A CFUG Memorandum to Lease Forest Land to a Hydropower Developer
Makwanpur. A community forest user group registered in 1998, with 620 households in two settlements and 380 ha of mainly Sal and Chilaune, is approached by a hydropower company that needs 6 ha for a transmission corridor and access road. The company offers NPR 30 million as 'compensation' to the CFUG; the chair and secretary signed a memorandum with the company without a general assembly decision. The local government chair supports the project and has publicly said the CFUG 'owns the forest and can decide'. The DFO learns of the memorandum from a newspaper. Separately, the CFUG has spent 55% of last year's timber revenue on a school building and no money on silviculture; the audit is pending. The CFUG's 25-year operational plan is due for renewal, and there are allegations that the treasurer issued timber receipts without the DFO's technical marking.
1. Set out the legal position on ownership, use rights and the procedure for using forest land for a national project.
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Forest land is public property vested in the Government of Nepal. A CFUG holds use rights and management responsibility under its approved operational plan; it does not own the land and cannot lease, sell or transfer it. The local government chair's statement is legally wrong.
Any diversion of forest land for a national-priority project must follow the procedure in the Forest Act 2076 and Forest Regulation 2079: application and proposal, technical assessment and the prescribed environmental study (IEE or EIA), recommendation through the division forest office and provincial ministry, decision at the prescribed level - up to the Council of Ministers for larger or sensitive diversions - and compensation for the forest and for the affected users. Compensation flows through the prescribed channel, not as a private payment to a committee.
A memorandum signed by two office-bearers, without a general assembly decision and without DFO approval, has no legal force and cannot bind the CFUG. The school expenditure is not automatically illegal if the assembly approved it, but it must appear in the audited fund statement. The unmarked timber receipts are a separate compliance failure.
2. What should the DFO do - both enforcement and facilitation - and how should it handle the federal and local coordination problem?
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Enforcement: write to the CFUG stating that the memorandum is void and cannot authorize any clearing; order suspension of felling or construction in the 6 ha; verify stumps and receipts against the marking records; and initiate action under the Act and Regulation for unmarked timber if the allegations are substantiated. Do not leap to cancelling the CFUG - proportionality matters, and the group is otherwise functioning.
Facilitation: if the project is genuinely a national priority, tell the company the correct route and require it to submit a proposal to the DFO. Press for routing along an existing road to minimize forest loss, and ensure compensation reaches the affected users through the proper process.
Coordination: brief the local government in writing that it cannot authorize forest land diversion, and propose a tripartite meeting with the province present. Document every communication. Keep the CFUG informed at each step so it does not see the DFO as an adversary.
3. What governance reforms would you attach to renewal of the operational plan?
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Attach conditions to renewal:
- A general assembly resolution on the transmission-line proposal, and a written decision procedure requiring assembly approval plus DFO concurrence for any land or major financial decision.
- Annual audit with public posting of income and expenditure at both settlements.
- A fund-allocation rule that guarantees a minimum share for silviculture and pro-poor programmes, so that infrastructure spending cannot crowd out forest work.
- A timber marking and receipt system with monthly reconciliation between the CFUG book and DFO records.
- A conflict-of-interest rule barring office-bearers from signing contracts with companies on the CFUG's behalf.
- A grievance mechanism and a three-year performance review.
Renewal for a shorter period - say five years - with these conditions is a proportionate middle path: it keeps the forest under functioning community management while correcting the governance failures that produced the memorandum.