Treaty between His Majesty's Government of Nepal and the Government of India concerning the integrated development of the Mahakali River including Sarada Barrage, Tanakpur Barrage and Pancheshwar Project.

Purpose of this Treaty is to ensure equal partnership in defining the obligations and corresponding rights and duties of the Parties thereto in regard to the waters of the Makahali River and its utilization. To this end the Treaty makes provision for: (a) the right of Nepal to a determined supply of water from the Sarada Barrage and the Tanakpur Barrage; (b) the construction of necessary waterworks; (c) the right of Nepal to the supply of energy from India on a continuous basis annually free of cost; (d) the construction of the Pancheshwar Multipurpose Project to be realized on the basis of the principles of the maximum total net benefit and the sharing of costs in proportion of the benefits accruing to each Party; (e) the supply from India of water for the irrigation of Dodhara-Chandani area of the nepalese territory. Article 9 provides for the establishment of The Mahakali River Commission, which shall make recommendations to both the Parties for the conservation and utilization of the Mahakali River, coordinate and monitor plans of actions and examine any differences arising between the Parties concerning the interpretation and application of the Treaty. In case the Commission fails to recommend its opinion within three months, the dispute shall be submitted to arbitration for decision.