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Three months after Nepal and India signed a preliminary agreement on long-term power trade, the Indian Cabinet has finally endorsed the deal under which the southern neighbor has agreed to buy 10,000 MW of electricity from Nepal in the next 10 years.

While Indian approval for the purchase of 10,000 MW of electricity from Nepal marks a major milestone in bilateral energy cooperation, it has come at a time when Nepali Prime Minister Pushpa Kamal Dahal is preparing for a China visit, during which Nepal plans to seal power trade agreement with the northern neighbor.  

The endorsement from the Indian Cabinet has paved the way for signing long-term power trade between India and Nepal. Nepal has been requesting the southern neighbor for a long-term power trade deal arguing that an inter-government agreement would lock in the market and end the unpredictability of the Indian market’s availability for electricity from Nepal in the long run. With a gradual increment in electricity generation in the past few years, Nepal has been looking for a market for its electricity export to avoid energy spillage. 

While Nepal wanted to sign the final deal during Prime Minister Dahal’s India visit in the first week of June, the signing was delayed as it was yet to be passed by the Indian Cabinet. Both countries then planned for the third week of June for agreement signing for which Energy Secretary Dinesh Kumar Ghimire did travel to New Delhi. However, it was again postponed as Indian Prime Minister Narendra Modi was busy on an abroad visit. 

Madhu Prasad Bhetuwal, spokesperson at the Energy Ministry said that they have received information that the draft of the long-term electricity trade agreement has been approved by the Indian Cabinet. “We are yet to receive the official letter on it,” said Bhetuwal. However, Shankar Prasad Sharma, Nepali Ambassador to India, confirmed this on social media, saying that “India’s cabinet approval to purchase 10,000 MWs of electricity from Nepal in the next ten years has paved the way to develop a new road map for electricity development in Nepal. This could play a significant role in the economic development and restructuring of Nepal.”

According to Energy Ministry officials, energy secretaries of both countries will now sign the intergovernmental agreement for medium-term and long-term electricity trade. The Energy Ministry plans to sign the agreement amid a special program in Kathmandu. 

According to NEA officials, with an umbrella agreement in place, electricity can be sold through long-term agreements spanning from 7-25 years, as well as medium-term agreements spanning 2-7 years. 

The agreement is an umbrella agreement that will pave the way for power trading agencies in Nepal and India such as Nepal Electricity Authority and NTPC Vidyut Vyapar Nigam Limited (NVVN) to enter into a long-term power purchase agreement (PPA). The NEA and NVVN will sign a separate agreement for commercial deals. 

The long-term power deal has become of paramount importance for Nepal with the country’s electricity generation capacity gradually increasing. If the market for Nepali electricity is not ensured, the country faces the risk of electricity spillage every year, especially during the wet season.  In the rainy season last year, the country’s electricity spillage reached as high as 800 MW during the festive period in October and November.

The country’s generation capacity has already reached nearly 2,700 MW which requires more exports to India to avoid spillage in the rainy season when power plants start generating power at their full capacity.

India allows Nepal to export additional 180 MW of electricity 

India has also allowed Nepal to sell an additional 180 MW of electricity to its market. Nepal has already received approval to export 452 MW to India. With an additional 180 MW of electricity export now allowed, total energy exports to India have reached 632 MW. 

Of the 180 MW, 70 MW will be exported from Tanakpur in western Nepal to Uttar Pradesh while 110 MW will be exported to another Indian state of Haryana through Dhalkebar-Muzaffpur 400 KV cross-border transmission line. 

According to Nepal Electricity Authority (NEA), India has allowed the export of electricity from 83 MW Dudhkosi Project, and 27 MW Lamjung’s Dordi Corridor under the medium-term agreement. Similarly, the electricity from 37 MW Upper Chameliya, and 33 MW Upper Kalangada projects will be exported from Tanakpur. 

Nepal which has been selling its electricity to India's day-ahead market since Nov 2021, has recently been allowed to sell electricity to its real-time market also. 

The price of gold has dropped by Rs 300 per tola in the domestic market on Wednesday.

According to the Federation of Nepal Gold and Silver Dealers’ Association, the yellow metal is being traded at Rs 112, 400 per tola today. It was traded at Rs 112, 700 per tola on Tuesday.

Meanwhile, tejabi gold is being traded at Rs 111, 850 per tola. It was traded at Rs 112, 150 per tola.

Similarly, the silver is being traded at Rs 1,430 per tola today.

The Nepal Stock Exchange (NEPSE) plunged by 6. 45 points to close at 1,961.37 points on Tuesday.

Similarly, the sensitive index dropped by 0. 47 points to close at 377. 24 points.

A total of 2,480,929-unit shares of 277 companies were traded for Rs 796 billion.

Meanwhile, NMB Microfinance Bittiya Sanstha Ltd was the top gainer today with its price surging by 10. 00 percent.

Likewise, RBB Mutual Fund 2 was the top loser as its price fell by 10. 00 percent.

At the end of the day, the total market capitalization stood at Rs 2. 93 trillion.  

Nepal has an extensive list of requests that it hopes to receive assistance from China during Prime Minister Pushpa Kamal Dahal’s upcoming trip to China. One of them is getting Chinese assistance for a detailed project report (DPR) of Tokha-Chhahare Tunnel. 

Officials from Nepal’s Ministry of Physical Infrastructure and Transport (MoPIT) stated that Nepal plans to ask China to bear the expenses for conducting the Detailed Project Report (DPR) of the tunnel. According to Arjun Jung Thapa, joint secretary at MoPIT, the ministry has already communicated with the Foreign Ministry to include the Tokha- Chhahare Tunnel in the agendas of the Prime Minister’s visit. 

On 13 October 2019, Nepal and China entered into a memorandum of understanding (MoU), outlining China’s assistance in constructing two segments of the road connecting Kathmandu and Rasuwagadhi. The first stretch of the road will span 32 kilometers, starting from Tokha in Kathmandu and extending to Chhahare in Nuwakot, including a 4.17-kilometer tunnel. The second section, spanning 19 kilometers, will connect Mailung with Syaphrubesi in Rasuwa district.

The road project serves as a vital link for connectivity between Nepal and China, and upon its completion, it will lead to a reduction in both the distance and the travel time between Kathmandu and Rasuwagadhi.

According to the Department of Road, the Tokha-Chhahare tunnel project has received significant priority from the government in the current fiscal year. Out of the total budget of Rs 1.94bn allocated for the tunnel road development program in the 2023/24 federal budget, Rs 1.25bn has been earmarked for the Tokha-Chhahare tunnel road. However, the detailed project report (DPR) and the environmental impact assessment (EIA) report for the Tokha-Chhahare road are yet to be prepared. Currently, a technical team from the China Communication Construction Company is conducting a study of the tunnel. 

The upgradation of roads linking the northern neighbor has also been proposed by the MoPIT. According to Thapa, the ministry has sent a proposal for upgrading three highways—Karnali Corridor, Koshi Corridor, and Araniko Highway to be included in the Prime Minister’s agenda. 

Thapa said that the ministry has forwarded the list of road projects linking with the Chinese border and the Tokha-Chhahare Tunnel to the Foreign Ministry. “It is up to the Foreign Ministry to finalize them,” he said. 

Among them is the upgradation of the 290-kilometer Hilsa-Khulalu segment of the Karnali Corridor. According to the department, the track opening is left in the 3-kilometer stretch of this segment. 

The ministry has also included the upgradation of the Dhulikhel-Tatopani segment of the Araniko Highway. The ministry has proposed to upgrade the 84-kilometer segment into a two-lane road with Chinese assistance. The 144-kilometer Araniko Highway was built with Chinese assistance in 1967. 

The blacktopping of a 162-kilometer road in the Koshi Corridor is amongst the road projects where Nepal is seeking Chinese assistance. Currently, the Nepal Army is doing track opening of this road.

The construction of the Khutiya-Dipayal-Chainpur-Taklakot road is a new road project for which the government is looking for Chinese help.