Signing a long-term intergovernmental agreement on energy trade, starting the development of a number of transmission line projects, and inking a joint venture agreement to develop hydropower projects in Nepal will be top agenda of the energy sector for Prime Minister Pushpa Kamal Dahal’s upcoming visit to India.
While the formal announcement of the visit is yet to be made, government officials said the prime minister will leave for India on May 31 for a three-day visit.
Government officials involved in the preparation of the visit said that energy sector cooperation between the two countries will dominate the list of agendas of the visit. With Nepal on a path to producing surplus energy soon, the government is seeking greater cooperation with India in the energy sector as the southern neighbor is prioritizing moving to clean energy sources from a feasible fuel-dominated energy market.
“We have sent a proposal to sign a 25-year intergovernmental agreement on power sale of Nepal to India,” said a senior official at the Ministry of Energy, Water Resources and Irrigation. “No conclusion has been reached as talks are undergoing. Such an agreement is essential to ensure long-term access to the Indian market for Nepal’s power.”
Nepal had proposed such a deal during the 10th secretary-level meeting of the Joint Steering Committee on Energy Cooperation in India in late February this year. India had asked Nepal for a formal proposal
Currently, Nepal is required to renew the approval from the Indian authority every year which has created uncertainty about whether the southern neighbor would allow the export of electricity from certain projects. As per the Power Trade Agreement signed in 2014, the inter-government agreement removes the requirement of taking approval frequently.
An agreement could be signed between Nepal Electricity Authority (NEA) and India’s Madhyanchal Vidyut Vitaran Nigam Ltd (MVVNL) for the sale of Nepal’s 200 to 500 MW under a five- or seven-year agreement, according to an NEA official. “We have got a proposal from the MVVNL,” said an NEA official.
The official said that there is also a plan to sign a memorandum of understanding between Nepali and Indian company NHPC Limited to develop the 480 MW Phukot Karnali Hydropower Project.
Vidyut Utpadan Company Limited (VUCL) and NHPC Limited, the two state-owned companies of Nepal and India respectively, have decided to develop this project in Kalikot district. VUCL has already sent a draft of the MoU for project development to the Cabinet for approval.
NHPC has been awarded the 750 MW West Seti Hydropower Project along with the 450MW Seti River-6 Project. In April, the Investment Board Nepal had asked the Indian company to prepare a detailed project report on these two projects.
Likewise, the southern neighbor is also likely to approve Nepal’s proposal to allow the export of 40 MW of electricity to Bangladesh through the existing Indian transmission infrastructure. The NEA has sent a request to the Indian authorities to allow the sale of the power generated by the 52.4 MW Likhu-4 Project to Bangladesh through India’s existing transmission infrastructure.
Officials said before the export takes place, a trilateral agreement needs to be signed between the NEA, the Bangladesh Power Development Board, and the NTPC Vidyut Vyapar Nigam Limited. “A draft of the agreement has been prepared and discussions are undergoing. Once a tripartite agreement is signed, it will pave the way for exports of Nepal’s power to Bangladesh.”
According to officials, there is a plan to lay a foundation stone to construct the Butwal-Gorakhpur cross-border transmission line. The two prime ministers are expected to lay the foundation stone indicating the start of the construction of the project. A joint venture company established by the NEA and the Power Grid Corporation of India will be undertaking the transmission project on the Indian side.
“The contract for the construction of the transmission line has already been awarded while the company has invited tender for the construction of the substation,” said the NEA official.
Likewise, there is also the plan to inaugurate the New Modi-Lekhnath Transmission Line as the construction of the project was done with the aid of the Export-Import Bank of India. There is also a plan to inaugurate a second circuit of the Kataiya-Kusaha cross-border transmission line whose construction has been completed, according to the NEA official.