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Nepal-India energy secretary meeting: Nepal to propose long-term PPA with India

Nepal-India energy secretary meeting: Nepal to propose long-term PPA with India
Nepal is preparing to table a proposal for a long-term Power Purchase Agreement (PPA) between Nepal and India in the upcoming secretary-level Joint Steering Committee (JSC) meeting scheduled for Feb 17-18 in New Delhi. Currently, the Nepal Electricity Authority (NEA) is selling electricity in the day-ahead market of the Indian Energy Exchange. India's approval is required to sell electricity in the Indian market. As of now, bidding is required to sell power on a daily basis. According to officials at the Ministry of Energy, Water Resources and Irrigation (MoEWRI), it is not possible to sell through daily competition. "We cannot always rely on the model through which we are exporting electricity to India," said a senior official at the ministry. "Now we will propose with India to sell electricity for a longer period."

According to MoEWRI officials, India has not approved the proposal from Nepal to sell 700 MW of electricity from Nepal. This has created uncertainty about India as the market for Nepali electricity. The proposal for long-term PPA, according to ministry officials, is to seek the certainty of the market.

Nepali officials say it has become necessary to export more electricity in the upcoming days to prevent the wastage of surplus power during the wet season. India has allowed Nepal to sell 452.6MW of power generated by eight hydropower projects in India’s energy market. NEA exported electricity worth Rs 11.16bn to India beginning June last year until it stopped the exports in the third week of December last year owing to falling production. Apart from long-term PPA, MoEWRI officials are planning to discuss the construction of two new high-capacity cross-border transmission lines during the meeting. Currently, the 400KV Dhalkebar-Muzaffarpur Cross-border transmission line is the only high-capacity power line for power trade between the two countries which can transmit around 1,000MW of electricity at a time. Nepal and India have already moved ahead to develop the New Butwal-Gorakhpur Transmission Line which will have a capacity of transporting power as much as 3,500MW. Nepal Electricity Authority (NEA) and Indian Power Grid Corporation have established a joint venture company in India to construct this transmission line in the Indian territory. According to the MoEWRI official, Nepal will propose the construction of two additional 400 KV cross-border transmission lines—Inaruwa-Purnia and New Lamki-Bareli, in the upcoming meeting. With more power coming to the national grid in the current fiscal year and next fiscal year, there is an urgent need to initiate the construction of more cross-border transmission lines between the two countries to enable more power export from Nepal to India. “As Nepal will have more power to sell to India during the wet season, reliable infrastructure for cross-border transmission of power has become necessary,” said the official. According to NEA, over 700MW is expected to be added to the national grid in the current fiscal 2022/23 while over 550MW is expected to be added in the next fiscal year 2023/24. Officials say it will become necessary to export more power in the upcoming days to prevent spillage. Apart from this, India will also be requested to facilitate the Nepal-Bangladesh power trade during the meeting. In August 2022, Nepal and Bangladesh decided to request India to allow the export of 40-50MW of electricity from Nepal to Bangladesh in the initial phase by utilizing the Baharampur-Bheramara cross-border power transmission line. As per the understanding reached by the secretary-level JSC formed for energy cooperation between Nepal and Bangladesh, Nepal had notified India of the understanding it reached with Bangladesh in October. Nepali officials were hopeful that energy export to Bangladesh would happen as there had been a request from the highest political level of Bangladesh to India. Bangladeshi Prime Minister Sheikh Hasina during her visit to India in September this year had requested her Indian counterpart Narendra Modi for a power transmission corridor to import electricity generated in Nepal. But, government officials and private sector representatives, who interacted with Indian officials during the conference on grid connectivity in the BIMSTEC (Bay of Bengal Initiative for Multi-sectoral Technical and Economic Cooperation) in New Delhi on 16 Dec 2022, said Indian officials notified the Nepali delegation that currently it is not possible to export electricity through the Baharampur-Bheramara transmission line.