Addressing a press conference at Hyderabad House after the delegation-level talks on Thursday, Indian Prime Minister Narendra Modi announced that India will purchase 10,000 MW of electricity from Nepal in the next 10 years.
A preliminary agreement for the power trade agreement has been signed between Nepal and India during Dahal's India visit. Nepal’s Energy Secretary Dinesh Kumar Ghimire and his Indian counterpart Shri Alok Kumar have signed the preliminary agreement. 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. The signing of the preliminary agreement, according to Nepali officials, has ensured a market for electricity produced in Nepal. “Power sector is one of the key signature successes between India and Nepal partnership in recent years,” said Indian Foreign Secretary Vinay Mohan Kwatra at a press meet on Thursday. Kwatra termed the understanding to increase the quantum of power to 10,000 MW as a major decision by both Prime Ministers. As Nepal faces the risk of spillage of electricity in the monsoon season, there was an urgent need for Indian approval to sell more power generated by power projects in Nepal. According to Nepali officials, an inter-government agreement will also cut the red tape in the approval process. As per the Indian Power Ministry’s ‘Guidelines for Import/Export (Cross Border) of the Electricity-2018’, the Indian entity willing to buy electricity from neighboring countries can do so by taking approval from the Central Electricity Authority of India. Currently, Nepal is only allowed to sell power in the day-ahead market of India’s energy exchange. The day-ahead market means that Nepal can sell electricity once quantity and price are determined a day ahead of the trading day. Since buyers may not buy Nepal’s electricity or may seek power at a very cheap price depending on the availability of power supply in the real-time market and day-ahead market, Nepal was pressing for a long-term power purchase agreement with a southern neighbor to ensure that electricity is not wasted in Nepal. India has also agreed to fund three major transmission corridors in Nepal under the line of credit support of $680m-Bheri Corridor, Nijgadh-Inaruwa Corridor, and Gandak-Nepalgunj Corridor. A project development agreement (PDA) for the construction of the 669 MW Lower Arun hydropower project was signed between Investment Board Nepal and SJVN India. This is the second mega project undertaken by the SJVN after the $1.04bn 900-MW Arun-III hydroelectric project in the Arun River. As per the PDA, the project developer has to provide 21 percent of the total energy produced from the Lower Arun HEP to Nepal for free. Similarly, an agreement for the development of the Phukhot-Karnali Hydropower Project was also signed between the Vidyut Utpadan Company Limited (VUCL) of Nepal and NHPC of India. NHPC will have a 51 percent stake in the joint venture that will develop the project.
