After Nepal and India signed an initial agreement on long-term power trade, the Nepal Electricity Authority (NEA) is going to enter into a medium-term power purchase agreement (PPA) with India to sell 200 MW of electricity in the first phase. The state-owned power utility has recently sent a draft of the PPA to India's NTPC Vidyut Vyapar Nigam Ltd (NVVN) to sell 200 MW of electricity starting this wet season. After NVVN approves the PPA, the NEA plans to enter into an agreement with the Indian power company for a five-year period. According to NEA officials, NEA plans to export 200 MW of electricity from this wet season. "We have sent a draft proposal to NVVN, the electricity trading company in India, to sell electricity for the medium term," said a senior NEA official. A preliminary agreement for the power trade agreement has been signed between Nepal and India during Prime Minister Dahal's recent visit to India. During the visit, the southern neighbor agreed to buy 10,000 MW of electricity from Nepal in the next 10 years.

The authority has planned to export up to 1,200MW of electricity to India this year. The NEA is preparing to export 200 MW by signing the medium-term PPA and the rest to the Indian energy exchange.

NEA plans to export power generated from six power projects - 83.42 MW Solukhola (Dudhkoshi) Project, 40.74 MW Mistry Khola Project, 34.92 MW Upper Balefi A Project, 28.17 MW Likhukhola-1 Project, and 12.75 MW Upper Chaku Khola Project. 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. Based on the agreement reached between the two countries, the NEA is planning to complete a medium-term PPA (five-year period) to export 200 MW of electricity in the first phase. According to NEA sources, it was planning to sign PPA with NVVN during Prime Minister Dahal's India visit. However, the Indian side failed to endorse the PPA draft sent by the NEA on time. "Now, NEA and NVVN can enter into medium-term and long-term PPA," said an official of the Ministry of Energy. According to the sources, NEA is planning to sell electricity at a rate of INR 5 which is equivalent to Rs 8 per unit. The authority has been purchasing electricity from domestic power developers at Rs 4.80 per unit. NEA has been selling electricity to Indian energy exchange for up to INR 12 per unit. However, Nepali officials say it will be difficult to get the same rate in the case of medium and long-term PPA. Nepal has started exporting surplus electricity to India during the wet season, it has to import electricity in the dry season to meet the power demand. The NEA has been selling electricity in the day-ahead market of Indian Energy Exchange Limited (IX) through daily bidding. Currently, the southern neighbor has allowed Nepal to sell 452.6 MW of electricity generated by 10 hydropower projects in the Indian power market. Since the approvals given to the 10 hydropower projects need to be renewed every year, Nepal has been pushing for a long-term power agreement with India.