PM Dahal’s forthcoming China visit: Nepal plans to sign power trade agreement

Nine years after signing a power trade agreement (PTA) with India, Nepal is preparing for the same agreement with its northern neighbor. Nepal and China are expected to sign a bilateral power trade agreement during Prime Minister Pushpa Kamal Dahal's forthcoming China visit. Prime Minister Dahal is set to visit the northern neighbor in the last week of September.

A senior official of the Nepal Electricity Authority (NEA) said that preparations are now being made to sign a power trade agreement with China during Dahal’s visit. According to him, the agendas of the visit are being prepared in collaboration with the Ministry of Energy, Water Resources and Irrigation. “There is still about a month left for the Prime Minister’s visit to China. The agenda has not been finalized. However, we are planning to conclude the PTA with China during his visit,” he said.

Prime Minister Dahal himself has said that a PTA will be signed during his China visit. Addressing a public function in Chitwan on Saturday, Dahal said there will be a new power trading agreement with China and soon, also with Bangladesh. 

 

In the last five years, there has been more engagement between Nepal and China in energy sector cooperation. Both countries signed a memorandum of understanding on energy cooperation on 21 June 2018. During Chinese President Xi Jinping’s Nepal visit in October 2019, both countries agreed to bring into full play the Joint Implementation Mechanism (JIM) on Nepal-China Cooperation in the energy sector. Both sides agreed to jointly carry out Nepal-China Electric Power Cooperation Plan and make the plan as an important reference for the next step of bilateral electric power cooperation and promote its implementation.

 

In the first meeting of the Joint Working Group formed for energy cooperation between Nepal and China in the last week of February this year, the Chinese side formally made a proposal to purchase electricity from Nepal. The northern neighbor wants to purchase power for its autonomous state Tibet which borders Nepal. According to Nepali officials, China wants to import electricity from Nepal, especially for the winter season.

Apart from PTA, Nepal is also proposing one more cross-border transmission line between the two countries during Dahal’s visit. According to NEA officials, there is a proposal to construct a 400 KV transmission line at Kimathanka-Arun point.

While China has sought electricity for the winter season, Nepal currently is not in a position to supply power to the northern neighbor mainly due to a lack of cross-border transmission line between the two countries.

Currently, both countries are doing homework to construct the 400 KV transmission line connecting Nepal and China. The NEA has already completed a feasibility study of the proposed Ratamate-Rasuwagadhi-Kerung Transmission Line Project. NEA Engineering Company, a subsidiary of NEA, is taking charge of the environmental impact assessment (EIA) of the project.

The construction of the proposed 400 kV transmission line from Ratamate (Nepal) to Kerung (China) will form a basis for power trading between Nepal and China in the years to come, according to NEA. According to NEA officials, since India does not buy electricity generated by projects where Chinese investors and contractors are involved, the Ratamate-Rasuwagadhi-Kerung Transmission Line Project will be vital for attracting Chinese investment with the objective of selling power to China.

Energy Ministry sources said that the construction and investment modality of the Ratamate-Rasuwagadhi-Kerung Transmission Line Project will be finalized during the Prime Minister’s visit.

The Nepal section of the trans-Himalayan transmission line will have a length of 70 km and 212 towers. The feasibility study of the project has shown that an investment of Rs 13bn is required to build the transmission line of the Nepal section. Officials said the 70km project which can carry 5,000MW of electricity would open the door for power trade between Nepal and China.

According to a Nepal Electricity Authority (NEA) official, both countries during the February meeting had agreed to study how much electricity Nepal can be supplied to Tibet in winter and how much power Tibet can purchase.