Nepal envisions 25-year energy deal with India during PM Prachanda’s planned visit to New Delhi

KATHMANDU: Nepal is willing to sign a long-term agreement with India on selling its surplus electricity to India during Prime Minister Pushpa Kamal Dahal aka Prachanda’s planned visit to India, officials in Kathmandu said.

Exact dates of Prachanda’s visit to the southern neighbour have not been officially announced, but Nepali officials say he may land in the Indian capital by mid-April.

A key aide to Prime Minister Prachanda said that they are in touch with the Indian side through diplomatic channels to make a formal announcement regarding the visit of the prime minister.

“We are preparing a proposal for the Indian side on the 25-year agreement,” a senior official at Nepal’s Energy Ministry has been quoted by Kathmandu Post newspaper as saying. The official further said “But a lot also depends on whether the Indian side agrees to include our proposal in the agenda.”

The official further said that Nepal and India are in intense discussion on including the signing of a long-term ‘Intergovernmental Agreement for Power Transfer from Nepal to India’ on the agenda of Prime Minister Prachanda’s planned visit.

Secretary at Nepal’s Energy Ministry confirmed that the two sides have been holding discussion on the possibility of such energy deal for quite some time.

“The issue of long-term inter-governmental agreement was under discussion at the ministry. But, we are yet to forward it to Nepal’s foreign ministry to make it an agenda item ahead of the prime minister’s trip,” Ghimire told the newspaper.

Ghimire said that such an agreement can be signed only if the Indian side gives its nod at the bureaucratic level before Dahal reaches New Delhi.

For the first time, Nepal had proposed such a deal during the 10th secretary-level meeting of Joint Steering Committee on Energy Cooperation in India’s Rajasthan in late February this year.

During the meeting, the India side had replied that they would examine the proposal.

Of late, Nepal and India have deepened cooperation in the field of energy. In February this year, the government authorities from Nepal and India agreed to build two new high capacity cross-border transmission lines.

The authorities, in their talks held in India, dwelt on the joint development of generation projects in Nepal, joint development of cross-border power transmission infrastructure, power trade under respective domestic regulations and policy framework, and capacity building assistance.

Nepal and India had agreed to build two new 400 KV capacity cross-border transmission lines within next six years.

According to Energy Ministry Spokesperson Madhu Bhetuwal, the first was a 400kV transmission line connecting Nepal’s Duhabi city with Purnia of the Indian State of Bihar. The second one was a 400kV transmission line connecting Nepal’s New Lamki (Dodhara) with India’s Bareli.

This was the first meeting held at the level of energy secretary between Nepal and India after the formation of Prachanda-led new government in December last year.

Irrespective of change of guard in Kathmandu, power sector cooperation between Nepal and India has gone off smoothly.

In the same meeting, the Indian side had given positive response to Nepal’s request to export its surplus energy to Bangladesh via India. “India will facilitate exporting 50 megawatts of electricity to Bangladesh from Nepal. For this, Nepal will send a specific proposal to India in near future.

Apart from other understandings, the two sides also agreed to set up a bilateral mechanism to export power from Nepal to the Indian state of Bihar during the rainy season through the existing 132 KV transmission line.

Both the parties also agreed on the early completion of the construction work of the Indian section of the 400 KV new Butwal-Gorakhpur transmission line as the second international transmission line by March 2025.

The erstwhile government led by Sher Bahadur Deuba awarded at least two hydropower projects to Indian companies.

To deepen cooperation in power sector, the two neighboring countries issued a long-term vision titled “India-Nepal Joint Vision Statement on Power Sector Cooperation” during the official visit of former Prime Minister Deuba to India in April 2022.

During the visit, Nepal invited Indian companies to invest in the development, construction and operation of viable renewable power projects, including in the Hydropower sector in Nepal, focusing on storage-type projects.

In August last year, the Investment Board of Nepal signed a Memorandum of Understanding (MoU) with India’s National Hydroelectric Power Corporation (NHPC) Limited to develop the West Seti and Seti River (SR6) projects. This was earlier being developed by China. There are other India-supported projects including the 900 MW Arun-3 hydroelectric project which are under construction.

Nepal is rich in water resources with a combined potential to generate more than 42,000 hydroelectric power, according to studies.

(Santosh Ghimire is India Narrative’s Nepal correspondent based in Kathmandu.)

Also Read: Nepal and India to build two cross-border transmission lines, stepping up energy partnership