In a major boost to energy sector cooperation between the two countries, the Investment Board of Nepal and India's NHPC Limited have signed a pact to develop two hydroelectric projects—West Seti (750 megawatts) and Seti River-6 (450 megawatts)— in the far western region of Nepal.

Sushil Bhatta, the chief executive officer (CEO) of the Nepal's investment board, and Abhay Kumar Singh, chairman and managing director of the NHPC Limited, inked the agreement amid a function held in the Nepali capital Kathmandu on Thursday evening.

NHPC signs MoU with Govt of Nepal for preparation of Detailed Project Report (DPR) and development of two hydropower projects [West Seti (750 MW) and Seti River 6 project (450 MW)] in Nepal pic.twitter.com/JWLTx71Lwm

— CNBC-TV18 (@CNBCTV18Live) August 18, 2022

The development comes four years after China’s stated-owned Three Gorges International Corp scrapped an agreement with Nepal to develop West Seti project amid disputes over the terms and conditions. Prior to the Chinese company, an Australian company was awarded the West Seti project in 1996. However, the company withdrew from the project in 2012 owing to low rate of return.

The proposed West Seti, which was first envisaged some six decades ago, is located on the Seti River in the far west of Nepal.

The proposed dam site is located 82 kilometers upstream of the confluence of the Seti and Karnali rivers, forming part of the Ganges basin.

India is presently constructing another 900-megawatt hydropower project on the Arun River in eastern part of Nepal at a cost USD 1.04 billion.

The signing-in ceremony was attended by Prime Minister Sher Bahadur Deuba, cabinet ministers and high-ranking government officials. Addressing the event, Prime Minister Deuba expressed hope that the two hydroelectric projects will be constructed within the next few years.

"These two storage type projects are national pride projects of our country. The Nepali people will reap benefits of the projects once they start generating electricity," the prime minister said.

According to the study conducted by the IBN, the estimated cost of the West Seti project is USD 1320 million while Westi Seti-6 project is expected to be built with 800 million US dollars.

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

With the signing of the agreement, the Indian company will now be able to conduct a feasibility study, environmental impact assessment, inundation of land and construction costs, according to concerned officials.

"The NHPC Limited is expected to complete the feasibility study in the next two years. We will facilitate the study," Amrit Lamshal, a spokesperson for the Nepal Investment Board, told Indian Narrative, on Thursday evening.

Nepal-India vision on energy cooperation

The potential cooperation on hydropower has been the one of key agendas of both the countries during high-level exchange of visits in recent times.

In April, Nepal and India unveiled a "Joint Vision Statement on Power Sector Cooperation" after Prime Minister Deuba and his Indian counterpart Narenda Modi held delegation level talks in New Delhi.

The two leaders also reaffirmed their commitment to further deepen the timeless linkages and bonds of geography, history, culture, commerce and people-to-people ties.

"That there are unprecedented opportunities for expanding and further strengthening mutually beneficial bilateral cooperation in the power sector including (a) joint development of power generation projects in Nepal, (b) development of cross-border transmission infrastructure, (c) bi-directional power trade with appropriate access to electricity markets in both countries based on mutual benefits, market demand and applicable domestic regulations of each country, (d) coordinated operation of the national grids and (e) institutional cooperation in sharing latest operational information, technology and know-how," read one of the key points of joint vision between Nepal and India.

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