Indian companies agree to buy 2200MW of power from Nepal in big boost to South Asian energy partnership

Indian companies agreed to purchase 2,200MW of electricity from Nepal’s hydropower projects during the power summit organised in Kathmandu on Tuesday and Wednesday, Independent Power Producers Association of Nepal (IPPAN) said.  

This is the significant quantity of power likely to be sold in India if deals are materialised at a time when Nepal’s total installed capacity of power projects is expected to reach 2,853MW by the end of the current fiscal year ending in  mid-July this year, according to Nepal Electricity Authority, state-owned power utility body of Nepal.

The IPPAN, which is the organizer of the event that welcomed around 850 participants with significant participation from India, said that India’s Vedanta Limited and Manikaran Power Limited took steps to buy Nepal’s hydropower in the next few years.

During the closing ceremony of the event, IPPAN Vice-President Ashish Garg said that Vedanta Limited had initiated the process of signing a  long-term power purchase agreement (PPA) to purchase 2,000MW of electricity from Nepal.

He didn’t specify in what phase the deal to buy such a large volume of power. It was however announced that Vedanta Resources, the subsidiary of the Indian company, agreed to sign a long-term deal to purchase power in five years.

Likewise,  India’s Manikaran Power Limited on Tuesday signed a memorandum of understanding (MoU) with two Nepali companies—Nepal’s Bizbell Energy Pvt. Ltd and Kasuwa Khola Hydropower Limited— to purchase around 200MW of power directly from the hydropower projects being developed by these companies.

Though Nepal’s  current electricity law does not allow licences to the power trading company, it has opened the door for the hydropower projects to sell the power directly in the domestic market and abroad.

In a video message, Vibhav Agarwal, chief executive officer for power at  Vedanta Limited  said that Nepal’s hydropower would be an important component in the de-carbonization goal of the Indian grid and Indian companies. He said his company aimed to decarbonize entire portfolios by 2050.

Nepal’s Minister for Energy, Water Resources and Irrigation said that Nepal needed huge investment for developing hydropower either for domestic consumption or exports. “We are confident that private developers, domestic and international financial institutions continue to support Nepal with renewed enthusiasm,” he said.

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