Indian companies can buy power directly from Nepal

The companies in India and Nepal can now directly sign medium and long term agreements on electricity import and export as per the umbrella agreement reached at the end of the high level talks Prime Minister Narendra Modi and his Nepalese counterpart Pushp Kamal Dahal on June first according to Nepalese media reports

So far, Nepal had to renew the agreement with India every year to export electricity from a hydropower project in Nepal,” said Kulman Ghising, managing director of Nepal Electricity Authority. “Moving forward, we don’t have to do that. Now the new deal has paved the way for the buyers and sellers from the two countries to sign agreements for five to 25 years.”  The electricity agreement could be a starting point to achieve Nepal’s prosperity through energy export.

Reacting to Modi’s statement that “India will buy 10,000 MW of electricity in the upcoming 10 years,” Dahal said the deal was “an outstanding development in bilateral collaboration.”

Nepal was pushing for an umbrella trade agreement for 25 years to export its electricity. The two sides reached an agreement in principle at the prime minister’s level, but they are yet to sign an agreement and exchange letters towards this end.

The two sides reached an understanding on the electricity deal at the last minute due to Nepal’s firm stand on the Lower Arun and Phukot Karnali,” a high-level Nepali official accompanying Dahal on the trip told the Kathmandu Post. “As the Indian Cabinet is yet to approve the agreement, there could be no exchange of letters.”

“Energy secretaries of the two countries signed a symbolic agreement. The goal is to exchange letters amid a function in the near future,” he added.

Foreign Secretary Kwatra said that Nepal and India agreed to increase the quantum of energy export to 10,000 MW within the next 10 years. Currently, Nepal is allowed to sell 452.6MW of electricity generated by 10 hydropower projects in the Indian power markets. And, every year Nepal needs to renew the approval for a particular project to export power to India, which adds to the uncertainty.

Besides, the two countries agreed to build 480 MW Phukat Karnali Hydropower Nepal, which will be developed by India’s National Hydro Power Company. They also agreed on signing a project development agreement for the 679 MW Lower Arun project to be undertaken by India’s state-run Satluj Jal Vidut Nigam.