INDIA – India and Nepal have recently inked a power trade agreement aimed at enabling Kathmandu to export an impressive 10,000 megawatts (MW) of hydroelectricity to India within the next decade, as confirmed by officials.
This deal, they anticipate, will spark investment interest in Nepal, a nation grappling with financial constraints amidst its stunning Himalayan landscape.
Blessed with rivers originating from the majestic Himalayas, Nepal possesses a substantial hydroelectric potential of approximately 42,000 MW.
Yet, owing to a lack of technical expertise and financial resources, the country, nestled between China and India, currently generates a meager 3,000 MW.
India, already engaged in short-term electricity trading with Nepal, is funneling substantial investments, amounting to billions of dollars, into infrastructural developments, particularly in hydropower plants.
This strategic endeavor by New Delhi aims to bolster its influence within its neighboring smaller nations, especially when China is significantly expanding its presence in the region.
The long-term power trade agreement was previously agreed upon by Indian Prime Minister Narendra Modi and Nepali counterpart Pushpa Kamal Dahal.
This accord, according to officials, holds paramount significance in luring investments into Nepal’s hydroelectric sector.
At the recent meeting of the Nepal-India Joint Commission in Kathmandu, four agreements were formalized, including this pivotal power trade deal.
Nepal’s Ministry of Foreign Affairs spokesperson, Prem Rai, highlighted this achievement, deeming it a landmark for attracting investments necessary for hydrosector development.
Suresh Bahadur Bhattarai, representing the state-owned Nepal Electricity Authority, expressed enthusiasm about the agreement’s potential in attracting investments.
However, he stressed the urgency of aligning legal frameworks, coordinating line ministries, and engaging various agencies to ensure timely project completion.
Indian Foreign Minister Subrahmanyam Jaishankar and his Nepali counterpart N.P. Saud were present at the Joint Commission meeting, reflecting the high-level commitment to fortifying bilateral ties.
Currently, Indian companies are involved in or in negotiations for constructing power plants capable of generating a cumulative capacity of 8,250 MW in Nepal.
Nepal aims to channel surplus energy to India, intending to mitigate its significant trade deficit with its southern neighbor.
This agreement comes on the heels of a prior collaborative effort between both countries to develop a 695 MW hydropower plant.
Additionally, the Arun IV project, set to materialize on the Arun River, will witness a joint effort between India’s Satluj Jal Vidyut Nigam (SJVN) Ltd and Nepal’s state-owned Nepal Electricity Authority.
This project is projected to supply 152 MW of electricity to Nepal, with the remaining output shared between the two entities in a 51%-49% equity partnership.
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