KATHMANDU, SEPTEMBER 5

India has officially given its approval to a memorandum of understanding (MoU) concerning the purchase of electricity from Nepal. Under this agreement, India has agreed to import 10,000 megawatts (MW) of electricity from Nepal in the next 10 years.

According to Nepal's Ambassador to India, Shankar Prasad Sharma, the federal Council of Ministers of India formally endorsed the agreement paper on the power trade with Nepal and India and shared the information about it through social media. He said the decision would contribute to accelerating Nepal's economic development and restructuring efforts.

'India's approval to purchase 10,000 MW of electricity from Nepal in the next 10 years has paved the way to develop a new road map for electricity development in Nepal. This could play a significant role in the economic development and restructuring of Nepal,' he shared on his Facebook.

The MoU was initially signed between the two countries during Prime Minister Pushpa Kamal Dahal (Prachanda)'s latest visit to India from May 31 to June 3. Energy secretaries from both countries signed and exchanged the document. Following India's latest decision to endorse the agreement, the energy secretaries from both nations will participate in a special ceremony to formally re-sign it.

Joint Secretary at the Ministry of Energy, Hydro Resources and Irrigation and Spokesperson for the Ministry, Madhu Prasad Bhetuwal said they were unofficially informed about the official decision of the Indian government to endorse the agreement and expect to receive an official confirmation regarding the decision.

With the decision, the door to export electricity to the Indian market in an easy and smooth manner has been opened. Nepal had been urging for power export in the Indian market in the short-, mid- and long term. The Nepal Electricity Authority (NEA) has been exporting 452 megawatts of electricity in the Indian Energy market on a daily basis. Nepal and India signed a power trade agreement in 2014.

An Indian company, Satluj Jal Vidyut Nigam, is constructing a 900-megawatt Arun III hydropower project. Although another Indian company, Gandhi Mallikarjun Rao, has been trying to construct a 900-megawatt Upper Karnali hydropower project, it has not been started yet.

Other Indian companies have also initiated the process for the construction of different projects including Lower Arun, West Seti, and SR-6. An agreement has been reached between Nepal and India to construct some projects through joint investments.

Nepal has been making preparations to export 40 megawatts of electricity to Bangladesh soon. The private sector has been demanding the government to grant permission for power trade. The proposed new electricity bill has made this arrangement. The Cabinet meeting held on August 29 had given permission to the Energy Ministry to table the electricity bill in the Federal Parliament.

A version of this article appears in the print on September 06, 2023, of The Himalayan Times.