Nepal | September 22, 2020

Indian govt amends electricity regulation

Nepali hydel developers can export power to third countries

Umesh Poudel
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Kathmandu, December 23

India has amended its cross-border power trading regulation paving the way for Nepali power producers to export electricity not only to India but also other third countries like Bangladesh, Bhutan and Myanmar.

Indian authorities have rescinded the provision, which stated that only companies fully owned by the governments of the concerned countries or those having at least 51 per cent equity investment of Indian public or private companies could export power to the Indian market after obtaining one-time approval from the designated authority in India.

“This is a major success for Nepal, Bangladesh, Bhutan and Myanmar,” said Dinesh Kumar Ghimire, joint secretary at the Ministry of Energy, Water Resources and Irrigation. “All the concerned countries had been putting pressure on India to
revise its guidelines.”

The Central Electricity Regulatory Commission of India under Ministry of Power had introduced the electricity regulation based on ‘Guidelines on Cross-Border Trade of Electricity’ for Nepal, Bangladesh, Bhutan and Myanmar seeking INR 10 million per megawatt as bank guarantee to utilise India’s transmission network in December 2016.

Likewise, the guidelines had a provision that only those hydropower projects with capacity to generate 50 megawatts and above would be granted grid connectivity to export electricity to the Indian market. This provision has also been excluded. The older provision apparently discouraged foreign investors and private Nepali power developers from exporting power to India.

As per the revised regulation, India has also dropped electricity from its list of strategic goods. With this revision, the Indian government has made it possible now for Nepali power developers to utilise India’s transmission network to export energy to third countries.

Nepal, Bangladesh, Bhutan and Myanmar can from now onward use Indian transmission infrastructure after taking approval from concerned Indian authorities. The revised regulation has also paved way for Nepal and other countries to collaborate and construct transmission network through India after taking necessary approval.

According to Ghimire, Nepal can now expand its power market in neighbouring countries. Nepali independent power producers will also be able to sell their power to other countries via Nepal Electricity Authority, which is the sole power utility of the country.

After this recent revision of the electricity regulation, the government believes that foreign direct investment in Nepal’s hydel sector will likely increase.

“This is good news for foreign investors who want to invest in hydropower in Nepal after India’s initial reluctance to import electricity produced by non-Indian entities,” Ghimire added.

Nepal’s private hydropower developers also welcomed the new regulation. “It was the result of our continuous lobbying, negotiations and also pressure from neighbouring countries for access to the power market of the South Asian giant,” said Shailendra Guragain, president of Independent Power Producers’ Association, Nepal.

The revised regulation on import/export of electricity states that after tripartite agreements between Nepal, Bhutan, Bangladesh and India cross-border trade of electricity across India will be allowed under the overall framework of bilateral agreements signed between respective countries.

The new modification in the Indian regulation makes it easier for hydropower projects owned by Nepali private sector or China-backed companies to export electricity to third countries.

A version of this article appears in print on December 24, 2018 of The Himalayan Times.

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