Kathmandu, December 13

Independent power producers of the country have suggested the government to hold talks with the government of India to ensure that the electricity generated in Nepal can easily be exported to the Indian market.

Independent Power Producers’ Association, Nepal (IPPAN) — the umbrella organisation of private sector hydropower developers in the country — has said that the recently issued ‘Guidelines on Cross Border Trade of Electricity’ by Ministry of Power, India, has disappointed the private sector developers and foreign investors in hydroelectricity (except India) as the guidelines have given preferential treatment only to the government-owned companies and Indian entities (with majority stake) involved in generation and power trade in Nepal. As per the provision of the guidelines, such companies can export power to the Indian market after obtaining one-time approval from the designated authority in India, while other companies will be dealt with on case-by-case basis.

“These guidelines will discourage foreign investors eyeing the Indian market and mulling over coming to Nepal to harness its hydroelectric potential,” said Khadga Bahadur Bisht, president of IPPAN, adding, “Foreign investors will not make any investment until there is guarantee of returns.”

However, foreign investors will have room to register their company in India and invest in Nepal’s hydroelectricity to ensure the power generated can be exported to the Indian market as the guidelines have offered preferential treatment to Indian companies. “While the guidelines have described electricity as a commodity of strategic, national and economic importance, the government of India seems to be distrustful of other developers except Indian entities and government,” said Bisht.

He further said that the guidelines were developed by the Power Ministry of India to deal collectively with Bangladesh, Bhutan, Nepal and Myanmar, and a bilateral deal with India can assure the market for Nepali electricity.

After the power trade agreement (PTA) with India was inked at the bilateral level, many foreign investors were encouraged to invest in Nepal’s hydropower sector as the agreement ensured access to the Indian market. It is reported that Nepal will be able to export power to Indian market from fiscal 2021-22 as country will have surplus power thereafter.

IPPAN is also going to organise a two-day ‘Power Summit’ starting on Thursday in the Capital to assist implementation of government’s vision to develop 10,000 megawatts of electricity over the next 10 years to lower country’s dependency on other sources of energy by raising consumption of clean source of energy and eventually exporting surplus energy to the Indian market.

As per the government’s vision, mainly reservoir and peaking run-of-the-river based projects would be prioritised to ensure regular supply of clean source of energy. This is because the country has been facing irregular supply of energy as most of the hydro projects in operation are run-of-the-river type, whose generation capacity declines by one-third during winter season. To meet the shortfall, the government has been importing power from India to ensure regular supply of electricity.

The country has total installed capacity of 850 MW against its potential to develop 40,000 MW of power. Nepal has signed power trade agreement with southern neighbour at bilateral level and there is another separate framework agreement among SAARC nations for energy trade as well.