June 1: Prime Minister Pushpa Kamal Dahal ‘Prachanda's visit to India has paved the way for easy sales of domestically produced electricity in Indian market.
Previously, electricity trade was conducted under short-term agreements, but now it will be carried out through long-term power trade agreements.
This will also provide relief to energy entrepreneurs. India has agreed to purchase 10,000 megawatts of electricity from Nepal in the next 10 years. In addition, India will also purchase the electricity generated from projects such as the Upper Tamakoshi Hydropower Project.
During a joint press conference following the meeting between the Prime Ministers of India and Nepal, Prime Minister Prachanda and Indian Prime Minister Narnedra Modi informed that India and Nepal had reached a long-term electricity trade agreement for the sale of power to India from Nepal.
Similarly, directions have been given to relevant government officials to reach an agreement within the next three months on the detailed project report (DPR) of the Pancheshwar Multipurpose Hydropower Project. This has increased confidence that the Pancheshwar project, which has been stagnant for a long time, will now move forward.
The long-term power trade includes the construction of the New Butwal-Gorakhpur Cross-Border Transmission Line and the implementation of the Pancheshwar and Lower Arun Hydropower Projects. This has paved the way for Nepal to explore the international market for electricity.
The agreement on long-term electricity trade has instilled confidence in expanding Indian investment in Nepal's energy sector. It is believed that it will help reduce the trade deficit, increase employment opportunities, and earn foreign currency.
Previously, the Nepal Electricity Authority(NEA) used to export electricity to the open market through a competitive bidding process every 15 minutes. The long-term agreement will provide significant relief to entrepreneurs as well.
In the past year, the Nepal Electricity Authority exported up to 452 megawatts of electricity to the open market. With the determination of rates every 15 minutes and the provision of an increase in rates, the Authority had to sell electricity at a cheaper price.
The long-term agreement has made Nepal's energy market more accessible and convenient for private entrepreneurs as well. Indian Prime Minister Modi also mentioned that long-term electricity trade agreement would contribute largely to Nepal’s power trade.