Nepal and India agree to increase power trade, build more cross-border power lines

Nepal had requested for long-term approval to its projects to export power.

Prithvi Man Shrestha

Prithvi Man Shrestha

The Kathmandu Post


Post Illustration

February 20, 2023

KATHMANDU – Nepal and India have agreed to increase power trade and build more cross-border transmission lines while upgrading the existing ones in a bid to scale up bilateral trade of electricity.

During the 10th joint secretary-level Joint Working Group and the secretary-level Joint Steering Committee held in Jaipur, India on February 17-18, the two sides also fixed a deadline for the completion of building and upgrade works on cross-border power lines, indicating the two sides’ commitments.

Nepal officials described the agreements reached between the two sides as a ‘milestone’ to ensure a foreign market for Nepal’s electricity.

According to a statement issued by the Ministry of Energy, Water Resources and Irrigation on Sunday, the two countries agreed to increase the volume of power that can be transmitted via the 400kV Dhalkebar-Muzaffarpur transmission line to 800MW from the current 600MW.

Currently, Nepal is allowed to sell in the Indian power market 452.6MW of electricity generated by 10 hydropower projects. Nepal is awaiting approval for more Nepali power projects from Indian authorities in order to export the electricity generated to its southern neighbour.

Nepal suffered power spillage in the last wet season, forcing many power plants to halt generation. “India has agreed to review its existing approval process for Nepali power projects under which they are allowed to export only for a year,” said Prabal Adhikari, director of power trade at Nepal Electricity Authority (NEA), who is a member of the Nepali delegation.

Nepal had requested for long-term approval to its projects to export power.

Nepali officials say the requirement for annual renewal has caused administrative hassles and hindrances in ensuring seamless trade of electricity.

The southern neighbour also notified Nepal that it was working to allow Nepal to participate in real-time trading of power in the Indian market. Currently, Nepal is allowed to take part only in the day-ahead market under which prices and quantity of power are determined one day before the trade date. Adhikari said it would help electricity from being wasted as it could be sold at any time.

Lack of adequate cross-border transmission capacity has been worrying Nepal as the country’s power production capacity has been on the rise. Nepal expects to add 706.8MW in the current fiscal year to the 2,200MW installed capacity as of the last fiscal year.

India has agreed to address Nepal’s concerns by agreeing to build two new high-capacity transmission lines along with the upgrade of existing lower-capacity cross-border lines. “The most important aspect is that India not only agreed to build cross-border lines, it also set a deadline for completing them,” Adhikari told the Post.

The two countries also agreed to develop the 400kV Inaruwa (Duhabi-Purnia, Bihar) and 400kV New Lamki (Dodhara-Bareli, Uttar Pradesh) cross-border lines by 2027-2028 and 2028-2029, respectively, according to the energy ministry’s statement.

The Nepal Electricity Authority said in a separate statement that Nepal has proposed developing these two projects under the investment modality of the 400kv New Butwal-Gorakhpur cross-border transmission line. “There has been an understanding to finalise the funding modality soon,” the NEA stated.

The two countries are constructing the Indian section of the New Butwal-Gorakhpur line by setting up a joint venture in India. The Millennium Challenge Corporation (MCC) will build around the 18km Nepal section of this power line.

The joint venture has already invited tenders for hiring the contractor, according to the NEA, a partner of the company.

The two sides will complete the New Butwal-Gorakhpur cross-border transmission line by March 2025. For this, they agreed to sign an implementation and transmission service agreement soon, according to the ministry.

The two countries also agreed to trade power through the 400kV Dhalkebar-Sitamarhi Transmission Line being built by the SJVN Arun-3 Power Development Company Pvt Ltd, in order to export 900MW electricity from Arun 3. The Joint Technical Team formed by both countries has been instructed to study the spare capacity of the transmission project.

In July last year, the Investment Board Nepal and the Indian state- owned SJVN Limited signed a memorandum of understanding to develop a 679MW Lower Arun Hydropower Project in the same river.

The under-construction cross-border transmission line will be used to export power generated from these two projects developed by the SJVN Limited.

“The capacity of this transmission line is 2,000MW. There has been an agreement to carry out a technical study on using the spare 1,100 MW of generated electricity,” said Kul Man Ghising, managing director of the NEA, according to a statement by the power utility monopoly. “As it will take more time to build the Lower Arun, it is good that we can use that spare capacity.”

“With the completion of all these 400kV transmission lines, Nepal and India will have five high-capacity power lines,” said Adhikari. “Such infrastructure is vital to ensuring reliable supply.

The two countries have also agreed to make a mechanism to enable Nepal to export power through 132kv and lower capacity transmission lines too.

There are a dozen cross-border transmission lines between Nepal and India of 33kV, 132kV and 400kV capacities, according to the ministry.

Only the Dhalkebar-Muzaffarpur transmission line has 400kv capacity, which can transport around 1,000MW. The other 11 cross-border lines can transport between 5MW and 125MW, according to a white paper on energy issued by the ministry in May 2018.

Adhikari said they not only agreed to use these low-capacity transmission lines but also to increase their capacity within specified periods.

According to him, they agreed to complete the under-construction second circuit of 132kV Kataiya-Kushaha cross-border transmission line by March this year. This single circuit can now carry 125MW electricity, according to the energy ministry.

Likewise, they agreed to improve the capacity of the Raxaul-Parwanipur power line by May this year. The capacity of the Nanpara-Nepalgunj power line will also be improved by September this year. They agreed to complete the new Butwal-Mainahiya power line by September this year.

The two countries agreed to trade 70MW-80MW through the 132kV Tanakpur-Mahendranagar Cross Border Line. Currently, Nepal has only been importing power through this power line.

Except Dhalkebar-Muzaffarpur, all other transmission lines have been used for trading power exclusively via government-to-government agreements. “With the latest agreement, we can trade power as we do through Dhalkebar-Muzaffarpur,” said Adhikari.

The southern neighbour is also positive about allowing Nepal to export 40–50MW of electricity to Bangladesh by using Indian transmission infrastructure, according to the energy ministry. Ghising said India has agreed to grant its approval once Nepal submits the proposal along with the project whose power will be sold to Bangladesh. “Such an approval will be granted in line with the Indian government’s directive on cross-border power trade,” he said.

Nepal and Bangladesh in August last year had decided to request the southern neighbour to allow the export of 40-50MW of Nepali electricity to Bangladesh in the initial phase by using the high-voltage Baharampur-Bheramara cross-border power transmission link.

“Export of 50MW is symbolic,” said Adhikari of the NEA. “But it will be a milestone for opening the door for trilateral cooperation in energy trade among Nepal, India and Bangladesh immediately and regional trade in the long run.” Two sides also agreed to finalise terms of reference for the Joint Hydropower Development Committee established to promote Indian investment in large hydropower projects in Nepal, according to Adhikari.

During the meeting, the Indian side had concerns about the difficulty of acquiring lands for the transmission line for SJVN and called for the facilitation of Indian investment in Nepal’s hydropower sector.

“We assured the Indian side that Nepal would facilitate such an endeavour,” said Adhikari.

The sub-head has been updated for clarity.

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