Due to the meaningful efforts of the government and continuous diplomatic efforts, India is ready to purchase electricity wasted during the rainy season.
Minister for Energy, Water Resources and Irrigation Pampha Bhusal's discussions with the concerned bodies, bilateral and multilateral dialogue at the ministry level and diplomatic initiatives are being discussed in the energy sector.
For the first time in the history of Nepal's electricity, it officially entered the Indian market. The construction of 39 MW of electricity, which was constructed with an Indian grant last October, had paved the way.
As per the agreement reached during the last visit of Prime Minister Sher Bahadur Deuba to India, about 360 MW of electricity has been paved to enter the Indian market during the coming monsoon. This will allow the electricity wasted during the rainy season to enter the Indian market and will also provide additional assistance to Nepali investors in exploring and expanding the market.
The government has already permitted the subsidiary company of the Nepal Electricity Authority to trade electricity. The private sector is also seeking permission to supply electricity to the regional market.
Nepal Power Exchange Limited (NEPEX) is also preparing to sell electricity on behalf of the Independent Power Entrepreneurs Association of Nepal (IPPAN). However, the company has not yet received permission from the government. In a program organized on Monday, Minister Bhusal has already signalled to issue a new Electricity Act and pave the way for the sale of electricity through an ordinance.
According to NEA, about 500 MW of electricity was wasted in the last monsoon alone. Its market value was about Rs. 5 billion. During the last visit, the Indian side stated that they are ready to use and purchase the electricity that is being stored in Nepal. The government understands that the impact of Nepal's entry into the Indian market will be strategic.
In particular, taking electricity as a commodity to market and expanding it also decides the fate and future of many other projects under construction in Nepal. The assistance provided by India for the development of Nepal's energy sector is significant in itself. On top of that, an important agreement has been reached this time on issues that Nepal has been raising for a long time.
According to Ganesh Karki, Vice President of IPAN and Vice President of IPAN, who is part of the visiting delegation of the Prime Minister, the level of agreement reached by the Indian side this time indicates that golden days are coming in Nepal's energy sector.
Another important aspect is to increase bilateral cooperation in the energy sector based on equality, jointly develop hydropower projects, and develop cross-border transmission lines. Nepal had been demanding the export of about 800 MW of electricity. According to the Ministry of Energy, paving the way for exports up to 360 MW is an achievement in itself as it intends to increase consumption internally and gradually expand even while exporting.
Earlier, India had not agreed that Nepal should have a seamless market as per the framework of the South Asian Association for Regional Cooperation (SAARC) and the Bay of Bengal Initiative for Multisectoral Technical and Economic Cooperation (BIMSTEC). Instead, it had been insisting that it would not take electricity from projects invested in countries without electricity trade agreements. Nepal did not even get permission to sell electricity for Upper Tamakoshi, Bhotekoshi and other projects. The situation was also comfortable during the monsoon season as Nepal was producing more electricity and India was in high demand. Rising above past commitments, India has paved the way for Nepal's electricity trade.
To make this commitment expressed at the political level a practical one, a joint effort is now needed, especially between the staff administration level and the concerned bodies. Even in the past, between the tendency to show commitment and non-implementation, there is a situation where the iron has to be damaged and shaped while it is being heated.
It is important in itself that the two countries agree to increase cooperation in the energy sector by issuing the 'India-Nepal Joint Vision' during Prime Minister Deuba's visit to India. With this, the long-standing desire to enter the regional market of Nepal is now being realized. According to energy entrepreneurs, the Prime Ministers of Nepal and India agreed on the joint vision as the biggest achievement in the energy sector so far and paving the way for easy export of surplus electricity to India and Bangladesh.
Strong initiative to sell electricity in the regional market
The government has taken strong initiatives to address the growing demand for electricity and convert wastewater into electricity and sell it in the regional market. Minister for Energy Bhusal said that continuous efforts are being made as per the plan to expand hydropower generation and trade by bringing in foreign investment along with the private sector.
Stating that an agreement has been reached during Prime Minister Sher Bahadur Deuba's recent visit to India to sell Nepal's electricity to India, he said that an agreement has been reached to facilitate electricity trade in Bangladesh through a sub-regional mechanism comprising Bangladesh, Bhutan, India and Nepal (BBIN). "There is an opportunity to sell the surplus electricity consumed in Nepal to India," said Minister Bhusal. "India's market is open, now Bangladesh's market is also opening."
For the first time, the two countries have agreed on the development of some of the major projects of Nepal with the joint investment of Nepal and India, construction of inter-country transmission lines and providing appropriate access based on market demand.
India's latest agreement has increased the certainty that excess electricity in Nepal will not be wasted. Minister Bhusal said that now it has been ensured that Nepal's electricity reaches the market of Bangladesh and the market there will be opened. Another important achievement is the Indian Prime Minister's public commitment to buying Nepal's electricity.
The sideline talks between Minister Bhusal and his Indian counterpart Rajkumar Singh, who are part of Prime Minister Deuba's delegation, have also led to significant achievements in the development of Nepal's energy sector. India's latest agreement also addresses Nepal's demand for access to the exchange market.
Mohan Dangi, Vice President of IPAN, said that he was happy with the announcement of the Indian Prime Minister that we would buy electricity from Nepal and give access to BBIN affiliated countries as well. According to him, Nepal's long-running effort to export electricity has paid off. Nepal's private sector has also been making efforts to sell electricity internationally.
It is trying to sell electricity through NEPEX. IPAN said India's recent acceptance and commitment by the top political leadership would pave the way for a long-closed power purchase agreement (PPA). NEA has not been doing PPA for the last three years. However, the PPA of semi-reservoir and reservoir projects was not stopped.
Bangladesh has already announced to import 9,000 MW of electricity from Nepal by 2040. During the visit of the then Energy Minister Barshaman Pun to Bangladesh in August 2075 BS, a Bangladeshi official said that they needed electricity from Nepal. During the visit of the Bangladeshi President, Prime Minister and Minister of State for Energy to Nepal, a commitment was also made to build the project with joint investment.
Similarly, it was decided to hold joint discussions with Bangladesh at the Energy Secretary level meeting of Nepal and India held in Bangalore, India on September 12 and 13, 2075 BS. Even though the total capacity of Nepal is equal to 83,000 MW, the message has been spread during Prime Minister Deuba's visit to India that there is no need to rush to find a market for generating 43,000 MW of electricity which is considered economical and potential.
With the construction of the transmission plant, 1,300 MW of electricity will be added to Nepal's system in the current fiscal year. Currently, the system has 2,150 MW of electricity.
For the first time, India has mentioned that it will conduct talks with Nepal on water resources and energy based on mutual equality and respect. Similarly, it has been mentioned that the structure of cooperation will be prepared and expanded in Bhutan, Bangladesh, India and Nepal. This can be taken to mean that Nepal's electricity has paved the way for sale in Bangladesh. India's refusal to use its transmission system did not pave the way for Nepal's electricity to reach Bangladesh. An agreement has already been reached to take 500 MW power of the Upper Karnali Hydropower Project to Bangladesh.
According to the latest agreement, the issues of bringing uniformity in the transmission system of each other, construction of cross-border transmission lines, and import and export of electricity from both sides have been included. Energy entrepreneurs believe that this will have a huge and positive impact.
The 'Vision Statement', which is jointly issued by the two countries, states that one country will co-operate with the other in the field of electricity based on equality and mutual respect. Experts say that this is another important issue.
The latest agreement has also paved the way for the construction of cross-border transmission lines. Recently, the government has approved NEA to invest Rs. 1 billion for the construction of the second interstate transmission line New Butwal Gokharpur. The transmission line with a total capacity of 400 kV is 140 km long. Construction of the 20 km long transmission line towards Nepal and 120 km towards India will start soon.
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