Nepal is on the verge of realizing its long-awaited dream of development through its hydropower resources. Historically, India has shied away from the development of Nepal’s hydropower resources. However, a careful reading of India’s Nepal policy in the past few years suggests that Delhi has quietly taken the lead in Nepal with its push for connectivity, especially in hydropower development and trade.
Hydropower Projects
- Several hydropower projects are currently underway in Nepal with the assistance of Indian companies.
- The Arun III project, which has a capacity of 900 MW, is being developed by a subsidiary of Satluj Jal Vidyut Nigam (SJVN) and is progressing quickly.
- Nepal has signed an agreement with NHPC Limited to develop the 750 MW West Seti project, which was abandoned by China’s Three Gorges Corporation, as well as the additional 450 MW Seti River 6 project.
- The license to develop the 900 MW Upper Karnali project has been granted to the Indian corporate GMR group, but the company has failed to achieve financial closure within the stipulated deadline.
- NHPC and SJVN have been awarded two other hydro projects listed under the Belt and Road Initiative (BRI) in Nepal: the 480 MW Phukot Karnali project and the 756 MW Tamor River storage-type project, respectively.
Cross-border Transmission lines
Several cross-border transmission lines are in the works, with the capacity of the Dhalkebar-Muzaffarpur transmission line agreed to be expanded to 800 MW from the current 600 MW. An agreement has been signed towards the export of Nepali power using transmission lines in Bihar at a fixed rate of INR 7.21 per unit.
Nepal’s Power Export to India
The most exciting development has been the export of NPR 11 billion (INR 6.8 billion) worth of power to India between June and December 2022. Nepal is currently allowed to sell 452.6 MW generated from 10 projects in the Indian day-ahead electricity market. Similarly, Nepali private power companies may soon also be able to sell their power directly to Indian buyers.
Issues and Challenges
There are worries that India’s decision to waive off Inter-State Transmission System (ISTS) charges to its domestic projects will make Nepali power exports less competitive, and Kathmandu will be seeking a similar waiver on its power exports as well. The reverberations of the India-China contest have been felt in Nepal, with India blocking access to its markets for infrastructure projects developed or funded by China.
Suggestions
India’s regional connectivity push will get additional momentum if it expedites the export of Nepali power to Bangladesh using Indian transmission lines. Expediting moves such as a bilateral UPI payment interface, which are at an incipient stage at the moment, will boost this connectivity drive.
Way Ahead
Regional connectivity has long been a mirage in South Asia, but developments over the past few years have raised hopes that it can finally be achieved in the culturally similar but economically disconnected region. The key will be India’s assurance to its neighbors that Delhi is committed to realizing its vision for the global South in the G20 presidency and taking the connectivity projects in South Asia one step further.
Why In News
The completion of several hydropower projects in Nepal, with the help of Indian companies, represents a significant step towards the long-awaited dream of economic development through the country’s vast hydropower resources.With projects such as the 900 MW Arun III and the 750 MW West Seti moving ahead at a quick pace, Nepal is on the cusp of a new era of sustainable development fueled by its abundant hydropower potential.
MCQs about India-Nepal Power Cooperation
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What is the capacity of the Arun III hydropower project being developed by a subsidiary of Satluj Jal Vidyut Nigam (SJVN) in Nepal?
A. 900 MW
B. 750 MW
C. 480 MW
D. 756 MW
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Which Indian corporate has been given the license to develop the 900 MW Upper Karnali hydropower project in Nepal?
A. NHPC Limited
B. GMR group
C. Satluj Jal Vidyut Nigam (SJVN)
D. China’s Three Gorges Corporation
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Which hydropower project on the Seti River in Nepal has run into trouble with the company being unable to achieve financial closure within the stipulated deadline?
A. West Seti project
B. Seti River 6 project
C. Upper Karnali project
D. Arun III project
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Which two hydropower projects in Nepal have been awarded to NHPC and SJVN, respectively, as possible Belt and Road Initiative (BRI) ventures?
A. Arun III and West Seti projects
B. Upper Karnali and Phukot Karnali projects
C. Tamor River and Seti River 6 projects
D. Phukot Karnali and Tamor River storage-type projects
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