Before PM Narendra Modi’s visit, govt begins work on Nepal power pacts

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    Flag-Pins-Nepal-India_20120210094839A crucial pact that would pave the way for the setting up of a 900 MW hydropower project in Nepal is likely to be inked during Prime Minister Narendra Modi’s upcoming visit to Kathmandu in the last week of October.

    Power secretary PK Sinha is slated to travel to Nepal early next week to finalise the project development agreement (PDA) for the 900 MW Arun III hydroelectric power project as a precursor to Modi’s visit to Kathmandu for the SAARC summit. The signing of the PDA for the Rs 5,139 crore project (2010 price levels) to be developed by state owned SJVN Ltd, which is being seen as a defining step in the consolidation of the power sector cooperation between the two countries, would set the ball rolling on the next two stages of project development — inking of the power purchase agreement and the financial closure.

    Earlier, on September 17, a PDA had been signed between the Nepalese government and the GMR group for the development of the first project off the block — the 900 MW Upper Karnali hydroelectric project. The signing of the PDA for this project followed a landmark Power Trade Agreement signed on September 4 between the governments of Nepal and India, an overarching agreement that allows market access to developers of hydro power projects in Nepal to sell and buy electricity in India.

    The pact, which also facilitates the use of the Indian transmission system to sell to third country such as Bangladesh, has considerably improved the power trade scenario and has broken the ice on energy sector between India and Nepal.

    Alongside these two, the detailed project report for the 5,600 MW Pancheshwar power station — the biggest hydro project in the subcontinent that has been under discussion for decades, is likely to see some definitive progress. A consultant has already been appointed for this and is expected to wrap up the DPR in consultation with the Nepalese authorities.

    “Clean energy is the way to future and the focus is to ensure that the slide in the share of hydroelectric power generation in India’s energy mix is arrested, including through international cooperation,” an official privy to the development said. Modi has already done a bilateral visit to Nepal, but the upcoming Saarc visit is being viewed as a crucial as India is expected to push the agenda to revive the regional cooperation inline with Modi’s neighbourhood focus.

    Source : The Financial Express