Kathmandu, September 10, 2021. An investment agreement has been signed between Nepal and India for the construction of Butwal-Gorakhpur 400 KV second cross boarder transmission line for electricity trade. A joint venture and investor agreement has been signed between Nepal Electricity Authority and Power Grid Corporation of India Ltd., which is owned by the Government of India.
The agreement was signed by NEA Managing Director Kulman Ghising and Power Grid Executive Director YK Dixit at a function in New Delhi on Wednesday.
A meeting of the Council of Ministers of the Government of Nepal on July 5 had approved the NEA to invest 50 percent shares in the company to be set up for the construction of the Butwal-Gorakhpur interstate transmission line to India.
After signing the agreement, the way has been opened to set up a joint company with 50-50 percent founder share of NEA and Power Grid for the construction of the section on the Indian side of the transmission line, said Managing Director Ghising.
“Although the meeting of the secretary and joint secretary level mechanism between the two countries agreed to set up the company with the joint investment of the block authority and the power grid, the joint investment and shareholder agreement could not be reached due to lack of approval from the cabinet,” Ghising said. He said that the work has moved ahead with the aim of completing the construction of the transmission line within three to three and a half years.
The length of Butwal-Gorakhpur interstate transmission line is 120 kilometers. Out of that, it is 20 kilometers towards Nepal and 100 kilometers towards India. The transmission line of Nepal section will be constructed by Nepal itself and a company to be established with 50-50 percent share ownership of NEA and Power Grid from India.
The transmission line can generate about 2,000 MW of electricity, said Prabal Adhikari, director of NEA’s electricity trade department. “The Butwal-Gorakhpur transmission line can carry almost double the capacity of the existing Dhalkebar-Muzaffarpur 400 KV transmission line, which will be the lifeline for electricity trade between the two countries,” the official said.
The seventh meeting of the mechanism of Nepal-India Energy Secretaries and Joint Secretaries held on 27-28 September, 2076 BS had finalized the investment format for the construction of the transmission line. The joint venture has agreed to invest 20 percent in the project with an estimated cost of Rs 6 billion and borrow the remaining amount.
Discussion with Indian officials on electricity trade
A team led by NEA Executive Director Ghising has discussed with Indian officials about the possibility of selling electricity in Nepal. A team led by Ghising had gone to India to arrange trade after the 456 MW Upper Tamakoshi and other private sector hydropower projects were wasted during the rainy season. The team met the Ministry of Power of India, Central Electricity Authority, Vihar State Power Holding Company Ltd. And had discussions with Indian companies doing electricity trade with Nepal. Ghising said that the discussions with the Indian authorities for the sale of electricity stored in Nepal in India and Bangladesh were positive.