India Rejects Nepal’s Proposal for Cross-Border Grid Joint Venture

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India section of the Butwal-Gorakhpur line is being built by a joint venture of Nepal Electricity Authority and the Power Grid Corporation of India. The two countries have agreed to build the 120 km power line by March 2025.

India doesn’t want to involve Nepal in building two new cross-border transmission lines on its territory unlike what the two countries are doing in the Butwal-Gorakhpur Cross Border Transmission Line, a senior official at the Nepal Electricity Authority said.

Nepal had proposed to build the 400kV Inaruwa (Duhabi-Purnia, Bihar) and 400kV New Lamki (Dodhara-Bareli, Uttar Pradesh) cross-border lines through a joint venture company involving entities of the two countries.

But the Indian side has proposed that Nepal builds the Nepal section by itself and the Indian section by the southern neighbour, said Dirghayu Kumar Shrestha, chief of the transmission directorate at the Nepal Electricity Authority (NEA).

After an exchange of letters, the two sides had discussed the matter during the 11th meeting of the joint-secretary level Joint Working Group (JWG) and the secretary-level Joint Steering Committee (JSC) held in Chitwan in early January without reaching a concrete agreement.

The two countries have already agreed to complete the Duhabi-Purnia power line by 2027-2028 and Dodhara-Bareli by 2028-2029, respectively.

NEA officials said that it is not immediately clear why the Indian side didn’t want to build these projects jointly.

A venture involving the NEA and the Power Grid Corporation of India has been established to build the Indian section of the 400kV Butwal-Gorakhpur transmission line.

Prime Minister Pushpa Kamal Dahal and his Indian counterpart Narendra Modi had virtually held a groundbreaking ceremony for the 400kV cross-border power line during Dahal’s Delhi visit from May 31 to June 3 last year.

The two countries have agreed to build the 120 km power line by March 2025 but NEA officials say it would be challenging to meet the completion deadline. The Nepal section of the line, which is around 20km, will be funded by the Millennium Challenge Corporation (MCC) Nepal Compact.

Nepal had proposed the same modality for building the other two transmission lines too.

With the Indian side rejecting the proposal, Nepal also notified the Indian side it would refrain from the capacity booking of these transmission lines unilaterally as it did in the case of Butwal-Gorakhpur Transmission Line for 25 years.

Capacity booking will force Nepal to pay a minimum fee to the joint venture irrespective of whether power flows in the transmission line or not.

“We proposed to the Indian side that we will only pay a wheeling charge based on the flow of energy if the modality of Butwal-Gorakhpur power line is not adopted,” said Shrestha.

Nepal had agreed to book the capacity of the Butwal-Gorakhpur transmission line as the country needs this cross-border line to sell excess power to its southern neighbour.

“Despite bearing a fixed financial burden due to capacity booking, joint venture profits will also be shared with the NEA as a partner in the case of the Butwal-Gorakhpur Transmission Line,” said Shrestha.

The two sides were supposed to agree on the modality of building the two cross-border lines during the 11th JWC and JSC meeting held in Nepal. “As two sides failed to reach a conclusion on modality, the Indian side proposed a discussion on the matter in the next meeting,” said Shrestha.

The 400kV Dhalkebar-Muzaffarpur cross-border line is the only high-capacity connection between the neighbours to transmit 1000MW power. There are about a dozen cross-border power lines, all of them of low capacity.

With India promising to buy as much as 10,000MW of power from Nepal in 10 years under a long-term power trade agreement signed between the two sides, more high-capacity lines will be needed to transmit power.

Four high-capacity cross-border transmission lines are in the pipeline. The SJVN Arun-3 Power Development Company, the 900MW Arun 3 Hydropower Project developer, has been constructing a 400kV Dhalkebar-Sitamarhi line to transmit up to 2,000MW.

Likewise, construction of the New Butwal-Gorakhpur Transmission Line, which will be able to supply up to 3,500MW, is underway following the laying of the foundation stone in June last year.

Duhabi-Purnia and Dodhara-Bareli are the other proposed power lines.

According to Shrestha, Nepal has proposed three more cross-border lines too. They include Lamahi (Dang)-Lucknow (Uttar Pradesh), Nijgadh (Bara)-Motihari (Bihar) and Anarmani (Jhapa)-Kishanganj (Bihar).

During the latest JWC and JSC meetings, the two sides also directed the Joint Technical Team under the JSC to study the possibility of setting up new high-voltage cross-border transmission lines to boost power trade between the two countries.

Source: Kathmandu Post