Indian investment in Nepal


    Nepal-IndiaIndian ventures in Nepal are engaged in manufacturing, services (banking, insurance, dry port, education and telecom), power sector and tourism industries. Some large Indian investors include, ITC, Dabur India, Hindustan Unilever, VSNL, TCIL, MTNL, State Bank of India, Punjab National Bank, Life Insurance Corporation of India, Asian Paints, CONCOR, GMR India, IL&FS, Manipal Group, MIT Group Holdings, Nupur International, Transworld Group, Patel Engineering, Bhilwara Energy, Bhushan Group, Feedback Ventures, R J Corp, KSK Energy, Berger Paints, Essel Infra Projects Limited and Tata Projects, etc.

    In recent years, Hydropower sector has emerged as an attractive sector for Indian investments.

    Government of Nepal has issued 28 survey licenses for hydropower projects in Nepal having generation capacity of 8249 MW to Indian companies/ joint ventures.

    These include:

    • Satluj Jal Vidyut Nigam Limited: 900 MW Arun III
    • GMR: 900MW Upper Karnali and 600 MW Upper Marsyangdi
    • Everest Power: 184 MW Upper Karnali St-1
    • Bhilwara Energy Limited: 120 MW Likhu-4, 50 MW Balephi, 194 MW Mugu Karnali-1 & 274 MW Humla Kamali-I)
    • Patel Engineering Ltd: 130 MW Budhi Gandaki ka & 260 MW Budhi Gandaki kha
    • PES Energy Pvt. Ltd: 210 MW Phulkot Karnali & 216 MW Upper Trishuli-l
    • LANCO Infratech Limited: 303 MW Namlan Project, 200 MW Karnali-7 & 100MW Kaligandaki Gorge
    • Jindal Power Limited: 454 MW Chainpur – Seti Project
    • KSK energy Pvt. Ltd: 400 MW Tila-I, 420 MW Tila-2, 212 MW Bheri-l, 180 MW Bheri-2, 174 MW Bheri-3, 130 MW Manang Marsyangdi & 150 MW Upper Marsyangdi
    • Avanti Feeds Ltd: 80 MW Seti Nadi-3
    • Maytas Estates Pvt. Ltd: 138 N’IW Dudhkoshi-2
    • Nanda Devi Agro Farms P. Ltd: 350 MW Dudhkoshi-4
    • Essel Infraprojects Limited: 40 MW Lower Solu and,
    • Tata Power (880 MW Tamakoshi — 3T

    Several other companies are awaiting decision on their survey license applications or are negotiating with the local license holders. Nepal’s hydroelectric power can play a significant role to boost the economy of India.

    Cross border power trade: Both countries will benefit “Water has an economic value in all its competing uses and should be recognized as an economic good” (International Conference on Water and Environment, held in Dublin, Ireland in January 1992). By cross border power trade, both Nepal and India will symbiotically benefit. After meeting its domestic needs, Nepal can supply substantial power to India. Owing to high Himalayan Rivers, the potential of water energy is immense in Nepal. Currently Nepal’s installed capacity is 750 MW and 1250MW of hydropower project is under construction planned for completion in the next 4 years. This adds to 2000MW by 2017. The domestic demand is at about 1641MW. If all these projects complete, after 2017, Nepal will have a wet months surplus (July-October) of 500-1000MW (off-peak time during day and night). An option available for Nepal is to reduce electricity shortages by promoting enhanced electricity trade in any surpluses. Nepal’s proximity to India is a big advantage. Therefore, Power exchange is must for both the countries.
    Power banking arrangement can add a lot of value here. This power banking facility would allow hydropower producers’ feed’ in the excess electricity generated by their plants’ in the wet months to the Indian/State grid and then draw that power for captive use within a year when there is a deficit. During the wet season, hydro energy is generated beyond the requirement and, therefore, harnessing such natural resource into energy and keeping it for use lean months can really aid in demand and supply management.

    If Nepal could fast track projects to generate just 10,000MW in 10 years, consume 2,000MW itself and export the rest to India, it could earn $2.4 billion a year. Furthermore, if Nepal is able to generate 25,000MW of power within the forthcoming two decades for its domestic consumption and export, it will be a long-term solution to power woes; the surplus can always be used as an attractive trading commodity to energize India’s ever-growing power needs. Besides, building more hydel projects is not only for electricity but it will give chain impacts in both countries. If hydropower generation in Nepal is expedited, it would help in the industrial development of both Nepal and India.

    Two kinds of bilateral arrangements exist between Nepal and India regarding power exchange.

    • One there is a power trade agreement of 50MW between the two countries.
    • Second buying power on commercial provisos.

    There is a need to upgrade the exchange of agreed level of power from the present 50MW to 150MW. The draft power agreement with the proposition to increase it to 150MW have already been forwarded to the Indian Government.

    On the transmission system front: 

    Exchange of power between India and Nepal has been happening over the years, but for a very limited amount of power and at lower voltages through a few interconnections. Now that larger power projects are likely to come up, Extra High Voltage Transmission System is also being planned. For operation of the Transmission System:

    1. There is a need for creation of a Power Exchange Company in PPP model in Nepal. Agreement has to be made with the. India electricity exchange system which currently has 12 electricity bidding zones to develop Nepal as the 13th bidding Zone. Buying power through the Indian electricity exchange system during the dry months along the Katuwa-Kusaha and Raxaul- Amlekhgunj corridors can help to significantly minimize load shedding in Nepal in 2 years.
    2. In order to facilitate the cross border power exchange between Nepal and India, Indo-Nepal Transmission Interconnections have been identified under Cross Border Transmission Line Interconnection projects which need to be aggressively advanced.

    Dhalkebar-Mujaffarpur 400kV Transmission Interconnection that has been prioritized in the first phase should be expedited and effort should be made to realize this.
    There is a need to upgrade the 132kV 200MW new capacity to 750MW in 132kV system in the coming 3 years through the Indian grant which include:

    Anarmani-Siliguri Transmission Interconnection: Construct it for 400kV double circuit and-charge it to 132kv transmission interconnections links. Construction to be completed in 3 years (2017).

    Katuwa-Kusaha: Conductor up gradation and similarly Kusha Katiya second transmission line (132kv) should be developed.

    Raxaul-Amlekhgunj: Develop 132kV transmission interconnections double circuit (underground cable). DPR is underway by the Indian Government (WECO) to be completed by 2015.

    Bhairahawa—Sunouli: Build 132kV transmission interconnections double circuit.

    There is a need to develop Butwal (Bardghat)-Gorakhpur 500kV Transmission Interconnections to 2000MW capacity. These links if developed shall result to 750MW power transfer capacity in 132 kV system between Nepal and India.

    Next week to begin with what should Nepal and India do: Ed.

    Source: / By Gyanendra Lal Pradhan