Nepal to propose power swap deal with India

Among a wide range of issues that would be proposed by the Energy Ministry, securing the Indian market for surplus electricity that Nepal is likely to generate during the wet season tops the list.

Nepal will have surplus electricity during the wet season once the 456MW Upper Tamakoshi Hydropower Project comes online by the end of this year. The ministry is planning to sell surplus electricity in India for cash. But it is also planning to float the option of “power banking”, if “determining the price of electricity becomes an issue”.

Power banking, according to the Energy Ministry, refers to exchange of electricity for electricity instead of cash. It is a mechanism under which one country exports electricity to the other when there is surplus energy and imports back the same quantum of energy when there is a deficit.

If the southern neighbour agrees to the power swap arrangement, Nepal can export surplus electricity to India during the wet season and import back the same volume of power during the dry season when there is shortage of energy.

Nepal is eyeing the option to barter energy, as the price of electricity is lower in India than here, which is likely to make domestic power less competitive in the southern neighbour’s market. “Against this scenario, the power banking could be an ideal way to manage our surplus energy,” said Dinesh Kumar Ghimire, joint secretary at the Energy Ministry.

Another agenda the ministry will push for, according to Ghimire, is allowing Nepal to purchase electricity from the Indian market through competitive bidding.

“India has extended this facility to Bangladesh. We want to purchase electricity in a similar way, as it will cheapen our imports,” said Ghimire.

The ministry is also planning to use the PM’s visit to convince India to develop the New Butwal-Gorakhpur cross-border transmission line under the government-to-government financing model. As per this financing model proposed by Nepal, the two governments should build the 400 kV power line in their respective territories. Around 20 km of the 135-km transmission line falls in the Nepali territory. The Indian side, which has not put forward its desired modality, has rejected Nepal’s proposal and repeatedly questioned the project’s commercial viability, raising doubts over the fate of the proposed transmission line.

Although the Nepal-India energy secretary-level Joint Steering Committee (JSC) is the proper mechanism to deal with these issues, the Energy Ministry is planning to get India on board during the PM’s visit. The ministry is of the view that if Prime Minister Oli can convince his counterpart during his visit, a deal on construction of the transmission line could be reached between Nepal and India during the next JSC meeting, which is likely to be held in the near future.