Nepal and India Set to Finalize Long-Term Energy Agreement

Nepal and India Set to Finalize Long-Term Energy Agreement
Credit goes to Kathmandu Post

In a significant development that underscores the growing energy cooperation between Nepal and India, senior officials from both nations are poised to sign a long-term energy agreement next week. This landmark deal, which was agreed upon in principle during the recent visit of Nepal's Prime Minister Pushpa Kamal Dahal to India, aims to facilitate the export of 10,000 megawatts of electricity from Nepal to India over the next decade.

The Genesis of the Agreement

The initial agreement was inked between Nepal and India at the energy secretary-level on June 2 in New Delhi. This followed delegation-level talks between Prime Minister Dahal and his Indian counterpart, Narendra Modi. However, due to time constraints, the Cabinets of the two countries could not approve the final text during the visit. Now, with the necessary processes concluded, the agreement is ready to be signed. Tentatively, the signing is planned for June 18 in New Delhi, when Energy Secretary Dinesh Kumar Ghimire travels to India.

The Impact of the Agreement

The long-term power trade agreement is expected to streamline procedures for power trade, making it more predictable. The Indian Prime Minister has stated that India aims to increase the quantum of hydropower imports from Nepal to 10,000 MW in the next 10 years. This agreement will address the complex issue of managing energy produced from Nepal's rivers and encourage mutually beneficial investments in Nepal's hydropower generation sector and transmission infrastructure.

The Agreement's Flexibility

The agreement, which consists of six articles, has been approved by the Nepali and Indian cabinets. It is an umbrella agreement and, although it talks about exporting energy for 10 years to India, it can be revisited when necessary. The text is flexible, and any provision can be changed, if needed, as per the recommendations of the two mechanisms led by the energy secretaries and joint secretaries of Nepal and India respectively.

The Role of Permanent Mechanisms

To discuss issues related to energy, water resources, inundation, and power trade, Nepal and India have set up two permanent mechanisms—one at the secretary level (the Joint Steering Committee) and the other at the level of joint-secretary (the Joint Working Group). If any change or amendment is needed in the proposed long-term power agreement, recommendations of these two mechanisms will be sought.

The upcoming long-term energy deal between Nepal and India is a testament to the growing energy cooperation between the two nations. By facilitating the export of a significant amount of electricity from Nepal to India, this agreement will not only boost Nepal's energy sector but also strengthen the bilateral ties between the two countries.