Nepal-India long-term power agreement boosts private sector confidence in hydropower investment

KATHMANDU: The recently signed long-term power agreement between Nepal and India has evoked positive responses from the private sector, instilling hope and enthusiasm for increased investment in hydropower projects. The Independent Power Producers’ Association President, Nepal Ganesh Karki, expressed excitement about the historic agreement and urged both governments to ensure its proper implementation.

The agreement, signed on Thursday, outlines India’s commitment to purchasing 10,000 megawatts of electricity from Nepal over the next decade. Karki emphasized the significance of this step, stating that it opens avenues for easy access to India’s vast market for Nepal’s electricity. This, in turn, is expected to encourage both domestic and foreign investors to participate in Nepal’s hydropower projects.

Karki stressed the importance of creating an investment-friendly environment by amending existing acts and policies. He underscored the necessity of addressing obstacles in hydropower project construction to fully capitalize on the potential of the sector. The private sector sees this agreement as a critical milestone to boost Nepal’s hydropower capacity.

With Nepal aiming to generate 28,000 MW of hydropower by 2035, including exporting 15,000 MW to India and Bangladesh, Karki emphasized the need for investments to meet these targets. Currently, Nepal’s power generation capacity stands at 2,892 megawatts.

In a related development, Rajendra Malla, President of Nepal Chamber of Commerce, advocated for the immediate promotion of the 1,200 MW Budhigandaki Hydropower Project through a public-private partnership. Malla highlighted the project’s potential contribution to electricity export and the reduction of the trade deficit.

The successful commissioning of the Nepal-India cross-border 132 kV double circuit transmission line was also announced. This transmission line, inaugurated jointly by the Ministers for Foreign Affairs of Nepal and India, NP Saud and Dr. S Jaishankar, facilitates the transmission of up to 200 megawatts of electricity between the two countries.

The Mainahiya-Sampatiya transmission line project, spanning 28.5 km, is expected to enhance cross-border electricity trade, making it more accessible and efficient. The private sector has welcomed these developments as positive steps toward a more robust and interconnected power infrastructure.