September 24, 2014

The union cabinet approved a landmark power grid connectivity agreement with Nepal, which will strengthen energy ties between the two energy-starved nations.

A cabinet communique said it approved the India-Nepal agreement on “Electric Power Trade, Cross-Border Transmission Interconnection and Grid Connectivity”.

“New cross-border transmission lines are under construction, which will more than double the transmission capacity, over the next two years,” the statement said.

“The agreement will also provide a framework for imports, by Indian entities, of surplus power generated from future hydroelectric plants in Nepal, on mutually acceptable terms and conditions,” it added.

Nepal is currently importing about 200 MW electricity from India annually. It has paved the way for a bilateral power trade, whereby energy produced in Nepal by any of the parties will be sold in India. The agreement is crucial for both sides to export and import electricity, fix the price and explore the market as Nepal and India need to do business over the long term.