Nepal and India power deal

Neighboring countries Nepal and India to ink hydroelectric power deal.

Nepal and India will sign a $1.04 billion power deal for building a 900 MW hydropower plant in light of chronic energy shortages in the region. According to reports, while the plant will provide free electricity to Nepal, it will deliver energy to India. The pact will be signed as part of the SAARC summit being held in the Himalayan state.

Nepal and India power deal

As per the electricity trading pact signed by the two countries in October 2014, Indian firms are investing billions of dollars to develop Nepal’s hydropower potential. Built by Satluj Jal Vidyut Nigam (SJVN) Limited, the project received a go ahead 2008, but was not taken forward as Kathmandu raised some concerns and demanded better benefits than those outlined.

The plant will be developed on the Arun River in eastern Nepal, which will supply a fifth of the generated electricity to Nepal for free. As additional benefits, Nepal will earn $3.48 billion over 25 years in royalty, income and taxes from the plant and will eventually take ownership of the project.

At present, Indian firms are negotiating with the government for power plants that would produce a total of 8,250 MW. It is estimated that about $7 billion will be invested in Nepal’s hydropower industry over the next 5 years.

Nepal holds the potential of generating 42,000 MW of hydropower, however current figures have not even surpassed 800 MW, which is even less than its demand of 1,400 MW.

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