The process that began in 2010 when Nepal first sent a draft of the PTA to India for approval ended with the signing on Tuesday. Energy Secretary Rajendra Kishore Kshatri and Indian Power Secretary PK Sinha signed the ‘Agreement on Electric Power Trade, Cross-border Transmission Intercon-nection and Grid Con-nectivity’ at Prime Minister’s Office in Singha Durbar.

The two secretaries termed the deal as “historic”. “After sustained effort, the road has opened for energy trade between Nepal and India,” said Kshatri.

He said that the major benefit for Nepal from the PTA is that it ensures the Indian market for power generators in Nepal. “Both the parties have committed to removing any distortion to the market that usually happens while imposing customs duty and other measures,” he added.

Expressing satisfaction at “early” completion of the task, Sinha said that the willingness on both sides helped finalise the PTA without difficulty. “I am confident that this agreement begins new cooperation between Nepal and India in the power sector,” said Sinha.

Officials of the two nations fast-tracked the PTA process as directed by the joint communiqué issued during Indian Prime Minister Narendra Modi’s visit to Nepal in August. The two countries had promised to finalise the PTA within 45 days of issuing the joint communiqué. Subsequently, the PTA was initialed in New Delhi on September 4 and was endorsed by the cabinets of Nepal and India.

The much talked about deal enables the countries to develop transmission interconnections, grid connectivity, power exchange and trade through governmental, and public and private enterprises on mutually agreed terms.

The agreement allows licenced electricity producers, buyers or traders of each country to engage in cross-border electricity trading, including that through power exchanges, and to seek cross-border transmission access as per the laws of the respective country.

Two nations have also formed two permanent mechanisms—Joint Working Group headed by joint secretaries from the two countries and Joint Steering Committee headed by secretaries to monitor existing areas of cooperation and to explore and identify new areas. The meeting of the panels will be held every six months. The Indian Embassy said in a statement that the discussions centred on holding the first meeting of the working group in November.

The Indian secretary also expressed readiness to increase power supply to Nepal once the Dhalkebar-Muzaffarpur cross-border transmission line is ready. The project is expected to complete at the end of 2015.

Sinha also offered financial assistance to construct transmission lines and provide technical assistance citing that India has expertise in planning and managing high-tech transmission lines.

According to the embassy, India “is giving full consideration” to Nepal’s request for supply of additional power up to 70 megawatt before the 18th Saarc Summit is held in Kathmandu in November.

It also said that both the sides welcomed the signing of the power development agreement for the 900 MW Upper Karnali project between Investment Board of Nepal and GMR India in September 2014. PDA talks for the 900 MW Arun III between Satluj Jal Vidyut Nigam Ltd and the IBN are on, and a deal is expected when Modi visits Kathmandu for the Saarc Summit.