The Energy Ministry is planning to hold talks with the Indian Power Ministry over its recently issued discriminatory guidelines on cross-border power trade which prohibit private and third country hydropower developers in Nepal from exporting electricity to India with a one-time approval.

According to the Guidelines on Cross-Border Trade of Electricity published by the Indian government last Monday, only companies in Nepal which are wholly owned by the Indian government or the public sector, or private companies with a 51 percent or higher Indian stake would be eligible to export power

to India.

These companies will be given a one-time approval to sell power to India, according to the guidelines. Also, companies owned or controlled by the Nepali government will be allowed to sell power to India after getting a one-time approval from the Indian authorities, according to the new rules.

However, private companies owned by Nepali or third country developers wishing to export power to the Indian market can do so only ‘after obtaining the approval of

the designated authority on a case-to-case basis’, according to the guidelines.

A highly placed source at the ministry said that Nepal would raise the issue during the Joint Steering Committee (JSC) meeting slated to be held next January. The JSC conference is an energy secretary-level meeting between the two countries.

“This is a discriminatory policy as it has been issued against the spirit of the power trade agreement (PTA) signed between Nepal and India two years ago,” said the source.

“A provision in the PTA requires both countries to allow non-discriminatory access to cross-border interconnections to all licensed participants. The ministry will strongly raise this issue during the JSC meeting and ask the Indian government to reconsider its decision.” 

While signing the PTA, both countries treated electricity as a commodity which will get free access to their respective markets. However, the guidelines issued by India have considered electricity as an issue of strategic, national and economic importance.  

“This policy is likely to discourage foreign investors planning to develop hydropower in Nepal with an eye on the Indian market,” said the source. “This will be a major setback for Nepal in its endeavor to develop hydropower as it needs foreign investors from all over the world to tap its entire hydroelectric potential.” 

Meanwhile, Energy Minister Janardan Sharma told the Post that he was aware of the recently issued guidelines by the Indian government, and that he would come up with a formal statement after holding talks with the concerned stakeholders.

“I have already spoken with our Foreign Minister Prakash Sharan Mahat to hold talks with his Indian counterpart,” said Sharma.

Spokesperson for the Nepal Electricity Authority Prabal Adhikari said there was still room for improvement as the Central Electricity Regulatory Commission, the power sector regulator in India, is yet to come up with regulations based on the new guidelines. “Nepal should request India to reconsider its stance while issuing the regulations.”