Indian firms to buy 2,200MW of electricity from NepalGeopolitics is the biggest obstacle to energy cooperation between Nepal and India, say participants of Kathmandu power summit.
The Independent Power Producers Association of Nepal said that deals were initiated for selling 2,200 MW of electricity to India during the two-day power summit that concluded on Wednesday in Kathmandu.
Although the private sector is yet to get trading licence to sell electricity in the domestic and foreign market because the current law does not allow it, India’s Manikaran Power Limited on Tuesday signed a memorandum of understanding (MoU) to purchase around 200MW of electricity directly from the hydropower projects.
During the closing ceremony of the event, IPPAN Vice-President Ashish Garg said that Vedanta India had initiated the process of signing a long-term power purchase agreement (PPA) to buy 2,000MW of electricity from Nepal.
It was notified during the closing ceremony of the two-day summit that Vedanta Resources, a sister company of Vedanta Limited, has initiated the necessary process to buy 2,000MW of hydropower from Nepal in the next five years.
According to the IPPAN, various projects with a combined generation capacity of 2,400MW were showcased for one to one negotiation.
In a video message, Vibhav Agarwal, chief executive officer for power at Vedanta Limited, said that Nepal’s hydropower would play an important role in balancing India's green energy and help in the decarbonization goal of the Indian companies and the Indian grid.
He said that his company has a goal to decarbonize 25 percent of portfolios by 2030 and 100 percent by 2050.
On Tuesday, Manikaran had signed the MoU with Nepal’s Bizbell Energy Pvt Ltd and Kasuwa Khola Hydropower Limited to purchase power from the projects being developed by these companies.
Section 22 (2) of the Electricity Act-1992 says, “the licensee [developer] desiring to export electricity generated on its own to the foreign country may do so by entering into an agreement with the Government of Nepal on such matter.”
Talking about the takeaway from the event, Garg said that India has a market for Nepal’s hydropower due to the southern neighbour’s de-carbonization goals. “Not only the Indian government but even the companies have their own goals to decarbonize their power production,” he said. India has targeted to reach net zero emission by 2070.
Rajeev Kumar Vishnoi, chairman and managing director of the NHPC Limited, which is set to develop the 750MW West Seti, 450MW Seti River-6 and Phukot Karnali Hydropower Project, said his company was seeing Nepal as great destination for the development of green energy.
He said that his company would soon start work on the ground for the West Seti Project, which is also the highly prioritised project of Nepal as well. “On the ground, activities will be carried out for the Phukot Karnali Project soon,” he said.
The Indian company is planning to develop the 480MW Phukot Karnali project located at Kalikot in collaboration with Vidyut Utpadan Company Limited (VUCL), the state-owned company of Nepal.
The VUCL said that it has sent a draft of the MoU to the cabinet through the energy ministry. The MoU could be signed during the planned visit of Nepali Prime Minister Pushpa Kamal Dahal to India and the visit date has not been confirmed yet.
“Nepal is now ready for the development of large hydropower projects,” said Vishnoi.
He also suggested that his company wanted to be involved in the development of large storage projects which could solve flooding and water scarcity problems.
There was a thick representation of Indian companies at the power summit, where firms from 19 countries had participated, according to the organiser of the event, the IPPAN.
The Indian firms, particularly those state-owned, are increasingly stepping up to develop large-scale hydropower projects in Nepal since the two countries over the last one year agreed to jointly develop such projects.
During the India visit of the then Prime Minister Sher Bahadur Deuba in early April last year, the two countries unveiled a Joint Vision Statement on Power Sector Cooperation.
It seeks to strengthen mutually beneficial bilateral cooperation in the energy sector through joint development of power projects in Nepal, besides developing cross border transmission infrastructure and providing market access.
Nepali stakeholders, however, had their doubts about securing reliable access to the Indian market as the country seems to prioritise its geopolitical agenda over its energy demands.
Majority of participants responding to journalists termed geopolitics as the biggest hindrance to power cooperation between the two countries.