In a major breakthrough, India has approved a memorandum of understanding (MoU) to buy up to 10,000 megawatts of electricity from Nepal in the next 10 years. Although Nepal and India had already agreed on the deal during Prime Minister Pushpa Kamal Dahal Prachanda's recent visit to India, India’s Union Council of Ministers has now formally approved it, giving an enormous boost to Nepal’s hydropower development. Nepal has been endowed with immense water resources but it requires huge investment and advanced technology to generate electricity. Nepal has increased power generation over the years but the pace of electricity production is not up to the mark. Currently, the country has installed capacity of producing over 2,577 MW of electricity. Nepal Electricity Authority (NEA) and its subsidiaries have so far generated 1,122.40 MW while the private sector has installed 1,370 MW of power.
On the other hand, small hydropwer plants and alternative energy sources have been generating 4.53 MW and 80 MW, respectively. Around 2,492.95 MW has been connected to the national grid and remaining 84.53 MW remains off-grid supply, according to official data of March this year. Meanwhile, Nepal’s ambassador to India Dr. Shankar Sharma, while informing about India’s decision to procure Nepali electricity said that this would make significant contribution to the economic development and restructuring of the country. The authorities and experts are optimistic that this would further encourage the potential investors to invest in building mega hydropower projects in Nepal. With India ready to buy large quantities of electricity from Nepal, the private sector’s confusion over the supply of generated electricity has also come to an end. It is urging the government to unveil an ambitious plan to produce 30,000 MW electricity in the next ten years. According to the private investors, Nepal will consume 10,000 MW electricity, and India and Bangladesh will import 10,000 MW each.
In yet another important development, the Indian government has decided to buy additional 180 MW of electricity from Nepal effective from Thursday. Currently, India is importing 452 megawatts of electricity from 10 different projects through the Dhalkebar-Muzaffarpur cross-border transmission line during the rainy season. The additional power will also be supplied to India through this transmission line. Nepal earned Rs. 11 billion by selling electricity worth Rs. 11 billion to India last year. The country is set to produce 15,000 MW of electricity by 2030. India needs clean energy to meet its target of attaining zero carbon by 2070. In 2014, Nepal and India inked a power trade agreement. Various Indian companies have been involved in building hydropower projects in Nepal. Satluj Jal Vidyut Nigam is constructing a 900-megawatt Arun III hydropower project.
Despite having abundant water resources, Nepal is not still self-reliant on hydropower, especially during the dry season. In the rainy season, certain amount of electricity goes wasted so the government asks the people to consume more electricity. For this, reservoir-based hydropower projects should be built as they generate electricity uninterruptedly during the rainy and dry season. The production, consumption and trade of electricity does not only improve the economic situation of the country, this is also crucial to reduce the dependency on the fossil fuels and fight the climate change. Similarly, it is necessary to diversify the power market and it is positive that Bangladesh is keen to purchase electricity from Nepal.