Nepal and India sealed a historic agreement on Jan 4, 2023, marking a significant breakthrough in bilateral energy collaboration. This pact opens the door for the seamless export of Nepal’s energy to the Indian market, with India committing to purchasing up to 10,000 MW of electricity over the next decade.
This development is a game-changer for Nepal’s hydropower projects, as it guarantees market access for Nepalese electricity. Previously, international investors hesitated to invest in Nepal’s hydropower sector due to concerns about market accessibility.
In parallel, efforts are underway to establish a trilateral energy cooperation involving India, Nepal, and Bangladesh. This initiative aims to facilitate the sale of electricity from Nepal to Bangladesh, addressing the latter’s pressing electricity demand. The agreement not only encourages Indian but also international investors to participate in Nepal’s hydropower sector. However, there is a cautious stance on electricity produced by Chinese companies, as India has declined to purchase power from Chinese firms or projects involving Chinese components.
To fully leverage this opportunity, the government must create a conducive environment for hydropower companies, ensuring swift project construction. Hydropower investors often encounter obstacles from local governments and residents, hindering progress. Immediate measures are needed to address these issues and meet the demands of private investors.
Given the significance of hydropower to Nepal’s assets, the government and relevant agencies must earnestly tackle bureaucratic hurdles affecting the sector. Simultaneously, India should seriously consider and address concerns raised by Nepal regarding the electricity trade between the two countries.
In a broader context, Thursday’s agreements go beyond energy cooperation. India has pledged Rs10 billion in financial aid for the reconstruction of earthquake-affected areas in Jajarkot and Rukum West. Additionally, collaborations in satellite launches, renewable energy, and the inauguration of cross-border transmission lines signify a multifaceted partnership between the two nations.
However, not everyone views these agreements positively. A group of rights activists and former bureaucrats criticizes the energy deal, citing concerns about its impact on Nepal’s water resources and demanding wider national discussion and parliamentary oversight for such crucial decisions. They argue that the agreements may compromise Nepal’s independent and sovereign agency in bilateral matters, expressing discontent with the perceived lack of transparency in reaching these accords.
