Nepal-India Sign Landmark Power Trade Agreement: 10,000 MW Electricity Export to India in 10 Years

January 5, 2024 | Investopaper

Nepal and India entered into a significant long-term Power Trade Agreement (PTA) during a Joint Commission  meeting, ensuring a market for Nepal’s hydroelectricity. Under this agreement, India is set to purchase 10,000 MW of electricity from Nepal over the next 10 years. The agreement was formalized by Gopal Sigdel, Secretary at the Ministry of Energy, Water Resources and Irrigation for Nepal, and Pankaj Agrawal, India’s Energy Secretary.

This landmark deal, signed during the visit of India’s Foreign Minister Subrahmanyam Jaishankar, is considered a major breakthrough for promoting Nepal’s electricity market. The agreement is expected to attract foreign direct investment in the sector and create a favorable environment for investors. The bilateral understanding on electricity export was initially reached during Prime Minister Pushpa Kamal Dahal’s visit to India in 2023, where Indian Prime Minister Narendra Modi expressed a commitment to long-term electricity purchase from Nepal.

The agreement not only solidifies India’s commitment to purchasing a substantial amount of electricity from Nepal but is also anticipated to benefit both nations. This assurance is expected to attract more investment from both domestic and foreign investors. Nepal is currently producing over 2,800 MW of electricity, with additional capacity under construction.

Following the agreement, various government and private entities in India will have the opportunity to engage in power trade with Nepal through short-term, medium-term, and long-term contracts. Additionally, Nepal’s private sector can participate in electricity import and export after completing necessary procedures.