Less than 48 hours before Prime Minister Narendra Modi arrives in Kathmandu to open a new chapter in ties between the two neighbours, a row has erupted in Nepal over a power trade agreement expected to be signed during his two-day visit starting Sunday.
Water resource experts have been questioning a provision in the draft of the power sector cooperation agreement. They claim it allows only the Indian government and firms the right to build Nepal’s hydroelectric projects.
With political parties and the media joining the debate, and the pitch getting shriller in the countdown to Modi’s visit, Nepal’s Finance Minister Ram Sharan Mahat told The Himalayan Times: “The draft of the PTA we have prepared focuses on trading in power between the two countries and cross-border grid connection to facilitate import as well as export of electricity… It does not include provisions of Indian investment in hydroelectricity generation and harnessing the country’s hydropower potential with Indian support.”
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The Indian embassy has already issued a statement clarifying that “in no way does the draft constrain Nepal’s sovereign right to develop its hydropower potential”.
“The proposal forwarded by India is a draft for discussion and would require bilateral negotiations prior to finalisation. Both sides are free to propose amendments or modifications to the draft,” the embassy said.
“The draft is in the nature of a framework agreement that outlines the broad principles and parameters for overall cooperation in the power sector including trading, transmission lines development and grid connectivity and construction of power projects.”
“Every power project to be developed will require a separate project implementation agreement and power purchase agreement, terms and conditions of which would need to be agreed,” the embassy stated.
Energy-starved Nepal wants to fast-track construction of new power plants and realise its hydel power potential which is estimated to be at least 40,000 MW. A decade-long Maoist insurgency until 2006 and the political uncertainty that followed stopped the country in its tracks, deepening its energy crisis.
Daily power cuts up to 12 hours are routine in Nepal which has been able to harness only 600 MW from its existing hydel power plants. It imports 150 MW from India but that’s not enough to meet demand.
A joint statement issued after External Affairs Minister Sushma Swaraj’s visit to Kathmandu last month said she and her counterpart underlined “the importance of harnessing vast hydropower potentials of Nepal for mutual benefits” and directed authorities to “finalise the text of a Power Trade Agreement at the earliest”.
“While noting the finalisation of the terms of reference of the Pancheswar Development Authority, they directed the authorities for early completion of the DPR of the Pancheshwar multipurpose project,” the joint statement said.
It also mentioned how the joint commission “expressed satisfaction over the implementation of 400 kV Dhalkebar-Muzaffarpur double circuit cross-border transmission interconnection and noted that the transmission interconnection would integrate the power grids on the two sides of the border”.
The joint commission decided to expedite construction of the 132 kV Kataiya-Kusaha and 132 kV Raxaul-Parwanipur transmission line projects so that the transmission lines can “help import additional power from India in the short term.”