Nepal and India Sign 5-Year Pact for 200 MW Power Supply During Rainy Season

via Urja Khabar

India and Nepal have reached an agreement for the purchase of 200 megawatts (MW) of electricity from Nepal during the rainy season. The agreement, which spans five years, marks a significant milestone in the long-term electricity trade between the two countries, according to officials from the Nepal Electricity Authority (NEA).

This agreement differs from the current practice of exporting 200 MW through the competitive electricity market, which consists of a total export capacity of 452 MW. The NEA confirmed that the new agreement ensures a more consistent and regular flow of electricity to India.

Under the terms of the agreement, Nepal will provide electricity up to the border at the Dhalkebar substation. From there, all expenses will be borne by the Indian side, who will purchase the electricity.

Since Kartik, 2078, Nepal has been selling electricity at competitive rates on India's central electricity system through the Indian Energy Exchange Limited (IEX). This electricity surplus, which remains unutilized in Nepal, is made available in the Indian energy market for trading, with the price determined by supply and demand dynamics.

The IEX operates in 15-minute blocks, totaling 96 blocks within 24 hours. Electricity is traded at competitive rates set by the market, resulting in different prices for each block. The new agreement aims to ensure a continuous export of electricity in this manner.

In the latest agreement between the NEA and India's NTPC Electricity Business Corporation, India will purchase an additional 200 MW of electricity for a period of six months during each rainy season for the next five years. The NEA will supply this electricity to India through a meter installed at the Muzaffarpur substation.

The official nodal agency appointed by the Government of India for purchasing and selling electricity in Nepal, Bangladesh, and Bhutan is NVVN. It continues to operate as an agent in the electricity exchange market of Nepal.

Under the five-year contract, NVVN will buy electricity from Nepal and sell it in the Indian market. India will bear all the associated wheeling charges, trading charges, and service charges for the exported 200 MW of electricity.

A power purchase agreement has been signed between the NEA and NVVN for a period of five years, at a rate of INR 5.25 or NRS 8.40 per unit. NEA officials state that this price is better than the average price of electricity sold through competition in the Indian exchange market. The agreement will be a net income for the NEA, as no additional fees will be incurred. The NEA will export electricity to India from mid-Jestha to Kartik.

As per the agreement, the NEA has proposed to sell electricity from various projects, including 83.42 MW from Solukhola (Dudhkhola), 42.68 MW from Super Madi, 34.92 MW from Upper Balephi 'A', 26.19 MW from Dordi Khola, and 12.79 MW from Upper Chaku 'A'. These projects are awaiting approval from India's central electricity authority, in coordination with the agreement between NVVN and NEA, before commencing the export process.

During a visit to India by Prime Minister Pushpa Kamal Dahal 'Prachanda' on Jestha 18, a preliminary agreement for long-term electricity trade was signed between the two countries. Indian Prime Minister Narendra Modi stated during a joint press conference that India aims to purchase 10,000 MW of electricity from Nepal within ten years.

Nepali energy officials consider this agreement as an umbrella agreement for future electricity trade. Kulman Ghising, Executive Director of the NEA, expressed optimism that the agreement will pave the way for long-term Power Purchase Agreements (PPAs) spanning 5, 10, 15, and 20 years.

The signing of the initial memorandum of understanding for long-term power trade is pending invitation by India, following approval by the Council of Ministers. The Government of Nepal has authorized Energy Secretary Dinesh Kumar Ghimire to sign the agreement.

NEA officials anticipate that after the initial agreement is signed, NVVN and NEA will proceed with the purchase and sale of 200 MW of electricity. They remain hopeful that India will subsequently call for a long-term electricity trade agreement, initiating the mid-term electricity trade for the first phase of five years.

(Disclaimer: The article is a translation based on an original article. The consistency in data and information has been maintained for accuracy.)