After the two-day talks, Nepal and India today finalised the construction modality of 400 kVA New Butwal-Gorakhpur cross-border transmission line.
Nepal and India agreed to fund – a second high-capacity cross-border transmission line connecting Butwal to Gorakhpur in India – through a commercial entity with 50-50 equity, informed managing director of Nepal Electricity Authority (NEA) Kul Man Ghising, who also took part in the meeting.
“The 80 per cent of the project cost will be financed through loans, while the Nepali and Indian governments will chip in the remaining 10 per cent each,” he said, adding that both the countries will form a joint company within three months and have a project implementation agreement, within six months. “The agreement – followed by a two-day seventh Joint Steering Committee and Joint Working Group meeting on Nepal-India Cooperation in the Power Sector in the southern Indian city of Bengaluru – also concluded with agreements on implementation and financing modality of the 135-km-long, 400 kV transmission line and formalisation of an energy banking mechanism between Nepal and India.”
The decision came a month after the Nepali and Indian energy ministers expressed optimism over both sides coming to terms on the development modality of the proposed 400 kV New Butwal-Gorakhpur transmission line project.
The detailed project report (DPR) of the cross-border transmission lines has been updated and revised by India in consultation with power utility officials, which has led to a cost reduction of around $18 million on the Indian portion of the transmission line, Ghising said, adding that the cost reduction and decision to evacuate or relay power from the existing substation in Gorakhpur rather than building a new substation for power exchange has added to the commercial viability of the project.
Around 120-km out of the Butwal-Gorakhpur Transmission Line's 135-km length lies in Indian territory. The project is of high strategic importance to both Nepal and India as it will set up a reliable route for energy banking by synchronising Nepal's power grid with India's and allow the power utility to sell large quantum of surplus power, which Nepal is poised to generate in the coming years.
The proposed transmission line is also a major component of the $630 million ‘Nepal Compact’ – an agreement between the government of Nepal and Millennium Challenge Corporation (MCC) of the US to fund electricity and road projects of strategic importance in Nepal.
The delay in finalising the construction of the transmission line project has affected the implementation of the MCC assistance to Nepal. The Millennium Challenge Account Nepal (MCA-Nepal) has already decided the project implementation date from June 30, 2020.
The agreement also paves the way for Nepal, India and Bangladesh to sign an agreement on using the Indian grid to transfer electricity from Nepal to Bangladesh, four months after a secretary-level meeting between Nepali and Bangladeshi energy officials agreed to trade power through India's transmission network. The meeting has decided to hold a tripartite meeting within three months. “The meeting is expected to fix transmission modalities and commercial terms for use of the Indian grid, paving the way for direct power trade between Nepal and Bangladesh through India.
Earlier, officials from both the countries had reached a broader agreement that the portion of the transmission line passing through Indian territory will be built by a commercial entity after India rejected Nepal’s proposal to develop the line under a government to government (G2G) financial model. Following the refusal, Nepal proposed to build the line with an equal equity investment from Nepal Electricity Authority (NEA) and Power Grid Corporation of India (DGCI) and book the use of power lines for seven years to which the Indian energy officials have now agreed, Ghising added.
The agreement between Nepal and India on implementing the transmission line is a ley pre-requisite for the multi-million dollar MCC-Nepal compact – viewed by many in Nepal as a counter-initiative under the Indo-Pacific Strategy of the US against China's Belt and Road Initiative (BRI) – to become effective.
Though the compact, which will prevail over the domestic laws, has been tabled in Parliament, it is yet to be ratified, due to intra-party differences within the ruling party lawmakers and leaders over Nepal’s degree of involvement in the USA's Indo-pacific Strategy and China’s BRI.
The compact is expected to be ratified by the Parliament by the time Millenium Challenge Account-Nepal (MCC-N) – the implementing agency of the project – completes an environmental impact assessment (EIA) of the infrastructure.
Energy secretary Dinesh Kumar Ghimire led the Nepali team, while his counterpart Subhash Chandra Garg had headed the Indian team during the meeting today, where India has also agreed to formalise the terms related to energy banking mechanism, which will allow Nepal and India to exchange power on a need basis, after the multiple requests from Nepali authorities and the surplus power projections.
Currently, energy banking between Nepal and India is done through mutual agreements under the purview of the Nepal-India Power Exchange Committee,” according to the NEA. “Indian energy officials have now agreed to formalise energy banking through cross-border power trade regulations of India.”
“The Bengaluru meeting also decided to permit NEA to trade in Indian Energy Exchange, an automated power trading platform which Nepal is keen on joining,” the state power utility informed, adding that the meeting also approved the DPR of Lumki-Bareilly and Inaruwa-Purnea cross border transmission lines between Nepal and India proposed to be built by 2025.
Nepal and India agreed to fund – a second high-capacity cross-border transmission line connecting Butwal to Gorakhpur in India – through a commercial entity with 50-50 equity, informed managing director of Nepal Electricity Authority (NEA) Kul Man Ghising, who also took part in the meeting.
“The 80 per cent of the project cost will be financed through loans, while the Nepali and Indian governments will chip in the remaining 10 per cent each,” he said, adding that both the countries will form a joint company within three months and have a project implementation agreement, within six months. “The agreement – followed by a two-day seventh Joint Steering Committee and Joint Working Group meeting on Nepal-India Cooperation in the Power Sector in the southern Indian city of Bengaluru – also concluded with agreements on implementation and financing modality of the 135-km-long, 400 kV transmission line and formalisation of an energy banking mechanism between Nepal and India.”
The decision came a month after the Nepali and Indian energy ministers expressed optimism over both sides coming to terms on the development modality of the proposed 400 kV New Butwal-Gorakhpur transmission line project.
The detailed project report (DPR) of the cross-border transmission lines has been updated and revised by India in consultation with power utility officials, which has led to a cost reduction of around $18 million on the Indian portion of the transmission line, Ghising said, adding that the cost reduction and decision to evacuate or relay power from the existing substation in Gorakhpur rather than building a new substation for power exchange has added to the commercial viability of the project.
Around 120-km out of the Butwal-Gorakhpur Transmission Line's 135-km length lies in Indian territory. The project is of high strategic importance to both Nepal and India as it will set up a reliable route for energy banking by synchronising Nepal's power grid with India's and allow the power utility to sell large quantum of surplus power, which Nepal is poised to generate in the coming years.
The proposed transmission line is also a major component of the $630 million ‘Nepal Compact’ – an agreement between the government of Nepal and Millennium Challenge Corporation (MCC) of the US to fund electricity and road projects of strategic importance in Nepal.
The delay in finalising the construction of the transmission line project has affected the implementation of the MCC assistance to Nepal. The Millennium Challenge Account Nepal (MCA-Nepal) has already decided the project implementation date from June 30, 2020.
The agreement also paves the way for Nepal, India and Bangladesh to sign an agreement on using the Indian grid to transfer electricity from Nepal to Bangladesh, four months after a secretary-level meeting between Nepali and Bangladeshi energy officials agreed to trade power through India's transmission network. The meeting has decided to hold a tripartite meeting within three months. “The meeting is expected to fix transmission modalities and commercial terms for use of the Indian grid, paving the way for direct power trade between Nepal and Bangladesh through India.
Earlier, officials from both the countries had reached a broader agreement that the portion of the transmission line passing through Indian territory will be built by a commercial entity after India rejected Nepal’s proposal to develop the line under a government to government (G2G) financial model. Following the refusal, Nepal proposed to build the line with an equal equity investment from Nepal Electricity Authority (NEA) and Power Grid Corporation of India (DGCI) and book the use of power lines for seven years to which the Indian energy officials have now agreed, Ghising added.
The agreement between Nepal and India on implementing the transmission line is a ley pre-requisite for the multi-million dollar MCC-Nepal compact – viewed by many in Nepal as a counter-initiative under the Indo-Pacific Strategy of the US against China's Belt and Road Initiative (BRI) – to become effective.
Though the compact, which will prevail over the domestic laws, has been tabled in Parliament, it is yet to be ratified, due to intra-party differences within the ruling party lawmakers and leaders over Nepal’s degree of involvement in the USA's Indo-pacific Strategy and China’s BRI.
The compact is expected to be ratified by the Parliament by the time Millenium Challenge Account-Nepal (MCC-N) – the implementing agency of the project – completes an environmental impact assessment (EIA) of the infrastructure.
Energy secretary Dinesh Kumar Ghimire led the Nepali team, while his counterpart Subhash Chandra Garg had headed the Indian team during the meeting today, where India has also agreed to formalise the terms related to energy banking mechanism, which will allow Nepal and India to exchange power on a need basis, after the multiple requests from Nepali authorities and the surplus power projections.
Currently, energy banking between Nepal and India is done through mutual agreements under the purview of the Nepal-India Power Exchange Committee,” according to the NEA. “Indian energy officials have now agreed to formalise energy banking through cross-border power trade regulations of India.”
“The Bengaluru meeting also decided to permit NEA to trade in Indian Energy Exchange, an automated power trading platform which Nepal is keen on joining,” the state power utility informed, adding that the meeting also approved the DPR of Lumki-Bareilly and Inaruwa-Purnea cross border transmission lines between Nepal and India proposed to be built by 2025.
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