At a time when Nepal Electricity Authority (NEA) has been worrying about what to do with the surplus electricity coming to its greed from next year, the recent cabinet decision authorizes it to trade electricity with India’s trade agency.

Although NEA has been exchanging the electricity with India for long at the state level through an electricity exchange agreement, the recent cabinet decision authorizes NEA to trade electricity with Bangladesh and India.

As Nepal’s generation capacity has increased recently and exported a small volume of surplus electricity at the state level under the electricity exchange agreement is inadequate, the current cabinet decision will be game-changer.

Given the current pace of hydropower project construction with 456 MW Upper Tamakosi and some private sector projects at the completion state, Nepal will have over 500 MW of electricity need to export wet sessions from next year.

At a time when NEA cannot make any deal, the approval given by the cabinet for inter-country electricity trade is highly significant.

“This is a major achievement for the electricity trade in Nepal. NEA has been looking for this kind of arrangement for a long time. Now we will be able to trade electricity in India and Bangladesh in real-time. The decision will make it easier for NEA to sell electricity to India or Bangladesh immediately when there is surplus electricity at night or in the afternoon,” said Kulman Ghising, Managing Director of NEA.

Currently, Nepal is importing electricity from India depending upon the demand. Nepal imports up to 400 MW at real-time. However, Nepal has been exporting its wet surplus up to 100 MW to the state level through various transmission connections under the electricity exchange agreement.

“The approval of the cabinet of 20 July permitted NEA to sell electricity to India and Bangladesh when the domestic production was high and to import electricity from when the production was low. NEA will now be able to buy and sell electricity at competitive prices,” said Minister of Energy, Water Resources and Irrigation Barshaman Pun. Minister Pun said that NEA can trade electricity in real-time now.

After the cabinet decision, NEA can conduct inter-country trade and keep records of electricity trade and price. Under the decision, NEA can exchange and sign an electricity trade deal as it requires.

“We have been preparing for a short term sale of electricity in India’s energy exchange market for a long time. In the energy exchange market of India, electricity can be bought and sold in real-time,” said MD Ghising.

NEA has designated Indian NTPC Vidyut Vyapar Nigam Ltd as its nodal agency to represent it in the market. Energy Secretary Dinesh Ghimire, who recently held a webinar with Indian Energy secretary for the opening market, said that the cabinet decision came when Nepal’s power generation is increasing.