NEPAL-INDIA ELECTRITY TRADE Export Boom

Nepal Exports Electricity worth Rs. 8 Billion to India in Four Months

Oct. 19, 2022, 1:22 p.m. Published in Magazine Issue: VOL. 16, No. 06, Oct.21,2022 (Kartika 04. 2079) Publisher and Editor: Keshab Prasad Poudel Online Register Number: DOI 584/074-75

Although India is yet to import all the surplus electricity Nepal had during the last four months, Nepal Electricity Authority has exported over one billion units of electricity worth of Rs.8 billion equivalent Nepalese Rupees.

According to a press release, NEA has exported over one billion units of electricity worth around Rs. 8 billion to India in the last four months. NEA has been exporting surplus electricity to India since last June under Indian Energy Exchange Limited (IEX). By October 11, Nepal exported 1.3 billion units of electricity to India.

According to NEA, it has generated Rs. 7.93 billion from selling electricity to India. Managing director of NEA Kul Man Ghising said that exporting over 1 billion units of electrify to India is another milestone. He said that Nepal has been exporting electricity on an average Rs.7.91 per unit. Nepal has been exporting 364 MW of electricity to India.

As Nepal is exporting electricity in Indian currency, it is helping to increase Nepal’s foreign currency reserve as NEA has already collected Indian currency worth Rs. 4.95 billion.

MD Ghising’s Wish

From the day one of joining NEA as MD, Ghising’s concern was how to create export market for surplus electricity. With the efforts of Ministry of Energy, Water Resources and Irrigation and NEA’s technical preparation, Indian government has agreed to open its electricity market for Nepal.

The political level meeting held between Prime Minister Sher Bahadur Deuba and Prime Minister of India has finalized the deal making it possible to export Nepal’s electricity to India.

Following opening of Indian market for Nepal’s electricity, Nepal has already exported electricity worth over Rs.7 billion in the last four months. For MD Ghising, this is a milestone in his career to open Indian market for export of electricity.

In a span of just over a year, MD Ghising has already made a major breakthrough in the electricity sector. The announcement of construction of 1061MW Upper Arun is a historically important decision. With this announcement, NEA moved to four-digit projects. Starting from two-digit Chilime and completion of three-digit Tamakoshi, Upper Arun placed itself as the main project.

According to Nepal Electricity Authority, in the second month of the current fiscal year 2022/23, electricity worth Rs. 2.42 billion has been exported to India.

Nepal Electricity Authority (NEA) exported 246.5 million units of surplus electricity in the Nepali month of Bhadra and earned Rs. 2.42 billion.

The Authority started selling the surplus electricity during the rainy season through competition in the day-ahead market of the Indian Energy Exchange Limited (IEX) from June 2, 2022.

In the beginning, 39 megawatts of electricity produced by two power plants was considered as a source and was sold to IEX on a daily basis. Since then, from June 10, 2022, 364 megawatts of electricity produced by six hydropower plants has been sold daily in the Indian market at a competitive rate.

The Authority has earned Rs. 7.19 billion by selling 787.8 million units of electricity in the Indian market in four months (Jestha, Asar, Shrawa and Bhadra).

Since the electricity trade with India is done in Indian rupees, during the period of four months, around IRs 4. 49 billion has entered into Nepal from the sale of electricity. In the month of Bhadra alone, IRs 1.51 billion has been earned from the sale of electricity.

MD Ghising said that the amount received from the increase in electricity export every month is contributing to the foreign exchange reserves of Nepal and reducing the trade deficit between the two countries.

He said, "In the current fiscal year, we have set a target of earning about Rs. 16 billion from the export of electricity. We estimate that electricity can be exported until the first week of Mangsir and when the export starts again after Jestha, the target will be met," he said.

"Now that the festivals are about to start, the domestic consumption of electricity will decrease a bit when the factories are closed, but since our production will be at full capacity, we have sent a proposal for approval for the export of about 200 megawatts of electricity. We are confident that the Indian side will give approval for the export of more electricity soon.”

In IEX, 24 hours are divided into 96 blocks of 15 minutes each and electricity is traded at a competitive rate set by the market.

Therefore, the price of each block is different. The average rate of electricity exported by the Authority in Bhadra is Rs. 9.80 per unit. The average rate for four months is Rs. 9.23 per unit.

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