An initial agreement for long-term electricity trade has been signed between Nepal and India.
During Prime Minister Pushpa Kamal Dahal Prachanda's visit to India, an initial agreement for long-term power trade (long-term PPA) was signed at the energy secretary level of the two countries.
Nepal's Energy Secretary Dinesh Kumar Ghimire and his Indian counterpart Alok Kumar have signed the preliminary agreement.
Kulman Ghising, Managing Director of Nepal Electricity Authority, says that India's commitment is historic and important for Nepal's energy sector.
"Now the rumor that India will not buy electricity from Nepal has been proven false", Ghising, who is part of the Nepali delegation, told Online News, India is an important electricity market for us, for this India has made a solid and stable commitment.
An Power Trade Agreement (PTA) was signed between Nepal and India in 2014, and during the then Prime Minister Sher Bahadur Deuba's visit to India on 18-20 Chait 2078, the officials of the two countries signed the 'Joint Approach Letter on Cooperation in the Energy Sector'.
According to Ghising, electricity trade with India will be done according to the guidelines and procedures issued under the PTA. "This is the continuation of PTA", MD Ghising said, "The benefits of electricity trade with India will not only be reaped by the government sector of the two countries, but also by the private sector."
Ghising said that this will create an environment to increase investment in the development of the hydropower sector in Nepal and ensure that the electricity produced here is sold.
He says that it will create an environment for investors of hydropower to invest confidently and the entire economy will benefit from it. "This is an umbrella framework (umbrella structure) for electricity trade," Ghising said, "Agreeing on this framework is the establishment of a new milestone in the electricity trade between Nepal and India."
With the proposed agreement with India, it will be easy to make a long-term power purchase agreement with India and create a mechanism for buying and selling electricity in the government.
Nepal proposed to enter into an intergovernmental agreement on long-term electricity trade with India. Accordingly, the Managing Director of Nepal Electricity Authority Kulman Ghising, who is in the Prime Minister's delegation during the visit to India, informed that India has agreed to enter into an agreement for long-term electricity trade for 25 years. India will buy up to 10,000 megawatts of electricity from Nepal within 10 years.
In a joint press conference held after the meeting with Prime Minister Prachanda at Hyderabad House, Indian Prime Minister Narendra Modi has said that there is a 'Long Term Power Trade Agreement' between India and Nepal.
"Today, Prime Minister Prachanda and I have taken an important decision to make our agreement a super hit in the future," said Modi, "A long-term power trade agreement has been signed between India and Nepal, and we have set a goal of importing 10,000 megawatts of electricity from Nepal in 10 years."
Now, Nepal has received permission to export electricity from various projects worth 452 MW in the Indian Energy Exchange Market (IEX). Since the average price is lower when electricity is sold in the competitive market, the government is trying to sell electricity through a contract.
The installed capacity of Nepal's hydropower has reached 2,700 megawatts.
Nepal is under pressure to ensure the export of about 1,000 MW of electricity to the Indian market in the coming rainy season as the demand is 1750 MW during the peak season and electricity is produced according to the connected capacity during the rainy season.
Officials of the Ministry of Energy say that with the initial agreement for long-term electricity trade, Nepal's electricity market has been further secured.