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India, Nepal sign pact on energy trading

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India and Nepal to focus more on energy trading

In a major development, India’s Manikaran Power Limited and Nepal Power Exchange Ltd have agreed on energy trading. A memorandum of understanding to this effect has been signed. “The deal ends the monopoly of the state-owned power utility – Nepal Electricity Authority – in energy trade,” the Kathmandu Post said.

The newspaper further said that “the landmark deal” could pave the way for Nepal’s private sector to sell electricity in the Indian market.

The pact could boost private sector investment into Nepal’s power sector thereby increasing its exports of electricity to neighbouring countries including India and Bangladesh.

India has made substantial investments in Nepal energy sector.

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Last year, India agreed to purchase of Nepal’s electricity. This is an important milestone for Nepal as it the first time that the Himalayan country is exporting hydropower, the Diplomat said, adding that Kathmandu will export 39 MW of electricity to India under the Indian Energy Exchange (IEX).

“The sale of electricity to India marks the realization of a long-cherished Nepali dream of exporting hydroelectricity for national prosperity. This is a huge turnaround for the Nepali energy sector, which met more than half of its electricity needs through imports from India during peak demand in 2019,” the news organisation said.

In 2021, Nepal and India’s hydro power major Satluj Jal Vidyut Nigam (SJVN) also signed a massive $ 1.3 billion deal with the aim to develop a 679-megawatt hydropower project in the eastern part of the Himalayan nation.

This is the second project awarded to SJVN in Nepal, the first one being the 900 MW Arun 3 Hydro Electric Project in Sankhuwasabha District.