On 23 May 2023, Nepali and Indian authorities signed a 5-year (medium-term) agreement that will allow Nepal to sell an additional 200 MW of hydroelectricity to India. This is in addition to the 452.6 MW that Nepal already has permission to sell to India. More electricity export to India will mean more export revenues to Nepal. The new agreement applies to wet season only (from June up until November). In June 2023, during PM Dahal's visit to India, Nepali and Indian PMs agreed to a long-term energy deal, which targets 10,000 MW of electricity import by India in 10 years.
Excerpts from The Kathmandu Post:
The state-owned power utility and NTPC Vidyut Vyapar Nigam Limited (NVVN) of India signed an agreement on May 23, paving the way for the Indian company to purchase 200MW of electricity from Nepal for five years. The agreement was reached between the two sides just ahead of Prime Minister Pushpa Kamal Dahal’s state visit to the southern neighbour from May 31 to June 3.
The five-year agreement which the authority describes as a ‘medium-term’ power sale deal, means that the power utility will be securing the market for its 200MW of power. This deal is outside the existing quota of 452.6MW.After the Indian government approves a list of hydropower projects that Nepal has forwarded for exporting electricity under this mechanism, the selling will begin. Based on an agreement reached with NTPC Vidyut Vyapar Nigam Limited (NVVN), the prices the NEA will be receiving will be modest. The NEA will receive a net tariff of INR 5.25 (Rs8.40) per unit after trade margin, transmission losses and transmission charges.
Nepal has been selling its excess power in India’s day-ahead market since November 2021. The prices in the market fluctuates on a daily basis so the NEA’s sales income changes accordingly. The southern neighbour has so far allowed Nepal to sell 452.6MW of power in the Indian market.
