Bridging Borders with Hydropower: Nepal’s Role in India’s Energy Security


Hydropower resolves power problems for Nepal and India as both are working together to improve hydropower output and plants in their country. Nepal has a huge potential for hydropower, with over 42,000 MW and its hydropower output has increased from 1,050 MW in 2012 to 2,800 MW in 2023. Collaboration with India has been crucial to this progress, with Indian investments supporting key hydropower projects. This partnership has not only benefited Nepal’s energy sector but also contributed to economic development and reduced dependence on fossil fuels.

According to the past studies, Nepal has the potential to produce more than 42,000 MW of hydropower. Not so long ago the country was facing 18 hours of load shedding per day, but now things have taken a right turn for them.

Nepal has become not only self-sufficient in power production, but also it has become an energy exporter rather than importer. In 2012, the country was producing just 1,050 MW of hydropower and from then it has tremendously increased its output to 2,800 MW in 2023. However, the country has to cover a long path in hydropower production to meet its energy requirements, because right now only it is producing around 7% of its potential.

Nepal is supplying around 452.6 MW of power to India, and it is allowed to sell and additional of around 180 MW to it. In the current fiscal Nepal exported power worth INR 687.5 billion to India in 2022. In just the first two months of the current fiscal year 2023-24, the country exported power worth over INR 3.30 billion to India.

Indian investment in Nepal’s hydropower sector is increasing. India’s power companies, SJVN Limited and NHPC Limited, are undertaking several new hydropower projects in Nepal.

  • SJVN Limited is developing the 669 MW Lower Arun Hydropower Project and the 490 MW Arun-4 project.
  • NHPC Limited is investing in the 750 MW West Seti and the 450 MW Seti River-6 projects.
  • Additionally, NHPC Limited and Vidyut Utpadan Company Limited are likely to develop the 480 MW Phukot Karnali Project.
  • Furthermore, Nepal and India have agreed to move forward with the Sapta Koshi High Dam Multipurpose Project, which could generate 3,000 MW of hydropower.
  • Nepal and India are working together to implement the Mahakali Treaty, which involves the Pancheshwar Multipurpose Project. This project aims to generate 6,480 MW of hydropower.

The Treaty was signed in 1996 but faced obstacles from the Nepalese side. Now, these concerns have been mostly resolved, and the detailed project report (DPR) for the Pancheshwar Multipurpose Project will be finalized soon.

Nepal plans to generate 30,000 MW of electricity by 2035. The country’s domestic power requirement is expected to reach 15,000 MW by then. To achieve this, hydropower projects under construction are striving to produce 5,000 MW of power on time. Additionally, the Nepal Electricity Authority (NEA) is preparing to buy all the power generated by these projects. There are also plans to increase power production in existing hydropower plants.

Nepal is having difficulty building transmission lines within the country and with India to enable power trade. To overcome this problem, Nepal has received significant assistance from India to develop transmission corridors between the two countries.

Also See: What is Run-of-River Hydroelectric Plant?

India and Nepal have agreed to enhance power trade by signing a long-term agreement. India will purchase 10,000 MW of power from Nepal over the next 10 years. Additionally, India has allowed Nepal to export up to 50 MW of power to Bangladesh through its transmission line.

At this development, Dr. Shankar Prasad Sharma, Nepal’s ambassador to India remarked that, “This decision on the part of the government of India would pave the way for developing a new road map for power production in Nepal.” He also added that, “This would not only create an environment for larger investment in the power sector in Nepal, but this would also play a major role in accelerating the pace of economic development of the country.”

Hydropower resolves power problems for Nepal and India as the latter’s investment in Nepal’s hydropower sector is expected to quadruple in the future, thanks to the growing cooperation between the two countries. This investment is seen as a game changer for Nepal, as it will help reduce its reliance on fossil fuels, increase its foreign exchange reserves, and reduce the trade deficit with India. In addition, India is also benefiting from these investments, as it receives economic returns and access to green energy.

Source: Nepal’s hydropower: A game changer for Nepal and India

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