India emerges reliable cross-border electricity provider to Nepal & South Asian partners

India and Nepal have signed an agreement to develop the 400KV cross-border power transmission line between Butwal (Nepal) to Gorakhpur (India). The agreement has paved the way for the construction of a second cross-border transmission line between the two countries which will prove to be the lifeline for Nepal in area of power trade. This is important to note that the signing of this agreement was a prerequisite for the implementation of the US Millennium Challenge Corporation (MCC) grant to Nepal, under which, if implemented, Nepal is to receive $500 million for electricity transmission and road infrastructure projects.

MCC is one of the largest US grants in recent history of Nepal for the development of infrastructure. The Nepal Compact is also first project in South Asia of MCC in itself. One of the broad areas under MCC is the Electricity transmission project which includes the construction of high-voltage power transmission line to facilitate greater electricity trade with India. In the next three years, more than 3,000MW of electricity will be added to Nepal’s national grid, more than doubling the generation capacity.

The new lines will allow this power to be distributed within Nepal, and also to export surplus power to India through the ButwalGorakhpur corridor, ET has learnt. Despite its vast hydropower potential, mismanagement and poor governance prevails which costs Nepal Rs. 20 billion of annual budget and importing nearly half of its power demand from India (source: The Great Game in Nepal: A Himalayan State’s Search,

Currently, the 400KV Dhalkebar-Muzaffarpur Cross-border transmission line is the crucial power line for power trade between the two countries. If some problem arises in this power line, Nepal will be able to trade power through the alternative transmission line after the completion of the Butwal-Gorakhpur Transmission Line.

The new agreement has been reached at a time when the Nepalese authority has been reporting wastage of electricity after all turbines of the 456MW Upper Tamakoshi Hydropower Project started producing electricity. The Butwal-Gorakhpur Transmission Line can act as a suitable channel to fulfil the seasonal demand and supply as Nepal relies heavily on run-of-the-river projects whose output peaks during the monsoon when India’s agricultural sector sees a surge in power demand, ET has learnt. Similarly, Nepal can also import energy through this line during the dry season when the plants run at less than 50 percent of their capacity.

As per a report by the National Renewable Energy Laboratory’s Strategic Energy Analysis Centre of the US, Butwal is a strategic location for cross-border energy trade between India and Nepal because of its proximity and ability to connect with India’s populous state of Uttar Pradesh and the Northern Regional Load Despatch Centre via Gorakhpur where power demand is high during the monsoon. India is centrally placed in the South Asian region and with cross border interconnections with neighbouring countries, playing a major role in effective utilization of regional resources.

Further, to facilitate import/ export of electricity between India and neighbouring countries, Ministry of Power, Government of India have issued the “Guidelines for Import/Export (Cross Border) of Electricity-2018”.

India have also developed expertise in high capacity high voltage transmission projects. Presently, India is connected with Nepal, Bhutan, Bangladesh and Myanmar. For transfer of bulk power, interconnection between India and Nepal through Dhalkebar (Nepal) – Muzaffarpur (India) 400kV D/C transmission line has been constructed. A total of about 700 MW of power is being supplied to Nepal through these interconnections.

India and Bhutan already are connected through various lines, mainly for import of about 2000 MW power from Tala HEP (1020MW), Chukha HEP (336MW), KurichuHEP(60MW) and Mangdechu HEP (720 MW) in Bhutan to India.Further, Punatsangchu-I (1200 MW) and Punatsangchu-II (1020 MW) HEPs in Bhutan, are expected to be commissioned by 2024-25.

The transmission system for transfer of this power from these projects to India is already in place. With the commissioning of these HEPs the power transfer between Bhutan and India would be enhanced to about 4200 MW.9 A high capacity interconnection between India and Bangladesh exists through Baharampur (India) – Bheramara (Bangladesh) 400kV D/C lines along with 2×500 MW HVDC back-to-back terminal at Bheramara. Another 400kV (operated at 132kV) interconnection exits between Surajmaninagar (Tripura) in India to Comilla in Bangladesh. These interconnections cumulatively facilitate transfer of power of the order of 1160MW to Bangladesh.

Further, to enable more intra-regional electricity trade, including competitively-priced power generated from Hydro-electric power projects in India, Nepal and Bhutan; development a 765kV Double Circuit cross-border electricity interconnection between Katihar (India), Parbotipur (Bangladesh) and Bornagar (India) was also agreed.

India is providing about 3 MW of power from Moreh in Manipur (India) to Tamu town in Myanmar through 11 kV transmission line. Strengthening of more low capacity links at various places along the border is being jointly worked out.

There has been over-politicisation of the issue of MCC compact in Nepal that could hamper prospects of future FDI in Nepal. There are allegations that the different opinions, debates, questions being raised against MCC clauses are being raised by those Nepalese politicians, media and scholars who are under Chinese pressure which is luring Nepal through BRI.