Nepal and India have agreed to ink the much awaited ‘energy banking’ deal, which will ensure uninterrupted exchange of power between the two countries.

The 13th meeting of the Power Exchange Committee (PEC) held in New Delhi, India on Wednesday has agreed to seal the Nepal-India energy banking deal. The draft of this agreement is expected to be approved by the energy secretary-level joint steering committee meeting scheduled for January.

Nepal had long been demanding the energy banking deal with India in a bid to ensure that the country is able to export its surplus electricity to India, especially during monsoon and import power from the southern neighbour when necessary. The energy banking mechanism allows Nepal to export power to India amid surplus generation and import the same amount of power when necessary.

Following the agreement at this level, Kulman Ghising, managing director of Nepal Electricity Authority (NEA) and the leader of Nepal’s delegation at the PEC meeting, said that energy banking agreement between Nepal and India will prove crucial to enhance bilateral energy trade.

The PEC meeting has also agreed on the draft guideline of the energy banking mechanism that incorporates methodology and structure of energy banking.

“The agreement has been forged on the guideline prepared for energy banking and will be implemented following approval from the secretary-level joint steering committee meeting,” said Ghising, adding that the decision to ink the energy banking deal with India is a ‘milestone achievement’ in the history of Nepal’s hydropower industry.

Meanwhile, NEA Spokesperson Prabal Adhikari, informed that Nepal also proposed for an ‘energy book’ for the first five to seven years with India and India was positive in this regard. “Nepal will book for energy in the first five to seven years as it will take almost four years to construct the transmission line. The model of the investment mechanism will be finalised by the joint steering committee meeting,” said Adhikari.

Currently, NEA has been purchasing electricity from India on a need basis from Bihar, Uttar Pradesh and Uttarakhand under the ‘purchase and pay’ mechanism.