After a long dilly-dallying, India finally renewed the electricity trade agreement with Nepal for the next three months, putting forth its conditions on electricity exports to Nepal.

Nepal and India entered into the medium-term agreement on cross-border electricity trade in 2022, which is aimed for simplifying the issues related to power trade. The five-year bilateral agreement which is supposed to get renewed every year is terminating in the next one week. Although the Nepali side sent a letter to the Indian authorities requesting for the renewal of the agreement a few months ago, India had been delaying the process, citing various pretexts.

According to Nepal Electricity Authority (NEA), India has finally approved the renewal of the electricity trade agreement between two countries for three months. “There has been an agreement to import 554 MW of electricity from the Indian market for three months effective from March 30,” said Chandan Kumar Ghosh, head of the NEA’s load dispatch center.

Ghosh said India has consented to sell 500 MW of electricity through the Dhalkebar-Muzaffarpur transmission line and an additional 54 MW via the Tanakpur-based transmission lines.

According to an NEA official, India, however, will be selling its electricity to Nepal only during the day time (from 6 am to 6 pm). As of now, Nepal is being permitted to purchase electricity at the Indian Energy Exchange in 86 slots. “We have also requested to provide 650 MW of electricity to manage the domestic demand; however, India has agreed to sell only 554 MW,” the official said.

The renewal of the agreement has given some respite to the power utility to meet the electricity demand for the next three months in which the domestic production will remain low due to the receded water level in rivers. Due to the conditions imposed by India, the NEA still faces a challenge to manage the domestic supply mainly during peak hour household demand in the evening.

With the onset of winter across the country, there was a decline in the production of electricity in hydropower projects. According to the NEA, although a total of 3,000 MW of electricity has been connected to the national grid, barely 1,200 MW of electricity is currently being produced.

Most of the hydropower projects across the country are run-of-the-river in nature. Due to this, the electricity production increases during the rainy season, while it drops with the onset of winter.