As winter begins, the flow of water in rivers and streams decreases, leading to a reduction in hydropower production. Therefore, electricity is imported from India to meet domestic demand. Nepal Electricity Authority has stated that usually, from mid or late December, it becomes necessary to import electricity to cover the shortfall.

Every year, the electricity shortfall is met by importing from India. For this, separate agreements have been made between India and Nepal. Among these, the agreement for importing electricity from India’s competitive market must be renewed annually.

The Authority began the process of renewing the agreement to import the required electricity from India during this dry season three to four months ago. For this, the Authority has already sent a letter to the Indian side. However, even after all this time, there has been no response from India, according to the Authority’s Managing Director, Kulman Ghising.

We started the renewal process for permission to import electricity from India’s competitive market three to four months ago,” he said. “But the renewal hasn’t come through from their side yet. There isn’t an immediate need to import electricity; there’s still time left. India will likely renew it sooner or later.

Ghising also mentioned that, although electricity is exported during the monsoon, there will still be a need to import electricity in winter to meet domestic demand for a few more years. For this year, electricity will need to be imported from mid-December, according to Authority spokesperson Chandan Kumar Ghosh. “We’ll likely need to import electricity from mid or late December, depending on internal production and consumption,” he said.

During his visit to India, Minister of Energy, Water Resources, and Irrigation, Deepak Khadka, mentioned that discussions took place regarding the renewal of the agreement to import electricity in winter, and that India has shown a positive stance on the matter. “We will face a shortfall of about 900 megawatts of electricity in winter, which will need to be imported from India. However, the renewal of the import permit has not yet been completed,” he said. “During the visit, we discussed this with India’s minister, and they assured us that the renewal would be done soon.

Energy Minister Khadka stated that discussions in India addressed the issue of electricity supply, with India indicating it cannot provide power around the clock. Instead, India has proposed supplying electricity for 20 to 21 hours a day, based on demand. “They said they can’t supply electricity 24 hours a day like before but will provide it, reducing a few hours, depending on the load,” he said. The Authority, however, had requested permission to import electricity 24 hours a day as needed.

Nepal has been purchasing electricity by competing in the Day-Ahead and Real-Time markets of India’s Indian Energy Exchange Limited (IEX). According to this arrangement, bidding with price and quantity details is conducted a day in advance. Nepal received permission to participate in this market in April 2021, with a five-year license that must be renewed annually. Although India has typically renewed the license for a full year, the last time, India renewed it for only three months, just three days before the expiration date (March 28, 2024).

The Authority had requested permission to import 650 megawatts of electricity through the Dhalkebar-Muzaffarpur cross-border transmission line and 54 megawatts through the Tanakpur transmission line. However, India granted permission to import only 500 megawatts via the Dhalkebar-Muzaffarpur line and 54 megawatts through the Tanakpur line. Previously, electricity could be imported at any time, but in the latest renewal, India restricted imports to solar hours (from 6 a.m. to 6 p.m.).

Apart from India’s competitive market, Nepal can also import electricity through the Tanakpur transmission line under the Mahakali Treaty and via the Nepal-India Power Exchange Committee (PEC). Under the Mahakali Treaty, Nepal receives 70 million units of electricity annually from the Tanakpur transmission line free of charge. The PEC meeting held on March 11, 2024, set the per-unit rate for electricity import and export based on transmission line capacity. The Authority has stated that this rate is lower than the price in the Day-Ahead and Real-Time markets of the Indian Energy Exchange Limited (IEX).

The Authority has stated that the per-unit price for electricity exchange through the 132 kV transmission line has been set at 7.98 INR (12 rupees 77 paisa). When necessary, the Authority has been importing electricity from Bihar, Uttar Pradesh, and Uttarakhand in India. The 132 kV transmission lines connected with Bihar include the Kataiya (Bihar)-Kushwa (Nepal) and Raxaul-Parwanipur lines. With Uttar Pradesh, the Manhiya (Nepal)-Samphattiya (New Nautenwa, India) line is connected.

The meeting also set the per-unit price for electricity exchange through the 33 kV transmission line at 8.65 INR (13 rupees 84 paisa). The new rate has been fixed so that Nepal can import electricity whenever needed, and this rate will also apply when electricity is exported to India, according to the Authority.

In addition to the competitive market in India, the Tanakpur transmission line under the Mahakali Treaty, and the trade under the Nepal-India Power Exchange Committee (PEC), a bilateral agreement was also made on 17th of September 2023 to import 230 megawatts of electricity during the dry season.

Every year, an agreement was made between Nepal Electricity Authority and India’s NTPC Electric Trade Corporation (NVBN) to import electricity from February to May. According to this agreement, 200 megawatts will be imported at a rate of 7.5 INR per unit from the Dhalkebar-Muzaffarpur transmission line, and 30 megawatts will be available 24 hours a day through the RTC (Round the Clock system) from the Tanakpur transmission line.

The flood that occurred in the past September has caused significant damage to the Upper Tamakoshi Project, which has a capacity of 456 megawatts. During high demand, electricity could have been produced in the mornings and evenings by storing water throughout the day. However, following the flood damage, electricity production has come to a halt, according to the Authority. As a result, the Authority may face pressure in balancing electricity demand and supply during the winter.

Hydropower production decreases by up to one-third during the winter. Currently, the total installed capacity is 3,300 megawatts. At present, 300 megawatts of electricity is being exported daily.

Source: Kantipur