India and Nepal have increased their cooperation in the power sector, and Kathmandu recently awarded a reputable Indian company the much-delayed West Seti Hydropower Project and Seti River Hydropower Project in the western part of the Himalayan country, nearly four years after China withdrew from these projects.
This week in Kathmandu, a formal agreement on the projects was signed against the backdrop of a resolution by the prime ministers of the two nations to concentrate on increasing their relationship in the power sector, which includes Indian power majors’ participation in the projects in Nepal.
The two projects are expected to cost $2.4 billion in total. In the past, two Chinese corporations on two separate occasions withdrew from the projects after signing memorandums of understanding, leaving Nepal in a difficult situation, ET has learned from sources located in Kathmandu.
The China Three Gorges International Corporation, a subsidiary of the China Three Gorges Corporation, and Nepal Electricity Authority, a state-owned energy provider, entered into a joint venture agreement in 2017 to establish the 750MW West Seti Project. The following year, the Chinese corporation abandoned the endeavor.
China National Machinery and Equipment Import and Export Corporation (CMEC) signed a memorandum of understanding (MoU) for the project earlier in 2009, however it withdrew after two years. According to sources in Kathmandu, the withdrawal reasons in both cases were insufficiently compelling.
The West Seti project is designed to produce energy throughout the year by storing excess river flows from the rainy season in the reservoir and utilizing this water to produce energy during dry season peak demand times (December-May)
Following the signing of the Memorandum of Understanding on Thursday, Prime Minister Sher Bahadur Deuba stated, “During my recent visit to India, Prime Minister Narendra Modi and I agreed on a vision statement on cooperation in the power sector, underscoring the need to strengthen mutually beneficial bilateral cooperation in this sector. Additionally, we had a fruitful conversation about it during Prime Minister Modi’s [SIC] visit to Lumbini, and I invited any Indian companies who were interested in developing the West Seti Hydroelectric Project.
Deuba commended India for helping to expand Nepal’s electrical market. If Kathmandu can export electricity to India by using its hydropower potential, it might earn up to Rs 31,000 crore per year in 2030 and as much as Rs 1.069 lakh crore per year in 2045.
