India, Nepal power talks end with gains for both

Kathmandu : The eighth Indo-Nepal energy talks, held after four years, have ended with gains for both sides, with Kathmandu now set to get more power from New Delhi and sell more units to its southern neighbour.

Stalled since 2003, the Indo-Nepal Power Exchange Committee resumed dialogue in Kathmandu Thursday, winding up late Friday. India agreed to sell an additional 40 MW to Nepal by mid-October, which will help reduce the power crisis in the Himalayan kingdom.

The two-day talks, headed by V. Ramakrishnan of India's Central Electricity Authority, and Arjun Karki, managing director of Nepal Electricity Authority, have agreed that India will upgrade the Duhabi-Kataiya cross-border transmission link so that Nepal can buy an additional 40 MW.

The Indian states bordering Nepal can also expect more power in future as the two countries have finally agreed to lift the curb on selling power units from a frontier hydropower project.

Nepal receives about 70 million units of power free from the 120 MW Tanakpur hydropower project in India. However, over half of it goes waste since it can't be fully utilised in Nepal's border towns nor be transported to the capital due to lack of transmission links.

It has now been decided that Nepal can sell the unutilised units to India.

Since Nepal's power generation, based on hydel projects, goes up in monsoon, it has also been agreed that the excess power – up to 40 MW – will be sold to India through the Gandak-Ramnagar transmission link.

Nepal, which has one of the highest electricity tariffs in the world, will now have some respite after the talks decided to slash rates.

Earlier, they had agreed to increase the power exchange tariff rate by 8.5 percent. However, the bilateral talks agreed to bring it down to 5 percent from January 2004 to June 2009.

From July 2008 to June 2009, the next hike will be only 5.5 percent instead of the projected 8.5 percent. This means a significant cut in Nepal's power dues, from nearly Rs.1 billion to Rs.850 million.

The talks also focussed on how Nepal can meet its payment arrears incurred with Bihar and Uttar Pradesh.

India has agreed to accept payment in instalments to settle dues run up till June, to be followed by monthly payments from July. To induce Nepal to make monthly payments, India is offering a two percent rebate.

The ninth meeting of the committee will be held probably in June 2008.