India opened the door wider to power exporters by removing a discriminatory provision in the Guidelines on Cross Border Trade of Electricity under which Nepali-based hydropower projects which are owned by the Indian government or have a majority Indian share are only allowed to export power to India.
This condition essentially bars plants built with Nepali or third country funding from exporting electricity to India, and its removal has been hailed as a major boost for Nepal’s energy sector.
According to the Energy Ministry and the Indian Embassy, the Indian Power Ministry has prepared a new draft of the guidelines minus the provision allowing only Nepali-based companies wholly owned by the Indian government or the public sector or private companies with a 51 percent or more Indian stake to sell power to India.
Moreover, companies owned or controlled by the Nepal government will be able to export power to India after getting a one-time approval from Indian authorities, as per the guidelines.
According to the guidelines issued by the Indian Power Ministry in December 2016, other companies wishing to sell power to India have to obtain the approval of the designated authority on a case-by-case basis. The provision was discouraging to foreign investors and private Nepali power developers planning to build export-oriented hydropower projects with an eye on the Indian market.
A highly placed source at the Indian Embassy in Kathmandu said the Indian Power Ministry had already shared a draft of the amended guidelines with the Nepal government. Energy Ministry officials told the Post that they were yet to receive a copy of the draft although they had been unofficially informed about the changes to the guidelines.
“We haven’t received a copy of the draft of the amended guidelines, but we have heard that the Indian government is removing some of the offending provisions following our objection,” said Dinesh Kumar Ghimire, joint secretary at the Energy Ministry.
After the Indian Power Ministry introduced the guidelines favouring Indian entities over Nepali and third country companies generating power in Nepal, there was widespread criticism from government officials and private hydropower developers in the country.
“The previous guidelines were against the spirit of the Power Trade Agreement (PTA) signed between Nepal and India in 2014 which requires both countries to allow non-discriminatory access to cross-border electricity market,” said a ministry official requesting anonymity. “This is a welcome move by India after our consistent engagement for the last couple of years.” Nepal had repeatedly raised the issue with India and also during the prime minister’s two visits to India.
Access to the Indian power market is vital for Nepal because supply will surpass domestic demand massively if it is able to tap its entire hydro potential.
The Kathmandu Post