India and Nepal try to break the ice on joint hyrdopower

Sep 8, 2006 - Kunda Dixit - Nepali Times

MAROONED: A family in Holiya VDC in Banke sits out floods that swept the region on 25 August. Tens of thousands are still waiting for relief. (RAMESWOR BOHARA)

There is demand, and there is supply, yet Nepal and India can’t agree on sharing power and water for mutual benefit.

Joint river projects are a political hot potato in Nepal because of the perception that India took advantage of past schemes. After 1990, there were efforts to start multipurpose projects like Mahakali and Tanakpur, but those are also stalled.

Now, the private sectors in India and Nepal are trying to see if they can succeed where their governments failed. The Independent Power Producers’ Association of Nepal (IPPAN) and the Power Trading Corporation (PTC) of India are holding a ‘Power Summit’ in Kathmandu this week to fast-track joint hydropower projects.

“We need to treat hydropower as a commodity, not just for export but also for our own growing domestic use,” says IPPAN’s Sandip Shah, “This conference is a good start. We have to delink power from geopolitics and governments must leave the business of business to business.”

In order to stay away from politics, investors on both sides are showing pragmatism by talking just electricity and keeping multipurpose projects out of the equation for now.

“We want to discuss energy and leave it to market forces,” says the PTC’s chairman Tantra Thakur, “there are complementarities we could use for mutual benefit.”

Over 30 top Indian investors, bankers and technocrats are attending the two-day conference. Nepal’s proximity to load centres in northern India is seen as ideal. Nepal also generates surplus hydropower during the monsoon when demand in India is highest, and India’s thermal plants generate a surplus when Nepal has a winter shortage.

An immediate priority is to connect the two grids so more power can be traded. Nepal has asked India for 100MW to meet this year’s winter shortfall in exchange for which Nepal will provide spill energy to India next monsoon. But this won’t be possible until cross-border transmission lines are in place.

“We will consider positively Nepal’s request for supply of electricity on commercial terms during the coming winter,” Indian ambassador Shiv Shanker Mukherjee told the conference, “although India has its own power shortage.”

In the medium-term, the conference will look into political risk for investors in Nepal, which has been a stumbling block for the only other export project currently planned, the 750MW West Seti. Although one Indian investor felt “political risk in Nepal is not as serious as it is made out to be”, it is a concern for offshore investors.

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