Nepal-India Power Deal: How New Transmission Lines Boost Energy Trade

The Nepal Electricity Authority (NEA) and the Power Grid Corporation of India Limited (PGCIL) signed the agreements in New Delhi to construct 400 kV cross-border transmission lines connecting Inaruwa (Nepal)-Purnia (India) and Lamki (Dododhara, Nepal)-Bareilly (India), Nepal's Ministry of Energy, Water Resources and Irrigation said in a statement on Wednesday.

As both countries have been making efforts to strengthen energy cooperation in recent years, the lack of adequate high-capacity cross-border transmission infrastructure has remained a major bottleneck. To address this issue, Nepal and India have agreed to develop several new high-capacity transmission lines, and these two projects are part of that broader plan.

Subash Kumar Mishra, Deputy Executive Director of the NEA, and Sanjay Kumar Gupta, Chief Operating Officer (International Business) at PGCIL, signed the agreement.

"The signing of the joint investment agreement has paved the way for the establishment of joint venture companies to construct both transmission lines with the investment of NEA and PGCIL," Nepal's ministry stated.

According to the agreement, the joint venture company to be established in India will construct the Indian sections of both transmission lines, with Power Grid holding 51 per cent and NEA holding 49 per cent of the shares. Similarly, the joint venture company to be established in Nepal will build the Nepali sections, with NEA holding 51 per cent and Power Grid 49 per cent ownership.

These projects will be financed through 80 per cent debt and 20 per cent equity capital. The Inaruwa-Purnia transmission line will span about 26 km in Nepal and 109 km in India, while the Lamki-Bareilly transmission line will cover about 33 km in Nepal and 185 km in India.

The agreements were signed during Energy Minister Kulman Ghising's ongoing visit to India to attend the eighth General Assembly of the International Solar Alliance (ISA), an initiative launched by India to promote solar energy cooperation.

During the signing ceremony, Minister Ghising said that the agreements mark another significant milestone in bilateral and regional electricity trade. He noted that these projects would facilitate the export of surplus electricity generated in Nepal to India and beyond, expanding Nepal's access to international energy markets and attracting both domestic and foreign direct investment in Nepal's hydropower sector.

Indian Power Minister Manohar Lal Khattar, who was also present during the signing, said that upon completion, the two new cross-border transmission lines would further strengthen electricity exchange between Nepal and India, enhance regional energy security, and contribute to the economic growth of both countries by improving grid stability.

At present, the 400 kV Dhalkebar-Muzaffarpur transmission line is the only high-capacity cross-border line in operation, capable of transmitting around 1,000 MW of electricity. Electricity trade between the two countries primarily takes place through this line.

In addition, Nepal has about a dozen 132 kV, 33 kV, and 11 kV cross-border transmission lines connecting with the Indian states of Bihar, Uttar Pradesh, and Uttarakhand. According to the Energy Ministry, NEA is currently exporting around 1,000 MW of electricity daily to India and Bangladesh through 400 kV and 132 kV transmission structures.

Another project -- the 400 kV Butwal-Gorakhpur cross-border transmission line -- is currently under construction. The Dhalkebar-Sitamarhi cross-border transmission line is also being developed by SJVN Arun-3 Power Development Company, with investment from India's SJVN Limited.

With India already agreeing to purchase 10,000 MW of electricity from Nepal over the next 10 years, cross-border transmission infrastructure will be critical to achieving this target.

Earlier, the ministry reported that Nepal exported electricity worth NPR 15 billion (around INR 9.37 billion) by early October since the beginning of the fiscal year 2025-26 in mid-July, as electricity continues to emerge as one of the country's key export commodities.

The two countries have also agreed to construct a 220 kV Chameliya-Jauljibi transmission line, linking Nepal's far-western region with India's Uttarakhand state.

- IANS