Following the decision taken during the visit of  Indian prime minister Narendra Modi to Nepal in August 2014, an Agreement on ‘Electric Power Trade, Cross –Border Transmission Interconnection and Grid Connectivity’ between Government of India and Government of Nepal was signed on 21 October 2014 in Kathmandu.

The agreement was jointly signed by Nepal Secretary at Ministry of Energy Rajendra Kumar Kshatri and P.K.Sinha, Secretary, Ministry of Power, Government of India. The draft of the Agreement had been initiated by the two Secretaries on September 4, 2014 and was later endorsed by the Cabinets of the two countries.

The agreement will facilitate and further strengthen cross-border electricity transmission, grid connectivity and power trade between Nepal and India. The Agreement provides a framework for power trade between the two countries, import by Nepal from India until it is power surplus and imports by Indian entities from Nepal after that, on mutually acceptable terms and conditions.

“It was discussed to hold the first meeting of Joint Working Group of the bilateral mechanism established between the two countries under this Agreement in November 2014.Nepal is currently importing about 200 MW of electricity from India. New cross-border transmission lines are under construction, which will more than double the transmission capacity, over the next two years,” said the press release issued by Indian Embassy.

Both sides welcomed the signing of the Power Development Agreement (PDA) for development of 900 MW Upper Karnali Hydropower Project between IBN and GMR in September 2014.  Negotiations on PDA for 900 MW Arun III between SJVN and IBN are under progress and the Agreement is expected to be signed around the visit of Prime Minister Narendra Modi to Nepal in November 2014.

“The request of the Government of Nepal for additional supply of additional, up to 70 MW, of electricity prior to the 18th SAARC Summit in Kathmandu in November 2014, is receiving full consideration of the Government of India. It is hoped that the Agreement will help encourage power cooperation between India and Nepal,” said the press release.