The Ministry of Energy, Water Resources, and Irrigation's recent rebuttal statement (issued on March 12) regarding the Nepal India Power Exchange Committee (PEC) has sparked controversy in the Nepal-India energy trade.

As Minister of Foreign Affairs Dr. Arzu Rana Deuba is on a visit New Delhi to engage with high-level officials, including Minister of External Affairs Dr. S. Jaishanker, in an effort to improve Nepal-India relations, the rebuttal press release from the Ministry questioning the legitimacy of minute of (Power Exchange Committee (PEC) meeting co-chaired by NEA and Central Electricity Authority of India which agreed incensement of 1.5 percent power exchange rate for Indian fiscal year 2025/26, will likely to make a major setback.

Prabal Adhikari, who has attended numerous PSC meetings during his time in NEA's top tier, is currently serving as a senior expert (Special Class) under Minister Khadka. The language used in the Ministry's response criticizing the outcome of the bilateral meeting may not simply be an error or oversight. Some view it as a potential conspiracy to undermine the visit of FM Dr. Rana. "I fail to comprehend why such rebuttal statements are being released without prior consultation with the Foreign Ministry at this critical juncture. This marks the first instance where the energy ministry has sidelined the Foreign Ministry during a crucial period. Previously, there was a practice of consulting the Foreign Ministry before issuing any statements related to water and energy matters with India," stated a former high-ranking official from the Ministry of Foreign Affairs, speaking on the condition of anonymity.

The controversy raised by Nepal’s ministry is now a new source of tension in the bilateral relationship and erode the confidence established between the two countries.

The ministry's rebuttal press statement defending Minister Dipak Khadka and Secretary Suresh Acharya was released at the same time as Nepal Electricity Authority Managing Director Kul Man Ghising's clarification, coinciding with the visit of Foreign Minister Dr. Deuba and her upcoming bilateral meeting with senior officials.

During the 12th meeting of the Nepal-India Energy Secretary-level Joint Steering Committee (JSC) on February 11, co-chaired by Energy Secretary Suresh Acharya and his counterpart in New Delhi, it was observed that the Power Secretary-level Committee (PSC) meeting scheduled for February 12 would be attended by Kul Man Ghising representing the Nepal Electricity Authority.

When the JSC meeting concluded and noted that the PEC meeting was set for 12 February, Energy Minister Khadka was in New Delhi.

The official statement from the ministry now solely criticized MD Ghising and raising questions on the decision and minutes of PSC meeting. , ,

This rebuttal statement from the Ministry may create tension in the bilateral energy relationship, which has seen significant progress in recent years.

After decades of effort, Nepal and India have made significant progress in bilateral electricity trade in recent years. Since signing the agreement for PEC in 1992, Nepal has been conducting import and export electricity with Indian states, and Nepal has earned nearly half a billion rupees in the last three years exporting the electricity to India.

The actions taken by Energy Minister Khadka directing MD Ghising are likely to strain Nepal-India relations evolved in energy sector.

This setback will also affect Foreign Minister Dr. Deuba’s talks. Despite waiting for over two weeks, the Ministry issued a rebuttal clarification on 12 March that disregarded the understanding reached in New Delhi Between Nepal and India.

The ministry squarely blamed MD Ghising for agreeing to increase tariff for importing electricity from India during PEC meeting.

Earlier, MD Ghising was asked to explain why he took actions beyond his authority though Secretary Acharya personally led the Nepali side in the JSC meeting and signed the minute meeting for PEC.

The truth is that the Indo-Nepal Power Exchange Committee was established during the second Indo-Nepal Joint Commission meeting in December 1991.

This committee facilitated the creation of a mechanism for electricity tariff exchange between Nepal Electricity Authority and the Central Electricity Authority of India starting in 1992.

Minister Khadka and Secretary Acharya are entitled to express their disapproval or critique of MD Ghising personally and his work. However, they must also consider the matters of bilateral interest.

The minutes of the PSC and JST are not solely about MD Ghising, but rather concern Nepal as a whole. It is the responsibility of the Minister and Secretary to show respect for these matters, regardless of any personal disagreements they may have.

The press release from the Water Resources and Irrigation department questioning the minutes of the PSC meeting during Foreign Minister Dr. Deuba's visit to India has caused a fresh controversy in Nepal's relationship with India.