India and Nepal Bet Big on Energy Links

India and Nepal took a major step forward in energy cooperation by signing two critical power agreements. These deals, signed between India’s POWERGRID Corporation and the Nepal Electricity Authority (NEA), aim to build two new high-voltage transmission lines and create joint ventures in both countries for implementation. This move is expected to significantly enhance electricity trade, improve power-grid stability, and promote deeper bilateral ties through shared infrastructure development.

Agreements at a Glance

• Parties involved: POWERGRID (India) and NEA (Nepal)
• Signed in: New Delhi, in the presence of India’s Power Minister Manohar Lal and Nepal’s Energy Minister Kulman Ghising
• Purpose: To develop two 400 kV cross-border transmission lines and establish joint ventures

Locations of transmission systems,

• Inaruwa (Nepal) – New Purnea (India)
• Lamki/Dododhara (Nepal) – Bareilly (India)

Joint venture structure,

• Separate JV entities will be formed in each country
• Ownership split to ensure balanced bilateral participation

Key Objectives

• Boost electricity trade between India and Nepal
• Improve grid resilience and transmission reliability
• Support Nepal’s hydropower exports to India
• Lay the foundation for a South Asian energy market

Strategic Outcomes

• Increased interconnection capacity for regional load sharing
• Enhanced energy security for both countries
• Stronger bilateral economic integration
• Creation of infrastructure-based cooperation models via joint ventures

Powering Up Regional Connectivity

• Nepal has vast hydropower potential while India has a growing electricity demand.
• Efficient cross-border transmission allows mutual benefit and seasonal power balancing.
• This is a model of clean energy diplomacy in South Asia.

Boost to India’s Neighborhood First Policy

• Energy infrastructure cooperation reflects India’s commitment to deeper regional ties.
• Strengthens India’s image as a partner in development with its neighbours.
• Could lead to broader South Asian grid integration, involving Bhutan, Bangladesh and others.

Key Takeaways

• Two new 400 kV cross-border transmission lines will be built
• India’s POWERGRID and Nepal’s NEA are the implementing bodies
• Joint ventures will be formed in both countries
• The goal: enhanced electricity trade and grid resilience
• Aligns with India’s Neighbourhood First and clean energy goals