NHPC project order by SC likely to feature in Nepal-India energy talks

Kathmandu, July 13 (IANS) Nepal’s Supreme Court order directing the government to work on increasing Nepal’s share of free electricity from the 480 MW Phukot Karnali Hydropower Project being developed by India’s state-owned NHPC Limited, is likely to be one of the key issues during high-level bilateral energy talks between both countries this week.

The 13th meeting of the Joint Secretary-level Joint Working Group (JWG) and the Secretary-level Joint Steering Committee (JSC) — the highest bilateral mechanisms overseeing energy cooperation between the two countries — is scheduled to be held in the western city of Pokhara on Tuesday and Wednesday.

Sandeep Kumar Deo, Joint Secretary at Nepal’s Ministry of Energy, Water Resources and Irrigation, told IANS that the progress of hydropower projects in Nepal being developed or planned with Indian investment would be one of the key agenda items.

Asked whether the Supreme Court order concerning the NHPC-promoted project would figure in the discussions, Deo said all major energy-sector projects and issues would be reviewed comprehensively, but declined to elaborate.

On September 1, 2025, Nepal’s Supreme Court directed the government to amend the Memorandum of Understanding (MoU) for the Phukot Karnali project so that Nepal’s share of free electricity — currently fixed at 21.9 per cent — is increased in proportion to its investment in the project. The court instructed the government to revise the agreement accordingly and implement the changes.

Following the verdict, NHPC expressed concern over the ruling, warning that the project may no longer be financially viable if the directive is implemented. Its Nepali partner, Nepal Vidyut Utpadan Company Limited, also urged the Ministry of Energy to recommend that the Prime Minister’s Office (PMO) file a review petition before the Supreme Court.

The Nepal government now finds itself in a difficult position. While seeking a review of the verdict could provide legal clarity and help preserve the project’s financial viability, doing so could expose the government to criticism from opposition parties, which may portray such a move as compromising Nepal’s national interest.

The MoU, signed during the 2023 visit of then Nepali Prime Minister Pushpa Kamal Dahal ‘Prachanda’ to India, provides that Nepal will receive 21.9 per cent of the project’s monthly electricity generation free of cost from the date of commercial operation. It also contains a provision allowing both parties to renegotiate the arrangement if the project becomes commercially unviable.

Deo said the two sides would also discuss cross-border transmission lines, electricity trade, renewable energy and green hydrogen.

He said the meeting would review existing cross-border transmission infrastructure, projects under construction and proposed high-capacity interconnections that are crucial to Nepal’s long-term ambition of becoming a major electricity exporter.

Although around a dozen cross-border transmission links exist between Nepal and India, only the Dhalkebar-Muzaffarpur 400 kV transmission line currently has the capacity to facilitate large-scale electricity trade.

Construction is currently underway on the New Butwal-Gorakhpur 400 kV and Dhalkebar-Sitamarhi 400 kV cross-border transmission lines.

In October last year, the Nepal Electricity Authority (NEA) and the Power Grid Corporation of India Limited signed the Joint Venture Agreement and the Shareholders’ Agreement to establish joint venture companies for constructing two additional 400 kV cross-border transmission lines—Inaruwa-Purnea and Dododhara-Bareilly.

The agreements ensure that, in line with the earlier understanding between the two countries, both transmission lines will be completed by 2030. Their completion is expected to enable Nepal to export an additional 5,000 MW of electricity to India.

The transmission line projects are central to implementing the long-term power trade agreement signed by Nepal and India in January 2024, under which India agreed in principle to import up to 10,000 MW of electricity from Nepal over the next decade. Nepal currently exports around 1,000 MW to India during the monsoon season, making the expansion of cross-border transmission infrastructure essential to achieving that target.

During the 12th meeting of the Joint Steering Committee, the two countries also agreed to prepare Detailed Project Reports (DPRs) and construct a 400 kV transmission line between Nijgadh/Harnaiya (Nepal) and Motihari (India), as well as another 400 kV transmission line between Kohalpur (Nepal) and Lucknow (India). They also agreed to upgrade the existing Dhalkebar-Muzaffarpur 400 kV transmission line by replacing its conductors with High-Temperature Low-Sag (HTLS) conductors with a capacity equivalent to Quad Moose conductors.

The two sides are also expected to review the progress of bilateral electricity trade, which has expanded rapidly since India began allowing Nepal to sell surplus hydropower through its day-ahead electricity market in 2021.

He added that cooperation in renewable energy development and the promotion of green hydrogen would also feature prominently during the two-day meetings.

–IANS

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