Nepal and India have signed an agreement to construct a 400 kV power connection.

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An agreement between Nepal Electricity Authority and the Power Grid Corporation of India has been struck to jointly fund the construction of the 400 kV Butwal-Gorakhpur cross-border transmission line in India.

135-kilometer-long power line passes across Nepali territory for around 15 kilometres, which Nepal will construct at its own expense. The agreement was inked on Wednesday in the Indian capital of New Delhi.

Kulman Ghising, managing director of Nepal Electricity Authority, said the agreement “has prepared the door for the building of a second cross-border transmission line between the two countries.”

According to him, construction of this transmission line is extremely vital for Nepal since several power projects are expected to be built in the next few years, and Nepal requires the ability to export electricity to India.

At moment, the 400 kV Dhalkebar-Muzaffarpur cross-border transmission line serves as the sole channel for the transfer of electricity between the two nations.

Despite fact that there is an issue with this power line, or even if it fails someplace, Ghising explained that after the Butwal-Gorakhpur transmission line is completed, “we will still be able to trade power through an alternative transmission route.”

According to authorities, the proposed Butwal-Gorakhpur transmission line will have a capacity of up to 3,500 megawatts, which is significantly greater than the 400 kV Dhalkebar-Muzaffarpur line, which has a capacity of 1,000 megawatts and is currently under construction.

Dhalkebar-Muzaffarpur cross-border transmission line, which connects Afghanistan and Pakistan, began operating in early 2017.

The new arrangement was signed at a time when the authority was reporting electricity wastage following the completion of the Upper Tamakoshi Hydropower Project, which generates 456 megawatts of electricity.

The Butwal-Gorakhpur transmission line can serve as a suitable channel for meeting the seasonal complementaries of demand and supply in Nepal, which is heavily reliant on run-of-the-river projects, whose output peaks during the monsoon season, when India’s agricultural sector experiences a spike in demand for electricity.

And during the dry season, when the plants in Nepal are operating at less than half their capacity, Nepal can import energy through this connection to supplement its own supply.

According to the agreement, the two parties would establish a business in India to carry out the development of the project.

“It will take approximately six to seven months to complete the necessary preparations in order to begin building.” “We plan to begin construction within the current fiscal year,” Ghising stated.

He stated that a full project report has already been drafted for his review. A completion date of four years has been set for the project.

Earlier this year, the two nations reached an agreement to fund a second high-capacity cross-border transmission line between Butwal in Nepal and Gorakhpur in India through a commercial business, with both governments committing equal equity to the project.

The two parties had agreed that a 20 percent equity investment and an 80 percent would be used to construct the transmission line.

He stated that the Nepal Electricity Authority and Power Grid Corporation of India will each retain an equal number of shares, but that the element of the transaction may be different. The project is projected to cost approximately IRs4.5 billion in total.

The proposed transmission line project, which is part of the Millennium Challenge Corporation Nepal Compact, will be connected to the proposed transmission line project, which is part of the Nepal Compact (MCC).

Nepal’s plan to construct the cross-border line under a government-to-government funding mechanism had been rejected by India earlier this year.. Later, they came to a broad agreement that the portion of the project that would travel through Indian land would be developed by a commercial organisation instead.

An agreement between Nepal and India on the construction of a cross-border transmission line has been declared a prerequisite for the implementation of Nepal’s Compact with the United States, under which the country will receive $500 million for electricity transmission and road infrastructure projects.

The Butwal-Gorakhpur transmission line project has been given high priority by the Energy Ministry because it will result in the effective distribution of imported power to high-energy-consuming towns such as Bhairahawa, Butwal, Pokhara, and Narayangarh, according to the ministry.

The lines can also be utilised to evacuate energy produced in the Kali Gandaki, Marsyangdi, and Trishuli corridors, which are areas with a large concentration of power generation facilities, for example.

Because of its proximity to and ability to connect with India’s Uttar Pradesh state and the Northern Regional Load Despatch Center via Gorakhpur, where power demand is high during the monsoon season, according to a report released by the National Renewable Energy Laboratory’s Strategic Energy Analysis Center in the United States, Butwal is a strategic location for cross-border energy trade between India and Nepal.

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