Nepal approves hydropower deals with India

Nepal approves hydropower deals with India
Modi flew into Kathmandu for talks on strengthening trade ties including harnessing Nepal's vast hydropower resources in the first visit by an Indian prime minister to the Himalayan nation in 17 years.

KATHMANDU - Kathmandu has approved two long-delayed hydropower agreements with India in a bid to kickstart economic growth and ease crippling electricity shortages in both countries, Nepal's information minister told AFP Friday.

A vast network of fast-flowing rivers through the Himalayas leaves huge untapped hydropower resources at Nepal's disposal, but disagreements over perceived threats to Nepalese sovereignty have stalled earlier agreements to develop joint ventures with India.

"The government has endorsed two power agreements... we have already communicated with India that we are ready to sign the deals," Nepal's Information Minister, Minendra Rijal, told AFP.

The approved deals include an agreement with Indian infrastructure giant GMR to build a 900-megawatt hydropower project on Nepal's Karnali river.

According to the state-run Nepal Investment Board, 12 per cent of the power generated by the $1.19 billion (S$1.51 billion) Karnali project, starting in 2021, will be given to Kathmandu free of cost, with the remainder exported to India.

The deal, which is expected to be signed later on Friday, will also provide Nepal with a 27-per cent share of the equity, with GMR agreeing to transfer complete ownership of the project to Kathmandu in 25 years.

Nepal has also approved a power trade agreement with India, Rijal said, but this will be signed at a later date.

"This will send out a great signal about Nepal's investment environment and positively impact the country's development," he said.

Nepal's total installed power generation capacity currently lags at just 750 megawatts - less than two per cent of its potential.

That is insufficient even to meet Nepal's own energy needs, forcing the country to endure power cuts of up to 12 hours a day and purchase fuel from India, itself an importer of petroleum products.

India's new Prime Minister Narendra Modi has sought to deepen energy ties between the two neighbours, securing a commitment to fast-track the Karnali project during his visit to Kathmandu last month.

Although New Delhi has traditionally exerted huge influence in Nepal, Beijing has recently intensified its engagement with the Himalayan nation, pumping billions of dollars into infrastructure projects ranging from roads to hydropower plants.

Nepal has endured prolonged political limbo over plans to draft a new constitution since 2006 when former rebel Maoists laid down arms and signed a peace deal, paving the way for constituent assembly polls two years later.

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