Madan Lamsal and Om Prakash Khanal

July 27: Nepal has an ambition to export 10,000 megawatts of electricity to India in the next 10 years. An agreement was also reached during Prime Minister Pushpa Kamal Dahal's visit to India. Similarly, by 2040, it is said that 9,000 megawatts of electricity will be sold to Bangladesh. Energy producers call it encouraging, but they see it as unlikely unless the country adopts a range of policy reforms and takes diplomatic initiatives.

According to the Economic Survey 2080, the current installed capacity of electricity is 2,666 MW. At present, electricity is being imported during the dry season to meet the domestic demand of around 1700 megawatts. Ganesh Karki, president of the Independent Power Producers Association of Nepal (IPPAN), says that if the target of 10,000 megawatts of electricity generation is to be achieved in 10 years, serious homework should be started from today.

IPPAN President Karki says that production is the primary condition for export.

"In order to export hydropower to India, first of all, production has to be increased. There is a need for many policy reforms to increase production and consumption in the country,” he said.

Electricity generators claim that the production of electricity will not be easy unless the procedural and policy problems seen in the construction of electricity development and distribution infrastructure are resolved.

Karki's experience is that acquiring land for electricity development is the most difficult of all. Laws related to forests are against the development of electricity. Such laws and procedures should be suspended for at least 10 years.

Kumar Pandey, an advisor to IPPAN, says that electricity export is not as easy as said. Pandey says that the main challenge is to produce electricity at a competitive price.

"Nepal cannot export electricity unless the country has the capacity to provide electricity at a cheaper rate than India," said Pandey.

According to Pandey, Nepal produces electricity with the technology and equipment imported from India. Therefore, the price cannot be competitive unless the government gives concessions,, argues Pandey.

Producers also say that billions of rupees need to be invested in transmission lines to export electricity to the market in India and Bangladesh.

IPPAN President Karki suggests that there should be a clear policy arrangement to finance the investment of banks and external investors in production and transmission infrastructure. He claimed that only if the laws and procedures that are obstacles to electricity production are suspended for at least 10 years, the investment of the financial sector in this sector will increase.

Experts claimed that export will be possible only if Nepal produces electricity at competitive prices and there is continuous production of electricity.

IPPAN's advisor Pandey argues that Nepal should put diplomatic efforts to India’s pre-condition to import electricity only if the investment is made by India.

“This depends on Nepal's diplomatic and bargaining ability. We should be able to get India to agree to take products involving investors from countries other than Nepal and India," he said.

Experts are of the opinion that India should also be positive in Nepal's electricity export to Bangladesh. Bangladesh has signed an agreement with Nepal to purchase 9,000 megawatts of electricity by 2040. A memorandum of understanding on cooperation in the energy sector between Nepal and Bangladesh has also been signed.

Bangladesh is heavily dependent on gas (51 percent) to meet its demand for energy, while the country’s hydropower is dependent on imports.

The basis for exporting electricity to Bangladesh from Nepal has been created after the two countries signed an agreement for cooperation in the energy sector  in  2018.

However, analyst Jagdish Prasad Agarwal is of the opinion that unless India's role is positive, electricity cannot be directly exported to Bangladesh through Indian land from Nepal.

It is doubtful that India will allow direct export of electricity to Bangladesh through its land in the current situation where India is trying to control electricity trade through various policy directives.

“There may also be a situation where India buys from Nepal and exports to Bangladesh," says Agarwal.

IPPAN President Karki also sees the potential of this option in exporting electricity to Bangladesh.

“India cannot stop electricity export to Bangladesh. There are also issues of international pressure. Instead, India can buy electricity from Nepal and sell it to Bangladesh,” says Karki.