Dr Shankar Sharma*
Efforts are underway to attract additional Indian investment in Nepal’s hydropower sector, including private sector investments. Currently, companies like Sutlej and NHPC are involved in production, and preparations are being made to bring in other private sector investors as well.
“Nepal received permission from India to export 28 MW of electricity in 2022. In the following years, further progress was made. A vision document was developed for a 25-year period, covering power production, transmission lines, and trade. A long-term approach was emphasized to ensure sustainable electricity exports and encourage investors. Over the next 2-3 years, we will be able to make agreements with Indian States, set electricity rates, and create a foundation to export up to 10,000 MW, which is a significant achievement.”
In addition to investment in hydropower, efforts are also being accelerated to upgrade existing transmission lines and construct new ones, which is another major success for Nepal. According to Ambassador Sharma, Nepal has been advocating for electricity exports to Bangladesh, and this demand is gradually being addressed. While geographical and transmission constraints currently limit exports beyond 40 MW, work is ongoing to expand capacity. Bangladesh is also interested in investing in Nepal’s energy sector. To facilitate electricity exports to Bangladesh, India, and potentially Sri Lanka and Myanmar in the future, establishing necessary transmission lines is crucial.
Nepal’s hydropower development roadmap
Nepal has already implemented the “Electricity Development Roadmap 2081” with a target of achieving an installed capacity of 28,500 MW by 2035. A long-term power trade agreement between Nepal and India aims to export 10,000 MW over the next decade. Additionally, the roadmap sets a goal to export 10,000 MW to India and 5,000 MW to Bangladesh and other countries by 2035.
The roadmap envisions producing an additional 26,000 MW over the next 11 years. Nepal’s current installed capacity is 3,403 MW, while domestic consumption peaks at 2,200 MW. During monsoons, up to 1,000 MW is exported to India. To meet the roadmap targets, Nepal must increase its exports to India by 9,000 MW in the next decade.
The Department of Electricity Development has issued licenses for projects totaling 10,154 MW, with 3,400 MW currently in operation. Around 7,000 MW worth of projects are under construction. The Nepal Electricity Authority is also in the process of purchasing 960 MW from solar power projects. Additionally, applications for licenses to build projects totaling 11,128 MW have been submitted, while another 8,090 MW worth of projects are in the survey phase. This indicates a strong potential for large-scale power generation in the coming years.
India’s investment in connectivity
India has been increasing its investment in Nepal’s infrastructure development. The Janakpur-Jayanagar railway has already begun operations, and work is ongoing to extend it to Bardibas. Other railway projects are also progressing. In western Nepal, India is supporting the construction of roads and bridges in areas with infrastructure gaps. Major projects like the long-delayed Pancheshwar hydropower project are now being prioritized, with high-level discussions underway.
Several Memorandums of Understanding (MoUs) have been signed between Nepal and India in sectors such as fertilizer, agriculture, drinking water, and urban development. Additional MoUs related to livestock and other sectors are in the pipeline and are expected to be signed soon.
“Nepal’s economic and trade relations with India are deeply interconnected. Meetings between the two governments are addressing existing challenges. The Nepalese embassy has been proactive in facilitating discussions, especially when Nepalese officials are unavailable,” said Ambassador Sharma.
According to him, several smaller nations like Moldova, Georgia, and Ukraine have expressed interest in economic cooperation with Nepal, particularly in sectors such as reconstruction, energy, and tourism. Future collaborations will be determined based on the specific strengths and expertise of each country.
Cross-border payment system resolves major issues
Nepal and India have signed a cross-border payment agreement, resolving a significant financial issue. Previously, Nepalese citizens could not legally carry more than INR 25,000, leading to risks of theft or loss. Many Indian tourists visit Nepal, and the restrictions on carrying large sums of money had been a longstanding concern.
“INR 25,000 is not a large sum, so we needed a better solution. Following discussions, we introduced a digital cross-border payment system. This has effectively addressed the issue,” stated Ambassador Sharma.
Nepal has now launched the Unified Payments Interface (UPI) system for cross-border payments. Recent data shows that transactions worth NRs 6 million (approximately INR 3.75 million) take place daily through QR code payments from India to Nepal. However, Nepalese authorities have yet to allow outbound transactions to India. Work is ongoing to facilitate cross-border payments for Nepalese citizens as well.
The new system has greatly benefited tourists, students, and businesspeople. However, many Nepalese are still unaware of it, and the Nepalese embassy is working to raise awareness. Previously, Nepalese visitors to India had to carry cash, but with improved banking services, they can now send up to INR 200,000 per transaction through bank accounts. Those without accounts can send up to INR 50,000 at a time through banks.
Additionally, Nepalese citizens can obtain Aadhaar cards in India with “Nepali” mentioned as their nationality, making financial transactions easier. Many Nepalese travel to India for medical treatment, and these improvements have facilitated their payments.
Ambassador Sharma emphasized that further efforts are being made to enable mobile-to-mobile payments, which is currently delayed due to technical reasons but is expected to be implemented soon.
Challenges for Nepal’s embassy in India
The Nepalese embassy in India faces financial and staffing constraints, making it difficult for officials to travel outside Delhi.
“It is challenging to visit locations outside Delhi due to financial constraints and tight schedules. However, we have made some visits for tourism promotion and have met with the Nepalese community during those trips. We also invite representatives of Nepalese organizations to the embassy for discussions,” said Ambassador Sharma.
Despite these challenges, the embassy maintains communication with Nepalese citizens in India through hotlines and other channels.
(Ambassador Dr Shankar Sharma was recently talking with the representatives from News Agency Nepal – NAN – in New Delhi)
