Several media outlets on Sunday came up with the India-proposed “Agreement between Government of the Republic of India and Government of Nepal on Cooperation in Power Sector” draft which would warrant the Indian side’s domination in Nepal’s energy sector including generation and power trading.

“The embassy’s attention has been drawn to several media reports with regard to India’s draft proposal for cooperation in the power sector between India and Nepal,” said the embassy in a statement.

“The draft is in the nature of a framework agreement that outlines the broad principles and parameters for overall cooperation in the power sector including trading, transmission lines development and grid connectivity and construction of power projects.”

Clarifying the Indian position, the statement said that every power project to be developed would require a separate project implementation agreement and power purchase agreement, terms and conditions of which needed to be agreed.

“In no way does the draft constrain Nepal’s sovereign right to develop its hydropower potential,” said the embassy.

After huge uproar from several quarters, Nepal has unilaterally cancelled a bilateral Energy Secretary-level meeting proposed in India.

“Power trade in India is under the OGL (open general licence) list. An Electric Power Trade Agreement was signed in 1997. Separately, Bilateral Power Exchange Committee meetings are held from time to time to review power exchange arrangements between India and Nepal,” said the embassy.

Some former water resource ministers, main opposition UCPN (Maoist) and a section of the ruling CPN-UML have opposed the draft saying that it would allow exclusive rights for India to develop hydropower in Nepal by insisting on the Bhutanese model.

The proposal forwarded by India is a draft for discussion and would require

bilateral negotiations prior to finalisation, it was stated.  “Both the sides are free to propose amendments or modifications to the draft.”