The Energy Ministry plans to make one last attempt to convince India to develop the New Butwal-Gorakhpur cross-border transmission line under the government-to-government financing model during Prime Minister KP Sharma Oli’s upcoming visit to India.

As per the financing model proposed by Nepal, the two governments will build the 400 kV power line in their respective territories. Around 20 km of the 135-km long transmission line falls in Nepali territory.

The Indian side, which has not put forward its desired modality, has rejected Nepal’s proposal and repeatedly questioned the project’s commercial viability, raising doubts over whether the transmission line will be built at all.

Although the Nepal-India energy secretary-level Joint Steering Committee (JSC) meeting is the mechanism to finalise the development modality of the power line project, the Energy Ministry has requested the Prime Minister’s Office to include the stalled project on the agenda for bilateral talks during Prime Minister Oli’s forthcoming visit to India.

The ministry is of the view that if Prime Minister Oli can convince his counterpart during his visit, it will be easier for Nepali officials to push the government-to-government financing modality during the JSC meeting slated to be held in the near future.

“Given the current situation where India is very keen to welcome PM Oli, he has the leverage to bring India on board to finance the power line as desired by us,” said an informed source at the Energy Ministry. 

India, on the other hand, prefers the financing model used during the construction of the Muzaffarpur-Dhalkebar cross-border transmission line.

Under this modality, Nepal will be required to pay rent until the project recovers the investment as per a predetermined return on investment, according to the Energy Ministry official. The disadvantage of this scheme for Nepal is that it has to pay a fee even if the cross-border power line is not used to import or export electricity.

The Energy Ministry has prioritised the construction of the New Butwal-Gorakhpur transmission line as it can efficiently distribute imported power to high energy consuming cities like Bhairahawa, Butwal, Pokhara and Narayangadh. The power line can also be used to evacuate surplus energy produced in the Budhi Gandaki, Marshyangdi and Trishuli corridors where most of of the country’s hydropower projects are located.  The ministry is anxious to execute the project as Nepal has already arranged the funds to build its portion of the transmission line. It is planning to build the transmission line with a grant provided by Millennium Challenge Corporation (MCC), an independent US government agency.  An agreement to this effect has been signed, but the Nepal government must get the Indian government’s consent over the financial terms for the construction, as per one of the preconditions set by MCC.