India and Nepal will build a 695-megawatt (MW) hydropower plant, officials said on Monday, as the Himalayan nation seeks to harness its potential to generate clean energy to reduce power shortages.
India, which has an electricity trade agreement with Nepal, is investing billions of dollars in infrastructure, including hydropower, as New Delhi seeks to increase its influence in its smaller neighbors, where China is also becoming increasingly active.
The Arun IV project will be jointly built by Satluj Hydroelectric Corporation of India (SJVN) Limited and the state-owned Nepal Electricity Authority of Nepal (NEA) on the Arun River east of Nepal with 51% and 49% equity arrears, respectively, NEA spokesperson Suresh Bahadur said. Dr. Bhattarai.
“Nepal will get 152 MW of free electricity from the plant for its use and the rest will be shared between the two on 51% and 49% basis,” Bhattarai told Reuters without elaborating.
“The cost of the project is being determined and what will come will be divided according to the above ratio.”
The power plant deal was one of the six agreements reached between India and Nepal during Indian Prime Minister Narendra Modi’s fifth visit to the Himalayan country on Monday, India’s foreign ministry said in a statement.
During the visit, Modi met his Nepali counterpart Sher Bahadur Deuba and attended a Buddhist function in Lumbini, southwestern Nepal, to mark the birth anniversary of Lord Buddha.
Officials say Indian companies are in talks with the government for a power plant that will generate a total of 8,250 MW and Nepal expects to export additional power to India.
Nepal has the potential to generate 42,000 megawatts of hydropower but now produces about 1,200 megawatts – less than the demand of about 1,750 megawatts. The deficit is met through imports from India.