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Nepal seeks clarity in energy cooperation with India

Publication Date : 21-07-2014

 

In its response to the draft agreement on “Cooperation in Power Sector”, the government of Nepal has asked if the Indian proposal is to be ratified by parliament or to be approved by the cabinet.

The four-page draft obtained by The Kathmandu Post on Sunday does not explicitly commit on two contentious issues as have been quoted in the media in recent days: India’s monopoly over Nepal’s hydropower development and the need to take Indian consent to develop Nepal’s power sector. 

This agreement will become a bridgehead for facilitating joint cooperation in the power generation and transmission, says Article 1 of the draft agreement.

“It will also enable export of power between Nepal and India on mutually acceptable terms.”

The most contentious clause, according to Nepali stakeholders, is Article 3 which talks about generating investment in power generation and transmission, including the joint venture investments.

India has proposed 100 per cent Indian investment or joint ventures with Indian entities.

Article 3a says that the parties will facilitate investments in each other’s country in the fields of power generation and transmission, including joint venture investments between the two countries subject to their extant policies and legislation.

Article 3b says, the parties will cooperate in effective harnessing of Nepal’s hydropower potential through facilitation and speedy construction of hydroelectric power projects in Nepal, either with 100 per cent Indian investments or joint venture with Indian entities.

According to Nepali officials, this clause gives an impression of denying involvement of other countries as well as Nepali companies in power generation and transmission.

“The content of the draft gives the impression of an umbrella agreement, which could be detrimental to Nepal,” said an official.

With the article remaining silent on involvement of investors of other countries, Nepali officials fear that investors from other countries could not be allowed in Nepal. 

Similarly, India has proposed to provide non-discriminatory access to the interconnection for all participants of the common electricity markets.

The Nepali side has suggested tariff and non-tariff barriers on trading electricity, adding “except for reasons of safety, stability and reliability standards applicable to the power grids of the both countries, parties will not impose any quotas, ceilings, restrictions or other measures that the cross border exchange or trade of electricity.”

Nepali has proposed that “electricity traders of both countries will have access to marketing arrangement, marketing channels and pricing options that are available to domestic companies conducting similar business in their domestic markets subjects to the laws, regulations and structural requirements of the respective countries.”

An official at Independent Power Producers Association of Nepal termed the Indian proposal “ambiguous” and needs to be cleared.

In a statement, the India Embassy said on Sunday that the clauses in the draft proposal were open for negotiations.  

The Nepali side has also sought explanation and amendment to the preamble of the Indian proposal for “a long-term open access to each other’s power markets” and “nondiscriminatory treatment in the field of power exchange power generation, grid connectivity, energy efficiency and development of renewable energy.”

The energy ministry on Sunday said the visit of its high-level delegation to New Delhi was postponed as the government waited for prime minister Sushil Koirala to return from the US before it could hold talks with India on power sector cooperation. The date for the talks would be decided after Koirala’s return.

The ministry, however, defended its decision not to disclose the draft of the ‘Cooperation in Power Sector’ agreement sent by India.

Energy minister Radha Gyawali, during a press meet at the ministry, said they would not make any content of the document public.

The ministry also clarified that bilateral talks between Nepal and India have not started over the matter.

Energy secretary Rajendra Kishore Kshetri was supposed to leave for Delhi for talks with India on power sector cooperation.

“We have sent our conditions while the Indian side has also forwarded its view,” said Gyawali, adding that her ministry has been reviewing the Indian proposal.

 

 

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