Prime Minister Narendra Modi will visit Nepal to attend the SAARC summit in the last week of this month. On that occasion, it is expected that a crucial pact would pave the way for the setting up of a 500 MW hydro power project in Nepal. Power Secretary P.K. Sinha is expected to be in Nepal to finalize the project development agreement (PDA) for the 900 MW Arun III hydroelectric power project. It will involve Rupees 5,139 crore and will be executed by state-owned SJUN Ltd. It is seen as a landmark step in consolidating power sector cooperation between India and Nepal. The next two stages of project development-inking the PDA and the financial closure will come in its wake. Earlier in September, a PDA had been signed between the Nepalese government and the GMR group for the development of the first power project, the 900 MW Upper Karnarli hydroelectric project. The PDA allows market access to developers of hydro power projects in Nepal to buy and sell electricity in India. The pact will also enable the use of the Indian transmission system to sell to a third country such as Bangladesh. Evidently, the ice has already been broken between the two countries in the energy sector. The detailed project report for the 5,600 MW Pancheshwar power station is also on the drawing board. A consultant has already been appointed.
It is agreed that clean energy generated through hydel project is the way to the future. India is anxious to ensure that the fall in the share of hydel power generation in the country’s energy mix is arrested. The Nepalese thrust should contribute to this end. Modi has already visited Nepal where he received a warm ovation from leaders of all parties in that country, including Maoist Chief Prachanda. It is hoped that the flux in Nepal politics will end soon. The SAARC visit will be highly significant as India will push the agenda to revive regional cooperation which is the keynote of Modi’s neighbourhood policy.