What Paschim Seti Power Project could mean for India-Nepal relations

India will end a six-year engagement between 2012 and 2018, nearly four years after China withdrew from an ambitious hydroelectric project – West Seti – in Nepal.

The National Hydroelectric Power Corporation of India (NHPC) has started initial participation of the site in far-western Nepal after the Indian Prime Minister. Narendra ModiVisit to Lumbini on 16th May. In fact, the groundwork and informal discussions started long ago when Nepal’s Prime Minister Sher Bahadur Deuba visited India in April. During a local body election campaign in early May, Deuba announced that since India is Nepal’s electricity market and has a policy of not buying power from projects executed by China, West Seti would be given to India.

Four days before the Lumbini visit, the written intention of the NHPC reached the headquarters of the Investment Board headed by the Prime Minister. The board may soon approve it and formally ask NHPC to take over the project.

CWE Investment Corporation, a subsidiary of China Three Gorges Corporation, informed the Government of Nepal in August 2018 that it would not be able to execute the 750 MW West Seti Hydroelectric Project on the grounds that it was “financially unfeasible”. The cost of its rehabilitation and resettlement was too high”. Previously, Snow Mountain Engineering Corporation (SMEC) had been refused renewal of its license after failure to “confidently” begin work throughout the decade from the mid-1990s. The Australian company was granted a generation license for 30 years under the Build, Own, Operate and Transfer (BOOT) scheme.

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India-Nepal Power Relations…

Nepal is rich in power sources with approximately 6,000 rivers and an estimated capacity of 83,000 MW. India has formally approached Nepal on several occasions, seeking preferential rights over Nepalese waters, should it match proposals coming in from elsewhere.

India is seen as a viable market for Nepal, but there remains some uncertainty in Nepal over India’s inability to deliver projects on time. India has expressed its intention to exploit or exploit major rivers in the north. An ambitious Mahakali pact was signed in 1996 to generate 6,480 MW, but India is yet to come out with a detailed project report. The Upper Karnali project, for which the multinational GMR has signed the contract, has not made any progress over the years. Also, one of the reasons for the closure of SMEC was its failure to enter into a power purchase agreement with India.

What has helped build confidence recently is India’s success in executing the 900-MW Arun Three project in eastern Nepal’s Sankhuwa Sabha, to be executed under a boot plan by India’s Satluj Vidyut Nigam. and whose foundation was laid in 2018 and which is scheduled for completion by 2023. During his first visit to Nepal as Prime Minister in 2014, Modi had said that India should start executing its projects on time. The 695 MW Arun Four project is also being awarded to the company executing Arun III, after which it has been decided to hand over West Seti to NHPC.

Estimated to cost Nepal Rs 104 billion (Indian Rupees 6,500 crore), the project is envisaged to provide 31.9% of electricity to Nepal free of cost. In addition, Nepalese Rs 1 crore share and 30 units of electricity per month are being given free of cost to the local people affected by the project.

There is a provision in the Constitution of Nepal under which any treaty or agreement with another country on natural resources would require the ratification of Parliament by at least a two-thirds majority. It would also mean that homework would be required before any hydroelectric project could be signed off and given for execution.

There is a severe power shortage in Nepal as it generates only 900 MW against an installed capacity of about 2,000 MW. Though it is currently selling 364 MW of electricity to India, it has been importing from India in the last few years.

However, Deepak Gyawali, a former energy minister cautioned: “Until India agrees to value Nepal’s water and the current focus on electricity is reviewed, mutual mistrust will linger on both sides.” condition. The rates will be much lower than the current rates, and people on both sides will have many benefits.”

… and diplomatic relations

Due to the 2015 economic blockade following the standoff between Nepal and India, equations changed after Deuba took power last July, replacing Oli. Modi, whose popularity in Nepal seemed to be waning, developed friendly and political relations with the Deuba. Modi’s BJP And Deuba’s Nepali Congress decided to establish “fraternal relations” during Deuba’s visit to Delhi last month.

Last year, on Raksha Bandhan, Arju Deuba, wife of the Prime Minister of Nepal, tied a rakhi to Vijay Chauthawale, in-charge of the BJP’s foreign affairs cell. The Paschim Seti project covers the far western Nepal region, from where the Deuba come. The completion of the project will be a gift to his voters and the region at this advanced stage of Deuba’s career, who is now 79.

It is still unclear what changes or expansions will be proposed for the project by NHPC under the initially planned 750 MW, but the project will be a year-round storage scheme to generate electricity to be supplied in India, or Whether for domestic consumption or for business. its national grid.

And its success is expected to restore India’s image in Nepal and give it importance in future ideas for hydroelectric projects, when competition is tough. Therefore, Paschim Seti has the potential to become a defining model for Nepal-India power relations in the future.