India and Nepal will build a 695MW (megawatt) hydropower plant, officials said on May 16, as the Himalayan nation looks to exploit its abundant potential to generate clean energy to ease power shortages.
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India, which has an electricity trading deal with Nepal, is investing billions of dollars in infrastructure including hydropower plants, as New Delhi looks to grow its influence in its smaller neighbours, where China is also increasingly active.
The Arun IV project will be jointly built on the Arun River in Nepal's east by India's Satluj Jal Vidyut Nigam (SJVN) Limited and Nepal's state-owned Nepal Electricity Authority (NEA) owing 51% and 49% of equity respectively, NEA spokesperson Suresh Bahadur Bhattarai said.
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"Nepal will get 152MW of free electricity from the plant for its consumption and the rest will be split between the two on the 51% and 49% basis," Mr. Bhattarai told Reuters without giving further details. "Cost of the project is being worked out and whatever it comes will be shared as per the above ratio."
The power plant agreement is among six deals concluded between India and Nepal during the Indian Prime Minister Narendra Modi's fifth visit to the Himalayan nation on Monday, India's Ministry of External Affairs said in a statement.
During the visit Mr. Modi met his Nepali counterpart Sher Bahadur Deuba and took part in a Buddhist ceremony to mark the birth anniversary of Lord Buddha at Lumbini in southwest Nepal.
“Indian companies are negotiating with the government for power plants that would produce a total of 8,250MW and Nepal hopes to export excess energy to India,” officials said. Nepal has the potential to produce 42,000MW of hydropower but now generates about 1,200MW — less than demand of about 1,750MW. The deficit is met by imports from India.