Last week, Nepal and India signed a power trade deal during the Indian External Affairs Minister S. Jaishanker's visit. The agreement consolidates the bilateral understanding of electricity exports pushed during the PM's visit to India in 2023.

Given the Indian government’s conditions on cross-border electricity trade, which recognizes electricity as a strategic commodity of interest, the recent agreement can be interpreted as a positive sign. However, the current agreement does not specify who, how, and when this electricity will be traded.

Hopefully, these matters will be progressively defined in the days to come. For now, we are re-releasing an earlier episode that touches upon the drivers, optimism, and challenges of Nepal India's power trade.

Originally aired on 26 September 2022, in this episode of PxP: Conversations, Saumitra Neupane and Sagar Prasai discuss how the Indian electricity market gets featured in Nepal’s hydropower imagination, the impact that this has had on Nepal’s ability to exploit its hydropower potential, and what differentiates the Nepali model from that of other bilateral arrangements such as those between India and Bhutan.

They also examine India’s policy positions on cross-border electricity trade in the last ten years and how regional rivalry between India and China complicates energy markets in South Asia. They also discuss the future market opportunities for Nepali hydropower and whether there are longer-term trends that support supply signals and investor confidence in Nepali hydropower. They end their conversation by discussing the possibilities of markets beyond India, primarily Bangladesh and China, and evaluate whether realistic opportunities exist on these fronts.

Sagar Prasai is a development professional with over two decades of experience working in water, energy, climate issues, and regional cooperation in South Asia. He is based in Nepal and provides advisory services to various organizations, including The Asia Foundation and the Australian Government’s DFAT. Previously, he served as The Asia Foundation’s country representative in India. He has a Ph.D. from the University of Illinois at Urbana-Champaign.

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