India and Nepal on 21 October 2014 signed a Power Trade Agreement (PTA) that allows exchange of electricity between the two countries. The agreement opened up new vistas of cooperation between India and Nepal in power sector.
The agreement aims to enhance the friendly relations and mutual trust between Nepal and India through increased cooperation in the field of transmission interconnection, grid connectivity and power trade. It also facilitates governments, public and private enterprises in planning and construction of interconnection facilities and power trade.
The agreement provides a provision for establishment of a joint working group and a joint steering committee to promote and facilitate cooperation in the identified areas.
Both the committees will work on
• Planning and identification of cross-border interconnections
• Selection of transmission technologies
• Preparation of detailed project reports (DPRs)
• Modes of investment for timely implementation of projects
The joint working group will be headed by joint secretaries of the two countries, which will meet every six months. It will take up issues pertaining to the existing cooperation in power sector between India and Nepal. The joint steering committee headed by secretaries of the two countries will convene once a year.
The agreement also provides a provision to form a bilateral mechanism for implementing the PTA and it will also facilitate regional power trade in South Asian region.
In September 2014, Nepal authorities and GMR group of India signed Project Development Agreement to construct 900 MW Upper Karnali Project in Nepal.