The immediate upshot of the joint inauguration of the Dhalkebar-Muzaffarpur cross-border transmission line by Prime Minister KP Sharma Oli and his Indian counterpart Narendra Modi on Saturday will be two fewer hours of power cuts in Nepal. Starting Saturday, an additional 80 MW of electricity is being imported from India to augment the 200-odd MW that is already being imported, through various transmission lines, in the dry season. According to an agreement signed between the two countries on Saturday, 200 MW will be imported via the Dhalkebar-Muzaffarpur line by October, 2016; by the end of 2017, Nepal will be able to import 600 MW. This is not all bad. First, the new transmission lines being built are two-way, which means that Nepal, theoretically, will be able to both buy and sell power with India. The agreement on Saturday can also be seen as a step towards the creation of the long-desired regional power trading system in South Asia. Second, additional imports will bring much-needed relief to Nepal's electricity consumers, including its vital industries, who now face up to 16 hours of daily power cuts.But there are big risks associated with importing half our electricity from India. Notwithstanding the traditionally warm relations that have existed between the two countries, how can Nepalis, the victims most recently of the third (and most crippling) Indian trade embargo, be assured that India in the future won't hesitate to cut power to Nepal if it believes another coercive move is in order? In light of the agreement on Saturday between Nepal and India, the worrying trend of Indian power companies indefinitely sitting on the projects contracted out to them, sometimes for decades, appears truly sinister. In the environment of suspicion created in Nepal after the latest Indian blockade, it is not farfetched for people here to question if these companies are acting on the direction of the Indian government. India, in this reckoning, will use all tools at its disposal to make Nepal completely reliant on it.
A more benign way of looking at the new India-Nepal power agreement is, again, that it's a two-way arrangement and if Nepal can harness its vast hydro potential in the years ahead, there is no reason it cannot sell electricity to India. But with no major power project besides the 456-MW Upper Tamakoshi set to come into pipeline in the next few years, it would be unrealistic to expect Nepal to sell excess electricity to India in the near future. And this is why with the short-term electricity needs now seemingly taken care of with the new agreement with India, Nepal must now put more pressure on the companies holding major projects to hurry up or face bigger penalties. There should be rebidding to take projects away from the most egregious violators of their time-bound commitments. Even if India is acting in good faith with the new power agreement, it is not in the interest of Nepal to so completely rely on other countries, much less a single country, for a strategic asset like electricity over the long haul.
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