The International Finance Corporation (IFC) and GMR, India’s second-largest infrastructure developer, have partnered to develop a 900 megawatt (MW) hydropower plant in Nepal’s underdeveloped western region of Upper Karnali.
The project involves the construction of three Nepali transmission lines. According to Indian local press, it will also see the installation of a 400 kilovolt (kV) double circuit transmission line up to the interconnection point of Indian utility Power Grid Corporation of India.
The partnership follows the lead of a power trade agreement (PTA), ailed as “historic”, signed between Indian and Nepali energy secretaries Pradeep Kumar Sinha and Rajendra Kishor Chettri last October to enhance cooperation in the fields of transmission interconnection, grid connectivity and power trade.
“The development of these projects complements the initiatives taken by India and Nepal to establish high-capacity cross-border transmission links to facilitate power trading between the two countries,” said GMR Group chairman Grandhi Mallikarjuna Rao in a statement.
“Hydropower is a powerful engine for economic growth in Nepal. These projects will boost a common energy market in South East Asia, create sustainable employment, improve quality of life, and provide reliable and clean energy for local industry,” said Vivek Pathak, IFC director for the Asia Pacific region.
The IFC will act as co-developer and assist GMR in reaching financial closure on the projects, the collective funding needs of which are estimated at $1.7 billion.
The transmission projects will connect the Upper Karnali plant and a 600MW plant in the Upper Marsyangdi region to underserved parts of the country. The additional lines are expected to begin commercial operations in 2021.
The IFC estimates that only one percent of Nepal’s abundant hydropower potential has so far been tapped. While only 46 percent of the population has access to electricity, the institution says, demand for power generation has grown by 9 percent over the last decade.
With as many as 6000 rivers, rivulets and tributaries in the country, the IFC reckons developing Nepal's hydropower potential could not only help it meet its domestic needs but also allow it to export electricity to energy-hungry neighbours such as Bangladesh and India.