Nepal suffers around $ 1.5 billion in losses as India is buying limited electricity

New Delhi: The Kathmandu Post newspaper reported this week that Nepal is suffering massive losses as there are no countries to buy the surplus electricity produced by the Nepal government.

Nepal's domestic demand has reduced, and India has reduced buying more electricity; the Nepal Electricity Authority (NEA) saw massive power spillage during the last few weeks.

As Indian authorities have allowed Nepal to sell only up to 364MW in their power trading market, the NEA had no way to sell the surplus energy.

The newspaper quoting an official, stated, "Around 40 million units of electricity went to waste in a week during Dashain," said Kul Man Ghising, managing director of the NEA. "If we calculate the cost of spillage based on Rs5 per unit, we lost as much as Rs200 million in potential earnings in a week."

The Nepal authority said spillage reached as high as 800MW at times, with domestic demand falling as low as 700MW against the peak demand of around 1700MW.

The total installed capacity of Nepal's power projects exceeds 2,200MW, and all of them were operating at their total capacity, aided by continued rainfall for days during the festival season.

All the extra electricity has resulted in a week's loss of $1.5 billion in potential earnings.

For Nepal, it is becoming challenging to convince India to buy surplus electricity India hesitated at several deals with Nepal because Chinese contractors are involved in production.

Nepal had long been seeking India's approval to sell the power generated by the 456MW Upper Tamakoshi Hydropower Project. Indian officials refused to give their nod citing the involvement of Chinese contractors in the project, which is currently Nepal's most extensive project.

India instead asked the NEA to propose other projects without Chinese components to sell electricity in the Indian market. So, Nepal has now submitted a list of new projects to export power to India.

The NEA, however, is hopeful that India will soon give it the approval to sell an additional 111.8 megawatts. "We are getting information from India that the approval process has reached the final stages," said the newspaper quoting Ghising.

The NEA sought approval from the Indian authorities to export an additional 212.7MW through competitive bidding. According to the power utility, the NEA earned as much as Rs 7.19 billion by exporting electricity to India in the last four months—between early June and mid-September.