What West Seti power project can mean for India-Nepal ties

Contact Counsellor

Last Updated21/06/2022

India’s National Hydro Power Corporation (NHPC) has already begun preliminary engagement of the site after Indian PM’s visit to Lumbini.
Nepalese PM declared that since India was Nepal’s power market and it had a policy of not buying power from China-executed projects, West Seti would be given to India.
It is not clear what changes NHPC will propose to the project initially planned at 750 MW.
It will be a storage scheme generating power round the year to be supplied to India, either for domestic consumption or for trade through its national grid.

CWE Investment Corporation, asubsidiary of China Three Gorges Corporation, had informed the Nepal Government in August 2018 that it would not be able to execute West Seti Hydropower Project.
Reason: It was financially unfeasible and its resettlement and rehabilitation costs were too high.
Prior to that, Australian co. Snowy Mountain Engineering Corporation had been refused renewal of its licence as it failed to begin the work during an entire decade from the mid-1990s.
It had been given a generation licence for 30 years under a Build, Own, Operate and Transfer (BOOT) scheme.

Nepal is rich in power sources with around 6,000 rivers and an estimated potential for 83,000 MW.
India has formally approached Nepal to seek preferential rights over Nepali waters.
India is viewed as feasible market for Nepal, but there has been some uncertainty in Nepal over India’s inability to deliver projects on time.
India has undertaken or expressed intent to harness major rivers in the north.
Mahakali treaty was signed in 1996, to produce 6,480 MW, but India has still not been able to come out with Detailed project Report.
Upper Karnali project has not made any headway for years.
India’s success in executing 900-MW Arun Three project in eastern Nepal’s Sankhuwa Sabha has build faith.
It is being executed by India’s Sutlej Vidhyut Nigam under BOOT scheme.
Foundation was laid in 2018 and is set for completion by 2023.
Company executing Arun Three is also being awarded 695-MW Arun Four project, followed by the decision to award West Seti to NHPC.
Estimated to cost Rs 6,500 crore, project will provide Nepal 31.9% electricity free.
Locals affected are being given Nepali Rs 10 million plus 30 units of electricity per month free.
Rationale: Nepal has a massive power shortfall as it generates only around 900 MW against an installed capacity of nearly 2,000 MW.

Standoff b/w Nepal and India led to economic blockade of 2015.
Equations changed after Deuba took over Nepal’s government.
On Raksha Bandhan last year, Nepal PM’s wife, Arzu Deuba, tied a rakhi on BJP’ s in-charge of foreign affairs cell.

Success of West Seti project is expected to restore India’s image in Nepal and give it weightage in future considerations for hydropower projects.
It has the potential to be defining model for Nepal India’s power relations in future.