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

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

  • India will be taking over an hydropower project in Nepal — West Seti
  • China withdrew from it, ending a six-year engagement between 2012 and 2018.

About the project

  • 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.

Earlier commitments

  • 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.

India -Nepal power relations

  • 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.

Diplomatic ties

  • 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.

Prelims take away

  • West Seti project
  • Mahakali treaty
  • Upper Karnali project
  • Arun project
  • Build, Own, Operate and Transfer (BOOT) scheme.