India-Nepal Hydropower Project

Why in news?

Recently, Nepal has signed a Memorandum of Understanding (MoU) with India to develop the West Seti and Seti River (SR6) projects to enhance the cross-border power exchanges.

How did the project evolve?

The 750MW West Seti Hydroelectric Project was thought of in the early 1980s as a 37 MW run-of-the-river scheme.
The project which was handed over to France followed by Australia could not take off.
Nepal handed over the project to China but it withdrew in 2018, citing issues of resettlement and rehabilitation.
Nepal tried to develop the project by mobilising internal resources but increased costs resulted in further delays.
Later, the project was remodelled as the West Seti and Seti River (SR6) joint storage project (1,200 MW).

What is the project about?

The project is to be located in the Sudurpaschim province of Nepal.
Estimated to cost Rs 6,500 crore, the project is envisaged to provide Nepal 21.9% electricity free.
Besides, locals affected by the project are being given a share of Nepali Rs 10 million and 30 units of electricity per month free.
The project will be developed under Public Private Partnership.

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setiriverproject

What potential does the project hold?

India is already involved in the projects of Nepal including
- The Mahakali Treaty (6,480 MW)
- The Upper Karnali Project (900 MW)
- The Arun Three projects (900 MW)

The Mahakali Treaty, signed in 1996 covers the Sarada and Tanakpur barrages as well as the Pancheshwar Multipurpose project.

Scope for India

Supports hydropower cooperation- On completion of the project, it is expected to provide India the much-needed leverage in future hydropower cooperation.
China factor- It will help India minimise the geopolitical influence of China, since the West Seti Hydroelectric Project was a major Chinese venture under the Belt and Road Initiative.
As an alternative- The West Seti Hydroelectric Project can provide an added alternative and viable way to address India’s power deficits.
Cross-border power exchanges- The project has the potential to enhance cross-border power exchanges between the two countries.

Scope for Nepal

Power shortage - The project has the potential to address the power shortage of Nepal.
Foreign exchange- Nepal’s electricity exports to India is expected to increase foreign exchange.

What are the concerns in this project?

The revised cost around the construction process has increased to $2.04 billion.
Nepal is concerned that the electricity rates and supply from India is inadequate to meet the rising demands.

What steps are needed for the successful project completion?

Address investment-related constraints- There needs to be a careful study of investment scenarios such as conducive investment environment, distribution and transmission network and cost of resettlement and rehabilitation, at the preliminary stage.
Project expansion- The project can also be extended to other regional partners under the Bangladesh-Bhutan-India-Nepal (BBIN) framework for cross-border energy cooperation.

References

Quick facts

Seti River

The Seti Gandaki River, also known as the Seti River or the Seti Khola, is a river of western Nepal.
It is a left tributary of the Trishuli River.
It is one of the holiest rivers of Nepal, worshipped in Hinduism as a form of Vishnu.
Seti River cuts through the Mahabharat range and, therefore, seems to disappear in caves and tunnels in many places along its route through Pokhara city.

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