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PGCIL and Nepal’s NEA to form JV for Rs. 400 Cr. Transmission Project

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Power Grid Corporation of India Limited (PGCIL or POWERGRID) stated in a stock filing dated 7th July 2022 that it has approved the formation of a joint venture (JV) with Nepal Electricity Authority (NEA).

This JV will be constituted for developing the Indian part of the 400 KV D/C power transmission line from Butwal in Nepal to Gorakhpur in UP. The estimated cost of this project is Rs. 400 crore.

Butwal – Gorakhpur Cross Border Transmission Line Project

Specifics of the India-Nepal Transmission Line

Butwal – Gorakhpur transmission line will be laid between the New Butwal substation at Sunawal Municipality-13 in Nawalparasi district of Nepal, and Gorakhpur substation in Uttar Pradesh, India. This 400 KV D/C line will be laid across a distance of 120 Km, of which 20 Km falls in Nepal and the remaining 100 Km is in Indian territory.

This line will have the capacity to handle a power load of up to 2,000 MW.

This line will be a double circuit, Quad-Moose Aluminium Conductor Steel Reinforced (ACSR) conductor line, which is used in case of bulk power transfer. ‘Moose’ is one of the specifications of ACSR conductors. Such conductors can be laid across long distances with minimum structural support, and are suited for laying lines across rivers and valleys.

Background of the Butwal – Gorakhpur Transmission Line

In October 2019 the finance model for this project was decided after a meeting of the Energy Secretaries of India and Nepal. This Rs. 400 crore transmission line is to be financed on a debt-equity ratio of 80:20.

Nepal Cabinet in its meeting on 3rd August 2021 approved NEA’s equity investment of 50% in a joint venture for the construction of the part of Butwal – Gorakhpur line which falls in India. NEA will develop the part of this transmission line which lies in Nepal independently.

PGCIL and NEA signed a Memorandum of Understanding (MoU) in August 2021 for forming a joint venture for this project. Subsequently, on 6th July 2022, the PGCIL’s board approved the formation of this JV.

India – Nepal Energy Trade and Indian Energy Exchange (IEX)

As per an August 2020 study by the Asian Development Bank Nepal’s total installed capacity of Hydropower was 1,113.48 MW by end of FY 2019. The study further assumes that the total installed capacity would be 3 GW by 2025 and 8 GW by 2030.

The land-locked country has the potential to become a major exporter of hydropower to India. With increasing energy trade between the two countries it is expected that during summers / rains Nepal will export surplus electricity to India, whereas during winters India will reciprocate by exporting energy to Nepal.

Nepal became the first country to be party to India’s Cross-Border Electricity Trade (CBET) by the Indian Energy Exchange (IEX) in 2021. India and Nepal currently engage in bulk power transfer through the 400KV Dhalkebar – Muzaffarpur line. As per Indian Power Ministry, Nepal is connected to the Indian energy grid at various places through 11KV, 33KV, 132KV, 220KV and 400KV lines.

The upcoming Butwal – Gorakhpur transmission line will greatly enhance India-Nepal energy trade through the Indian Energy Exchange and work at solidifying grid connectivity between the two neighbours.

Some of the other proposed India-Nepal transmission projects are: Second circuit of 132KV Kataiya – Kushaha line, Second circuit of 132 KV Raxaul – Parwanipur line, 400KV D/C Dhalkebar – Sitamarhi line, 132KV D/C Nanpara – Kohalpur line.