Image: Reuters
For a long time Nepal’s roaring rivers have promised riches. With an estimated 83,000 megawatts of hydropower potential, it could be the “battery of South Asia”. Yet much of that energy has flowed uselessly into the Ganges basin, as plans to connect Nepal’s grid to India’s lagged behind pledges of cooperation. Now, at last, the two countries are beginning to turn potential into transmission.
At meetings in Pokhara and New Delhi recently, Nepal and India agreed to build three new cross-border transmission lines and to upgrade four existing ones. These join two 400-kilovolt links already signed in October, bringing the total of new projects to five. Together, they form the most ambitious expansion of cross-border electricity infrastructure since the 400kV Dhalkebar–Muzaffarpur line opened in 2016.
The new lines include the Inaruwa–New Purnea and Lamki–Bareilly 400kV corridors, now under joint venture. In Pokhara, both sides approved three more: Chameliya–Jauljibi (220kV), Nijgadh–Motihari (400kV) and Lamahi–Lucknow (400kV). Meanwhile, existing corridors such as Dhalkebar–Muzaffarpur and Raxaul–Parwanipur will be upgraded with high-capacity conductors, boosting Nepal’s export ability to 1,500 megawatts. Officials hope these links will enable Nepal to sell up to 10,000 megawatts of electricity to India within the next decade, a tenfold increase on current levels.
The timing is not coincidental. Nepal’s hydropower capacity is surging, with some 11,000 megawatts in various stages of construction or financing. Domestic demand, by contrast, grows slowly. To avoid wasting wet-season surpluses, Nepal needs a buyer—and India, pursuing cleaner sources of power and greater regional grid stability, has emerged as the obvious one. A 2023 agreement between Narendra Modi, India’s prime minister, and Pushpa Kamal Dahal, his Nepali counterpart, committed India to importing 10,000 megawatts over ten years. The new power lines are the hardware required to make that promise real.
Getting to this point required more than goodwill. Earlier plans had stalled over ownership and control. The compromise—a pair of mirror-image joint ventures—gives each country a 51% stake in the segment on its own soil and 49% in the other’s. This 51:49 split preserves national sovereignty while embedding interdependence. Financing will follow an 80:20 debt-to-equity model, allowing both partners to borrow cheaply and share risks symmetrically.
For Nepal the prize is twofold: steady export earnings and investor confidence. The country’s hydropower ambitions have long been constrained not by generation but by evacuation—the ability to move electricity from remote valleys to foreign grids. Each new cross-border line unlocks fresh investment upstream, enabling new projects to reach financial closure. For India, cheap hydropower from Nepal complements its push to decarbonise; helps stabilise its northern grid; and deepens strategic influence in a region where China has been courting the same rivers.
The benefits could extend further. A more interconnected grid lays the foundations for a regional electricity market, linking Nepal, India and Bangladesh. Power that once cascaded wastefully through the Himalayas could one day light homes across the Gangetic plain. The trouble will be coordination. Transmission projects are slow, tariffs politically sensitive and dry-season shortages still threaten Nepal’s reliability as an exporter.
Yet compared with years of diplomatic drift, the new momentum is remarkable. When the Dhalkebar–Muzaffarpur line was inaugurated less than a decade ago, it was hailed as a “symbolic link”. The nine now being built or upgraded suggest something more big: a shared electrical future. For once the region’s politics and physics appear to be moving in the same direction. ■
