Nepal, India plans setting up energy bank

India and Nepal are planning to setting up an energy bank so that they can help each other to overcome the problem of power shortage.

The proposal was discussed at a meeting of the India-Nepal Joint Standing Committee, a bilateral technical mechanism on water resources, power and irrigation projects, which concluded yesterday.

The two countries have conducted informal discussions regarding the energy bank before, but this is the first time that Nepal has made a formal proposal, Kathmandu Post reported.

According to the energy bank concept, Nepal would export electricity to India during the summer season and import power from India in the winter when output drops sharply resulting in crippling power shortages.

The Power Trade Agreement signed by Nepal and India in 2014 during Prime Minister Narendra Modi's visit to Kathmandu has opened the way for the two countries to establish an energy bank.

"The concept of an energy bank is clear: We export to India when our production exceeds domestic consumption and we import from India during times of crisis," said Mukesh Raj Kafle, managing director of the Nepal Electricity Authority, who participated in the meeting.

India is agreeable to the concept, but there is no open access to India due to legal complications.

"The proposal is good, but we have to clear a number of regulatory provisions. We will start to work on it," Khanal quoted Indian officials as saying. According to Nepali officials, it depends on India's willingness.

Nepal has also requested India to resume production from the 15 MW Gandak Powerhouse. The plant was constructed as per the Gandak Agreement. Similarly, Nepal has also requested India to build the Birpur Powerhouse as soon as possible.

Meanwhile, the two sides also discussed extensively the construction of roads by India on the common border. Nepali officials drew the attention of the Indian government to the road building projects saying that they had increased the possibility of floods and inundation on the Nepali side.

"The roads are like embankment dams which might cause floods during the summer season. The Indian side has taken the issue positively. They have asked for a specific report," said Kafle.

India raised the issue of security at these areas, and Nepal has pledged to address its concerns. The two sides also assessed the ongoing irrigation projects.

The two-day meeting is the first official engagement between the two countries after the cancellation of President Bidya Devi Bhandari's visit to India and recalling of Nepal's ambassador Deep Kumar Upadhyay.