New Butwal-Gorakhpur Transmission Line: Preparations for Joint Investment Agreement in Final Phase

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New Butwal-Gorakhpur Transmission Line: Preparations for Joint Investment Agreement in Final Phase

July 5: The joint venture agreement between Nepal Electricity Authority (NEA) and the Power Grid Corporation of India for the construction of Nepal-India second cross-border transmission line New Butwal-Gorakhpur (400 KV) will be signed within the next month. The discussions between the two sides regarding this matter have reached the final stage.

Executive director of the NEA, Kulman Ghising said, “Preparations of the joint venture agreement is now almost finalised. We will sign the agreement within a month.”

The transmission line will be constructed with equal investment of Nepal and India, i.e. 50/50 percent investment. The two sides had agreed to set up a joint venture company. According to the agreement, the structure of the joint company and other issues will be determined soon.

“Both sides had already agreed to open a joint venture company. We are now completing the method of establishing the joint company accordingly,” Ghising said.

After the joint investment agreement is done, it has to be passed by the Council of Ministers of Nepal as well as India. Then the joint company will be established in India. Ghising says it might take three to four months for the company to be established.

The agreement for the construction of cross-border transmission line was done in last October during a meeting of Nepal-India secretary level Joint Steering Committee held at Bengaluru. At that time, it was already decided that the joint company will be established within three months, however, due to various reasons it has not been done yet.

The company that is going to be established now will build the transmission line of Indian section. Millennium Challenge Account (MCA) under Millennium Challenge Corporation (MCC) will construct the transmission line in Nepal section. Ghising said that if MCA Nepal could not build the transmission line in Nepal due to MCC dispute, the NEA will build it.

According to the Detailed Project Report (DPR), the total length of the transmission line will be 140 km. Among the total length, 120 km section will be in Gorakhpur, India while 20 km section will be in Nepal.

About Rs 7 billion investments is estimated for the construction. 80 percent investment will be raised from concessional loan while 20 percent from equity investment of both sides.

This project is also associated with US funded MCC. The DPR was already prepared in 2015. Another substation will be constructed near Rohini River. The import and export of electricity from Nepal to India and vice versa will be done through this. Especially when the electricity generated from Budhigandaki and Marsyangdi is in excess, it will be easier to export the surplus power to India through this transmission line. 

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