Towards this end, the officials are preparing a final a draft of Memorandum of Understanding (MoU) for energy cooperation and power trade agreement between the two countries.

According to Dinesh Kumar Ghimire, Joint Secretary at the Nepal Ministry of Energy, Water Resources and Irrigation (MoEWRI), Nepal Government has already given its nod for the deals and is awaiting the response from the Government of Bangladesh.

We are currently holding discussions with the Bangladeshi Government to finalize the MoU, says Ghimire.

Ghimire further informed that Nepal has proposed a new energy mechanism for power trade and investment in its finalized draft.

Post signing the agreement, Nepal plans to set up a joint examining and working committees for bilateral energy cooperation and also hold trilateral discussions with Bangladesh and India for a feasible solution to address all the pending issues pertaining to transmission lines.

The latest update comes in the backdrop of earlier talks, where the Bangladeshi Government had promised to build a large hydropower project in Nepal and also received nod from the opposite side for related investment. However, things did not materialize then.

“Power trade between Nepal and Bangladesh is complex because the transmission lines would have to traverse India,” explains Ghimire.

The proposed project framework is based on SAARC Framework Agreement for Energy Cooperation signed among SAARC member countries in 2014.

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The second edition of the three-day Nepal Power Investment Summit 2018, held during January 27-29, 2018, saw the participation of renowned personalities from international bodies such as SAARC, BIMSTEC and ASEAN, global leaders and investors, ambassadors, bankers, ministers and businessmen, among various other key delegates from different parts of the world.

A total of 350 delegates from 24 countries including China, Korea, Europe and the United States, around 100 participants representing 30 international companies and around 400 participants from Nepal including policymakers and private sector players took part in the summit.

As part of the summit, various government and industry experts expressed their views on Nepal’s energy sector and its potential.

President Calls for Energy Investment

Inaugurating the summit on January 27, 2018, President Bidya Devi Bhandari called on the global and local investors to tap the untapped hydropower potential of Nepal.

“We need capital and technology for the implementation of large scale hydropower projects and the government will accord top priority to attract foreign investment and technology. The investors will also benefit from the growing demand for electricity in Nepal as well as South Asia,” said the President in her inaugural address.

In this regard, she promised an investor-friendly environment in line with their interests and needs to all the players coming forward.

Need to Act Fast, says Ambassador

Highlighting Nepal’s strong energy potential, Indian Ambassador to Nepal Manjeev Singh Puri said the country should act fast in implementing the hydropower projects considering the inclination towards renewable energy projects at the global-level.

“In the backdrop where solar power is getting cheaper day by day, hydropower will lose its competitive advantage to solar energy soon. Therefore, Nepal should act fast in developing the hydropower projects,” said Puri in his keynote address.

He went on to say that Nepal should start mega energy projects for both employment generation and economic development and to stay ahead in competition.

“Nepal should immediately start developing large projects to provide energy at competitive rates,” he added.

Industry Experts Seek Faster Implementation

Though Nepal’s energy policies for foreign investors look promising, the government agencies working in the process need to pace up the rate at which they implement the projects, say the energy industry experts.

“We are the private sector who looks maximized return within short period of time, but here in Nepal we have to invest more than five years doing basic things, getting approvals and clearances,” said a Vietnam-based businessman who participated in the summit.

The experts also lauded the Government of Nepal’s power purchasing policies in USD term, ease in removal of land ceiling for big hydro projects and management of technical human resources as some of the notable developments required for attracting foreign investment.

Innovation in Investment

Speaking at a panel discussion on ‘FDI in Nepal’s Power Sector’ held as part of the summit, various energy industry experts and investors called for innovative ways of financing in the Nepali hydropower sector.

“Since hydropower projects are capital intensive and have longer gestation period, innovative financing solutions like equity financing is the need of time,” says a Nepal-based private industry player.

The panel speakers also pitched for independent regulatory body to check the demand and supply along with fixing energy tariff in the country.

Towards Energy Development and Expansion

According to the summit organizer, Energy Development Council (EDC), this summit is aimed at creating a platform to ensure one-step business and business expansion in the energy sector while matching the interests of industry players.

The summit was hosted a participant-investor platform allowing participants to meet investors for a debt financing of around
USD 5-20 billion for various power projects including solar, wind and hydro energy.

Speaking on the occasion, EDC Chairperson Sujit Acharya highlighted that Nepal holds a 40,000MW electricity generation potential over the next 10 years.

“The resources needed for harnessing hydropower to that level could be available from the international financing institutions under Engineering, Procurement, Construction and Financing modality,” he added.

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The International Finance Corporation’s (IFC) report titled ‘Climate Investment Opportunities in South Asia’, released last week, said Nepal holds USD 46.1 billion worth investment potential and would also fulfil its national climate targets promised under the Paris Agreement by 2030.

According to the report, Nepal offers such opportunities in key sectors such as transport infrastructure, renewable energy and municipal solid waste for the 2008-13 period as part of its moves towards achieving climate change targets.

IFC’s assessment was based on Nepal’s commitment under Nationally Determined Contributions (NDC) to the United Nations Framework Convention on Climate Change in October 2016.

Hydropower and Solar Energy, Among Others

In its NDC, Nepal promised generation and distribution of 12,000 MW hydroelectricity and 2,100 MW solar energy, better waste management and control of methane emission, while also equipping every rural household with smokeless cooking stoves by 2030.

Meeting all these requirements would mean almost USD 46.1 billion investment with 12,000 MW hydropower generation alone requiring USD 22.5 billion investment, says the report.

Besides, the Nepali Government’s policy to integrate technological solutions in the country’s agricultural sector would need another USD 4.8 billion.

Private Sector Participation

While highlighting the role of private sector, IFC called on the Government of Nepal to facilitate private-public partnerships and also conduct awareness programs on climate smart-projects to understand the financial benefits of investing in green projects.

The report also recommended revision of foreign ownership limits, restrictions on non-equity investments and sector caps for attracting foreign investment.

Overall, the South Asian countries, which contribute to seven percent of global CO₂ emissions, hold USD 3.4 trillion climate-smart investment opportunities to fulfil their national targets, highlights the report.

“The only way that the South Asian countries can take advantage of these climate investment opportunities is with a strong and engaged private sector,” says Philippe Le Houérou, CEO, IFC.

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