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India, Nepal sign $1 billion hydropower deal

Nepal and India signed a deal Tuesday to build a $1-billion hydropower plant as Indian premier Narendra Modi began a visit to the impoverished Himalayan nation. The deal allows India's state-owned company Satluj Jal Vidyut Nigam to construct a 900-megawatt hydropower project on Nepal's Arun river, with electricity expected to be generated from 2021.

The two energy-hungry countries both suffer crippling electricity shortages and blackouts. Nepal will receive for free about 22 percent of the power generated, while the remainder will be exported to India, according to the Nepal Investment Board. A vast network of fast-flowing rivers through the Himalayas means Nepal has huge untapped hydropower resources.

But disagreements over perceived threats to its sovereignty stalled earlier agreements to develop joint ventures with India. Meanwhile, Beijing has intensified its engagement with India's northern neighbour, pumping billions of dollars into infrastructure projects ranging from roads to hydropower plants.

"When we trust each other, we can move forward very quickly," Modi said in Kathmandu. "Projects that have been in limbo for 25 years are moving forward. I feel very satisfied," he said on the sidelines of a summit of South Asian leaders and ministers under way in Kathmandu. Modi has sought to deepen ties since coming to power in May, with the two countries signing a power trade agreement last month.

India is investing billions of dollars to develop hydropower in Nepal, which currently produces just 750 megawatts - less than two percent of its potential. "This project is an important achievement for both Nepal and India. There is a lot of excitement here to finally sign the agreement," said Radhesh Pant, from the Nepal Investment Board.

Copyright Agence France-Presse, 2014


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Banking Review 2014

Foreign Debt $62.649bn
Per Cap Income $1,512
GDP Growth 4.24%
Average CPI 8.6%
Trade Balance $-2.378 bln
Exports $2.016 bln
Imports $4.394 bln
WeeklyAugust 27, 2015
Reserves $18.509 bln