Kathmandu – Nepal and India have signed a joint venture and shareholder agreement to construct two 400 kV cross-border transmission lines aimed at expanding electricity trade between the two countries.

The proposed projects include the Inaruwa (Nepal)–New Purnea (India) 400 kV double-circuit transmission line and the Lamki (Dodhara, Nepal)–Bareilly (India) 400 kV double-circuit transmission line. 

Once completed, these new transmission corridors will enhance electricity exchange, improve grid stability, and contribute to sustainable economic growth in both countries, officials said.

The agreement was signed in New Delhi on Wednesday in the presence of Energy, Water Resources and Irrigation Minister Kulman Ghising, and India’s Power Minister Manohar Lal Khattar.

Subhash Kumar Mishra, deputy managing director of the Nepal Electricity Authority (NEA), signed the agreement on behalf of NEA, while Sanjay Kumar Gupta, chief operating officer of International Business at the Power Grid Corporation of India Limited, signed on behalf of Power Grid.

The deal opens the door for establishing joint venture companies between the NEA and the Power Grid to build the two transmission lines.

“This is another milestone in Nepal-India power cooperation,” said Minister Ghising. “The construction of these transmission lines will facilitate electricity exchange not only between the two countries but also across the region. It will also allow Nepal to access international energy markets, boosting domestic and foreign investment in the hydropower sector.”

Mr Khattar said the two new transmission lines would make electricity exchange between Nepal and India more robust, enhancing regional energy security, strengthening grid systems, and contributing to economic growth.

These two new transmission line agreements are in addition to the under construction 400 kV Gorakhpur – New Butwal transmission line.

“Together, these lines are expected to add up to about 6000 MW additional transmission capacity between India and Nepal. These developments will support and help in realizing the ambitious target of 10,000 MW power export from Nepal to India within a timeframe of ten years as expressed in the Agreement for Long Term Power Trade signed in January 2024,” said a communique issued by the Indian Embassy in Kathmandu.

On October 16, Nepal’s Cabinet approved the establishment of two joint venture companies—one in Nepal and the other in India—with investments from the NEA and the Power Grid to construct the transmission lines. The Cabinet also authorised the NEA to invest equity capital in both companies.

At present, Nepal exports up to 1,125 MW hydropower to India via the 400 kV Muzaffarpur- Dhalkebar and other transmission lines. NEA earned a revenue of NPR 17.56 billion in the fiscal year 2024-2025 through such exports. Further, NEA also started exporting up to 40 MW power to Bangladesh through the Indian grid from November 2024.

The Indian company to be established for the portion of the transmission lines in Indian territory will be 51 percent owned by Power Grid and 49 percent by NEA. Similarly, the company to be established in Nepal for the section within Nepali territory will be 51 percent owned by NEA and 49 percent by Power Grid.

The financing structure for both projects will consist of 80 percent debt and 20 percent equity.

NEA will invest Rs1 billion in the Nepali company and Rs2 billion in the Indian company as part of its equity contribution, reports said.