Nepal fetches premium price of Rs 16 per unit on electricity sold to India, due to flood in Tista River

Kathmandu: Nepal is selling its electricity in India's 'Day Ahead' market at a rate of Rs 16 per unit, one of the highest prices of energy produced in the Himalayan country till the date.

According to records of India's Energy Exchange (IEX) market, electricity is being traded at a price of INR 10 per unit on Tuesday.

The Indian market divides 24 hours into 96 blocks of 15-minute intervals, and electricity is traded at competitive rates determined by market dynamics. Therefore, the price of each block can vary. However, on Tuesday, all 96 blocks are being sold at 10 Indian rupees per unit, equivalent to 16 Nepali rupees.

This surge in electricity prices can be attributed to several factors, including issues related to coal imports during the Russia-Ukraine war. Approximately two years ago, India implemented regulations for the IEX India, setting the maximum rate for purchasing and selling electricity at INR 12 per unit.

Recent flooding in hydropower projects on the Tista River in India has caused a reduction in electricity production in India. Consequently, as electricity sellers were unable to meet the demand, Nepal's electricity has garnered a favorable price in the market. Typically, electricity prices in Nepal range from Rs 5 to Rs 8 per unit. Even in India's real-time market on the IEX, it is currently being traded at INR 10 per unit.

In a significant development, the Nepal Electricity Authority (NEA) obtained permission this month to sell electricity in IEX India real-time market. In India's competitive energy market, the NEA, which previously sold electricity through day-ahead bidding, can now bid and sell electricity 15 hours in advance.

On July 31, the Ministry of Electricity of India amended procedures for bodies overseeing electricity import/export (cross-border) approvals, allowing authorized bodies from neighboring countries to participate in the real-time market.

NEA has secured approval for exporting 522 MW to the competitive market and 632 MW to the state of Haryana through NVVN, including 110 MW. Of this, 562 MW of electricity is exported through the Dhalkebar-Muzaffarpur 400 KV international transmission line, with an additional 70 MW via the Mahendranagar-Tanakpur 132 KV transmission line.

From mid-July to mid-September, NEA exported electricity worth Rs 5.43 billion to India, marking a significant milestone in Nepal's energy export endeavors.