Nepal and India Sign Joint Venture Pact to Build Two New Cross-Border Power Lines

Kathmandu, Oct 2025 : Nepal and India have taken a major step forward in their growing energy partnership, with two state-owned power companies signing agreements on Wednesday to jointly construct two high-capacity cross-border electricity transmission lines that will enhance regional energy trade and grid stability.

The Nepal Electricity Authority (NEA) and the Power Grid Corporation of India Limited (PGCIL) signed a Joint Venture (JV) and Shareholders’ Agreement in New Delhi to develop 400 kV transmission corridors linking Inaruwa (Nepal)–Purnia (India) and Lamki (Dododhara, Nepal)–Bareilly (India), Nepal’s Ministry of Energy, Water Resources and Irrigation said in a statement.

Both countries have made significant progress in recent years toward deeper energy cooperation, but officials on both sides acknowledge that inadequate transmission infrastructure remains a key bottleneck to scaling up cross-border power trade. The two new projects are part of a broader plan to build multiple high-capacity transmission lines connecting Nepal’s rapidly expanding hydropower generation network with India’s vast energy market.

The agreements were signed by Subash Kumar Mishra, Deputy Executive Director of NEA, and Sanjay Kumar Gupta, Chief Operating Officer (International Business) at PGCIL.

“The signing of the joint investment agreement has paved the way for the establishment of joint venture companies to construct both transmission lines with investments from NEA and PGCIL,” Nepal’s Energy Ministry said.

Under the terms of the agreement, two separate joint venture companies will be formed — one in India and one in Nepal — to execute the projects. The Indian JV will build the sections of the lines located within India, with PGCIL holding a 51% stake and NEA holding 49%. Conversely, the Nepal-based JV will construct the Nepali segments, with NEA holding 51% ownership and PGCIL 49%.

The projects will be financed through 80% debt and 20% equity, according to the ministry. The Inaruwa–Purnia line will extend about 26 km in Nepal and 109 km in India, while the Lamki–Bareilly line will run approximately 33 km in Nepal and 185 km in India.

The signing took place during the visit of Energy Minister Kulman Ghising to India for the eighth General Assembly of the International Solar Alliance (ISA) — a global initiative led by India to promote solar energy collaboration among member countries.

Minister Ghising described the deal as a “significant milestone” in advancing bilateral and regional electricity trade. “These transmission projects will enable the export of surplus electricity generated in Nepal to India and beyond,” he said. “They will expand Nepal’s access to international energy markets and attract both domestic and foreign investment into the country’s hydropower sector.”

India’s Power Minister Manohar Lal Khattar, who attended the ceremony, said the new transmission lines would strengthen energy exchange, improve grid reliability, and enhance energy security for both nations. “Upon completion, these projects will further deepen our cooperation in the power sector and contribute to the economic growth of both India and Nepal,” he said.

Currently, the 400 kV Dhalkebar–Muzaffarpur line is the only high-capacity cross-border transmission link in operation, with the ability to transmit about 1,000 MW of power. Most electricity trade between Nepal and India flows through this corridor.

In addition, Nepal operates nearly a dozen lower-capacity transmission lines (132 kV, 33 kV, and 11 kV) connecting with India’s Bihar, Uttar Pradesh, and Uttarakhand states. The NEA currently exports around 1,000 MW of electricity daily to India and Bangladesh through these networks.

Other major cross-border projects are also progressing. The 400 kV Butwal–Gorakhpur line is under construction, while the Dhalkebar–Sitamarhi line is being developed by SJVN Arun-3 Power Development Company, a subsidiary of India’s SJVN Limited.

India has already committed to importing 10,000 MW of electricity from Nepal over the next ten years, making the expansion of cross-border transmission capacity vital to meeting that goal.

According to Nepal’s Energy Ministry, the country has already exported electricity worth NPR 15 billion (approximately INR 9.37 billion) since the beginning of the 2025–26 fiscal year in mid-July, reinforcing its emergence as a growing power exporter in South Asia.

In addition to the two newly signed projects, both countries have agreed to jointly develop the 220 kV Chameliya–Jauljibi transmission line, which will connect Nepal’s far-western region to India’s Uttarakhand state, further integrating their electricity grids and deepening regional power cooperation.