Power Trading Corporation of India (PTC) has started supplying 25 MW of additional power to Nepal Electricity Authority (NEA) from 18 May 2008 to overcome the current shortage of power in Nepal. This is an addition to the 50 MW of power already being supplied by India to Nepal through the power exchange mechanism.

India and Nepal have had a Power Exchange Agreement since 1971 for addressing power requirements in the border areas of the two countries. India also supplies 10 MW of power to Nepal under the Kosi Agreement and 70 million KWH under the Mahakali Treaty. At the last meeting in June 2007, both sides agreed that additional quantities of power to overcome seasonal shortages would be addressed at commercial terms. Earlier this year, NEA placed an order with PTC for 25 MW of power which has now been operationalized. With augmentation of transmission systems between the two countries, power quantities can be substantially enhanced. A number of projects in this regard are being financed through the USD 100 million soft loan extended by India. In addition, to address the longstanding power requirements, Government of India has offered to provide assistance to build a 250 MW Naumure Power Project and 27 MW Rahughat Hydropower Project while also offering assistance to rehabilitate the Devighat Hydropower Project.