Hon’ble Deputy Prime Minister Mr. KPS Oli; Hon’ble Finance Minister Ram Sharan Mahat; Hon’ble Minister of State for Water Resources Mr. Gyanendra Bahadur Karki; Mr. T.N. Thakur, Chairman and Managing Director of PTC India Ltd.; Dr. Sandeep Shah, President IPPAN; Mr. Chandi Dhakal, President of FNCCI; and, distinguished participants.
I would like to congratulate IPPAN and PTC India Ltd. for organising this seminar, which is the first of its kind between India and Nepal. And, thank you for inviting me to be a part of this extraordinary event. When we had first conceived of this event, we had not imagined that the response would be so strong.
This huge gathering, marked by the presence of over 100 Nepali and over 50 Indian participants, is in itself a powerful testimony to the recognition in both countries of the vast opportunities for cooperation in the power sector.
I speak of opportunities not in the sense of mere potential, but from the point of view of real and immediate possibilities, based on synergies and complementarities; markets and financial resources; and, entrepreneurial capabilities and regulatory environment in the two countries. Yet, nothing has seen more discussions and less achievement than cooperation in this sector.
This is particularly unfortunate in the context of our otherwise close and robust economic relationship. Nearly 70% - I repeat – nearly 70% of Nepal's manufactured exports go to India. A large part of these exports is based on Nepal's natural resources. Similarly, nearly two-thirds of Nepal's imports come from India. About 40% of foreign investments in Nepal have originated in India. Around 40% of tourist arrivals in Nepal are from India. Our trade in services, which is not documented, is even more integrated.
Yet, there has been no complaints and controversy about these wide-ranging commercial ties. Indeed, this engagement is a key manifestation of our close relations and is actively encouraged by the leadership in both countries. It is ironical that controversy, doubts, mistrust and hesitation over bilateral cooperation have existed precisely in a sector that offers Nepal a unique asset and an unparalleled opportunity – first, to meet Nepal's own burgeoning energy demand in the face of the country’s evident financial constraints and, second, to generate revenues from exports.
A key objective of both governments is to increase connectivity between the two countries. We are seeking to expand this connectivity through telecom, road, rail and air services links and a petroleum pipeline. Sadly, we have seen no progress on developing transmission interconnection.
The absence of adequate cross-border infrastructure has constrained the development of power trading between the two countries, denying Nepal the opportunity to earn revenue from spilled energy in the wet season and the possibility of importing power from India in the dry season.
We need to, therefore, ask why it should be difficult for us to engage in the power sector, if it is possible for us to foster close ties across all sectors of the economy in a most natural manner. We need to ponder why commercial exchanges in other sectors are considered mutually beneficial and in the power sector a zero-sum game.
In the past, perhaps, we focused only on large, multipurpose projects, with their complex externalities that were difficult to value and reach agreement on. Perhaps, historical perceptions cast a shadow; and, institutional weaknesses and regulatory framework impeded cooperation. Our dialogue was confined to the governments, when it should have also involved industry players in both countries. And, frankly, there has been more politics and less business in our engagement.
The power sector in both countries has evolved. There are multiple players in this sector. The contours of a genuine power market are taking shape. Therefore, our engagement must also evolve to keep pace with changing environment and emerging opportunities. We must make the channels of cooperation more broad based and allow those who are in the business of power, in Nepal and India, to take the lead in this process. They are more likely to make a success of cooperation than governments can.
Therefore, this event, put together by IPPAN and PTC India, is most timely. This is a pioneering effort and one that, I am confident, will break new ground in the development of hydropower sector in Nepal, not only in terms of power projects, but also in related areas of institutional partnerships in financing power and other infrastructure projects, project services and equipment supplies.
The participation today is genuinely encouraging, especially at a time when larger political questions in Nepal are still unresolved. I do, however, share the sense of optimism that, for all the challenges and uncertainty that exist in the ongoing political process, the prospects for political resolution and enduring peace are strong. The size and the quality of Indian contingent – project developers, contractors, investors, insurers, financing companies and banks – represent a strong vote of confidence in Nepal and our relationship.
I would like to stress to participants from both sides that success would depend critically on the quality of partnerships that are forged, and transparency and professionalism with which ventures are developed. The need for diligence in choice of projects, partners and strategies can never be underestimated. I say this with the experience of other sectors, which have India-Nepal joint ventures. This event, therefore, provides a platform not only to understand the regulatory environment and opportunities in both countries, but, even more, for people to get to know each other. I also hope that new ventures would involve the broadest participation possible from the people of Nepal, so that they, too, directly enjoy the benefits of this cooperation.
We, on our part, are ready to facilitate cooperative endeavours between the industries in the two countries. We at the embassy stand ready to provide such advice and guidance as we can, as you seek to steer your way through a complex process.
I would also like to reiterate my government's enduring commitment of strong support for Nepal's economic development, to the best of our ability and capacity. This support also extends to the power sector in Nepal.
We will, for example, provide funds for rehabilitating and upgrading the Devighat hydroelectric project, which was built with Indian assistance in the early 1980s. We are prepared to consider providing support, through an appropriate financial model and corporate structure, for the development of a project in the range of 100-150 MW for Nepal's own use.
We understand that Government of Nepal intends to utilise a considerable part of the concessional line of credit of USD 100 million extended by Government of India for augmenting generating capacity in Nepal, expanding rural electrification and developing high voltage transmission interconnection to India. I can assure you that we would take steps to simultaneously develop the connection on our territory. I believe we can have at least two transmission highways in two-three years.
In the face of looming power shortage in Nepal, we will consider positively Nepal's request for supply of electricity on commercial terms during the coming winter, although, as you are aware, India has its own power shortage. In fact, we have been in regular touch with PTC India to explore the possibility of arranging supplies on a priority basis. I understand that a transmission bottlenecks have to be overcome. We hope to be able to address that problem in the coming months. We will also seek to schedule the meeting of the Power Exchange Committee as soon as we receive the request and dates from Government of Nepal.
In conclusion, let me say that we are committed to defining new terms of engagement in water resources, which will address each other concerns and resolve outstanding issues in a mutually satisfactory manner. This will be an area of priority for us in the coming months. The time has also come for us to create a new paradigm of mutually beneficial partnership in the power sector, which will have a transformational impact on the lives of millions of people in both countries. For Nepal, this cooperation can be an engine of rapid economic and industrial growth and a key to prosperity.
I, therefore, wish this event all success and I hope that it leads to new milestones in our economic cooperation.
Thank you
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