The looming power crisis during peak summer in mind, the Power Ministry has asked the External Affairs Ministry to open talks with Nepal to exploit some of its untapped hydroelectricity potential.
In a letter to Foreign Secretary Shivshankar Menon last month, outgoing Power Secretary RV Shahi underlined the importance of utilising Nepal's 44,000 MW hydroelectric potential, of which only 650 MW has so far been developed by Kathmandu.
Citing the successful umbrella agreement with Bhutan in July 2006, the power secretary suggested that the Foreign Ministry consider financing such projects.
Shahi wrote: "Implementation of these projects will have a demonstrable effect as this would not only enable Nepal to meet its increasing energy requirements, but would also boost its socio-economic development through sustained income from sale of surplus power."
The Power Ministry has since floated an approach paper on cooperation with Nepal in development of hydroelectric projects. The paper has been sent to the Prime Minister's Office, Cabinet Secretary BK Chaturvedi and Water Secretary Gauri Chatterjee.
The Power Ministry argues that cooperation with Nepal would also be a confidence-building measure that could kickstart discussions on multi-purpose projects.
Cooperation with Bhutan in hydropower has yielded good results, the letter said. Three projects - Chukha (336 MW), Kurichu (60 MW) and Tala (1020 MW) - have been implemented as mutual benefit projects. Projects taken up so far with
Bhutan are run of the river projects fully financed by India through grant and loan funding.
In addition to these three projects, discussions with Bhutan are at a final stage for taking up the implementation of Punatsanchhu 1 hydroelectric power project of 1095 MW capacity with Indian assistance.
The Power Ministry argues that a similar umbrella agreement with Nepal should start with run of the river projects because they have shorter gestation period.
The ministry has already outlined a number of projects like West Seti (750 MW), Budhi Gandaki (600 MW), Arun 111 (400 MW), Upper Marshyanngdi (121 MW) and Upper Karnali (300 MW) as possible for India-Nepal cooperation.