POWERGRID Activates 900 MW Nepal Transmission Line

Power Grid Corporation of India (POWERGRID) has activated its critical "Transmission System for Power Evacuation from Arun-3 (900 MW) HEP, Nepal - Indian Portion". This new infrastructure facilitates the transfer of 900 MW of power from Nepal into the Indian grid.

Key Milestones and Regulatory Actions

The transmission system achieved its Commercial Operation Date (COD) on September 3, 2023. A significant regulatory step occurred with a Central Electricity Regulatory Commission (CERC) Order on March 10, 2026, which determined the tariff for this asset. The CERC order also noted a 126-day delay in the project's completion, impacting capital cost approvals and leading to disallowances regarding Interest During Construction (IDC) and Incidental Expenditure During Construction (IEDC).

Why This Project Matters

This project is vital for strengthening India's energy infrastructure and energy security through international cooperation. It enables the evacuation of 900 MW of hydropower from Nepal, fostering bilateral economic ties and promoting renewable energy integration. The successful activation of this link highlights POWERGRID's role in facilitating regional power trade and supporting Nepal's hydropower development.

Project Background

The Arun-3 Hydro Electric Project (HEP) is a 900 MW initiative in Nepal, developed by SJVN Limited via its subsidiary SAPDC. This project aims to export surplus power to India, a key part of India-Nepal energy cooperation. POWERGRID's role involves the "Indian Portion" of the transmission system, specifically the Sitamarhi – Dhalkebar 400 kV D/C transmission line. This infrastructure is crucial for channeling Nepal's generated power into the Indian grid, ultimately supplying areas like Muzaffarpur in Bihar.

Impact for Shareholders

Shareholders can note the addition of new transmission capacity to POWERGRID's operational portfolio, directly supporting the evacuation of significant hydropower from Nepal.

• The transmission system is now live, enabling the flow of 900 MW from Nepal.
• This expands POWERGRID's footprint in cross-border energy infrastructure.
• The system's operation allows for revenue generation based on determined tariffs.
• It reinforces India's commitment to regional energy security and cooperation.

Operational Risks

Beyond the noted construction delays, POWERGRID, like other sector players, faces general risks such as delays in government clearances, land acquisition challenges, and right-of-way issues, which can impact project timelines and costs.

Peer Landscape

POWERGRID stands as India's largest transmission utility and a key state-owned entity. Its extensive network and operational scale are distinct from private players like Adani Energy Solutions, India's largest private transmission and distribution company. As of March 2025, Adani Energy Solutions operates approximately 26,696 ckm of transmission lines and over 90,236 MVA of transformation capacity. POWERGRID's dominance in the inter-state transmission system offers a strategic advantage, though competition in bidding for new projects remains.

Investor Outlook

Investors will be keen to monitor the actual power flow and revenue realization from this project under the newly determined tariffs. Key areas to watch include:

• Future updates on POWERGRID's participation in other cross-border transmission projects.
• Progress on integrating renewable energy sources into the national grid via new evacuation systems.
• Any further regulatory developments or tariff adjustments from the CERC.
• POWERGRID's overall project execution pipeline and performance against timelines.
• The ongoing impact of sector-wide challenges like land acquisition and clearances on its portfolio.