The two sides, however, made headway on early start of the 5600-MW Pancheshwar multipurpose project and signed three memorandums of understanding, including one in which India will grant assistance of 69 million Nepalese rupees to supply iodised salt to check the high incidence of goitre in Nepal.
Emerging from a meeting with Modi after his arrival in Kathmandu, Nepals Minister for Foreign Affairs Mahendra Bahadur Pandey told The Indian Express that the power trade agreement would take 45 days to be firmed up.
It will take 45 days. I am very confident (it will go through), Pandey said.
The PTA was discussed by the Nepal cabinet before Modis arrival but officials familiar with the exchange of drafts between the two countries had cautioned that the revised Nepal version had to be acceptable to the Indians.
A row erupted over the PTA after Nepalese water resource experts questioned a provision in the draft of the power sector cooperation agreement. They claimed it only allowed Indian government and entities the right to build hydroelectric projects in Nepal.
So shrill was the debate here that the Nepal government had to step in and clear the air. Finance Minister Ram Sharan Mahat said the PTA drafted by Nepal focused on power trade and cross-border grid connection. It did not include any provision of Indian investment in hydel power generation or harnessing the potential with Indian support.
The Indian embassy also issued a statement saying that in no way does the draft constrain Nepals sovereign right to develop its hydropower potential.
Energy-starved Nepal wants to fast-track construction of new power plants and realise its hydel power potential which is estimated to be at least 40,000 MW. A decade-long Maoist insurgency until 2006 and the political uncertainty that followed stopped the country in its tracks, deepening its energy crisis.
The MoUs signed Sunday, in the presence of Modi and Prime Minister Sushil Koirala at the Singha Durbar, included one on the Pancheshwar project and another on cooperation between Doordarshan and Nepal Television.
The progress on Pancheshwar Modi later told Nepals lawmakers he hoped to see work begin in a year was made during External Affairs Minister Sushma Swarajs visit to Kathmandu on July 26.
Along with counterpart Pandey, she co-chaired a meeting of the joint commission. A joint statement issued later said: While noting the finalisation of the terms of reference of the Pancheshwar Development Authority, they directed the authorities for early completion of the DPR of the Pancheshwar multipurpose project.
The 5600-MW multipurpose project is to come up on the Mahakali river which forms the boundary between India and Nepal. The detailed project report was first drafted by India in 2002 but no progress was made because issues like location of the structure, availability of water downstream and assessment of power benefits could not be resolved.