Electricity Trade between Nepal and India: Problems and Prospects

Alternative Title
Gurung, Ritu
Gurung, Ritu
Alternative Author(s)
Gurung, Ritu
국제대학원 국제통상학과
Graduate School of International Studies Ajou University
Publication Year
International TradeNepalIndiaElectricity Trade
Alternative Abstract
Abstract Nepal is one of the most trade dependent countries in South Asia. India is the major trading partner of Nepal. Because of geographical proximity, trade with India is more convenient than with any other neighboring countries. Trade relation between India and Nepal has a long history. However, despite of all the trade treaties between two countries, India rejoices the economies of scale where as Nepal is facing a severe trade deficit. According to the “Nepal Quarterly Economic Update” published by Asian Development Bank, total export to India decreased by 5.4% and to total imports from India rose 2.7% this year. Through this thesis, I have tried to analyze the problems of bilateral trade in electricity between two countries and what are the significances of the trade. If Nepal continues trading with India then what would be the future prospects of Nepalese economy. The main objectives of the study are to a) Review of Nepal and India electricity trade relation b) Analysis of the electricity market growth of both nations c) Study of Nepal’s water resources as a comparative advantage d) Analysis of the impact of electricity trade, in particular, in improving trade relation in terms of friendly and historical relationship between the two countries. e). Identify the problems and scope and areas of improvement in Indo-Nepal electricity trade relations. Economic growth of Nepal on the basis of hydroelectricity trade is the primary focus of the study. The electricity deficit has the major role in economy growth of the country. At the present context, Nepal and India electricity trade is based on the intra industry trade theory but it will no longer exists in the future when Nepal will only export the hydroelectricity to India. With available data I have tried to analyze numerically that Nepal and enjoy the electricity export led growth. The projected ten years revenue growth is positive and supports the theory of comparative advantage. The cost analysis of producing electricity by using coal (69%) in India since it is the highly dependent factor for power generation for India and by water resources (63%) in Nepal has been shown. Nepal also has the advantage on cost of production because of run of river type which naturally discourages the construction cost of big dams’ reservoirs. Finally, on the basis of my study, it is illustrated that Nepal and India electricity trade relationship is going to grow stronger with the market demand growth. Nepal can rejoice the comparative advantage in producing hydroelectricity and sell it to the highly potential market of India and gain the economic growth for both the countries. Acknowledgements This dissertation would not have been completed without the guidance and support from my advisor Professor Young-Kyun Song. I am very thankful for his encouragements and suggestions during the preparation of thesis. Similarly, I am also grateful to my committee members Professor Soobok Lee and Professor Min-je Sung for their valuable inputs during the defence of my thesis. It would be unthinkable of me not to thank my father and Dhiraj for always encouraging me to pursue my beliefs and dreams. My brothers and aunty with their faithful and loyal support have been instrumental in my endeavours. All of my loved ones’ absolute support gave me the courage to follow this complicated journey and focus on my goals. My sincere thank goes to Mr. R.P Devkota for his immense support on my thesis completion without which my thesis would have remained incomplete. Likewise, my extended thank goes to Mr. Sachidananda Joshi for his priceless suggestions and feedback on my draft thesis. I would also like to thank Mr. Arun Ranjitkar, Mr. Deepesh Man Shrestha, Mr. Jeevan Baniya, Munna, Rita and to all of those who helped me on the entire process of writing my thesis. I am especially grateful to GSIS, all the professors of GSIS and the entire family of Ajou University for giving me the opportunity to learn in a multicultural environment and giving me an edge to explore the world in a different way. Dedication This dissertation is solely dedicated to my dad and my mom whose love and support made me reach so far. Mom, you are always missed and your memories can never fed away. It is your love and blessing that holds me high when I am low and tormented. Dad, thank you for your faith in me and keeping my moral always up. I am so proud to be your daughter.

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Special Graduate Schools > Graduate School of International Studies > Department of International Trade > International Trade > 3. Theses(Master)
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