Sri Lanka and Nepal to discuss energy trade

Foreign Ministers from Nepal and Sri Lanka meet today in Colombo to discuss opportunities to collaborate in the energy sector.

Sri Lanka and Nepal will discuss future energy trade today

Sri Lanka and Nepal will discuss avenues to increase trade in energy today – Photo: Chemonics

Foreign Ministers from Nepal and Sri Lanka meet today in Colombo to discuss opportunities to collaborate in the energy sector.

90% of Nepalese energy consumption is sourced from hydroelectric power. In Sri Lanka, hydroelectric power accounts for 20% of electricity generation, and over 70% of its energy generation comes from thermal sources—built by Chinese companies.

Sri Lanka has faced routine power outages since March when Colombo failed to make payments on diesel shipments—an alternative way to generate electricity.  To keep its economy above water, Sri Lanka borrowed heavily, including from China, to which it owes 15% of its national debt. Nepal has rich hydropower reserves and exported 39 Megawatt to India in 2021. Sri Lanka could benefit from Nepal’s lucrative hydroelectric power generation.

In the short and long-term, bilateral discussions will likely focus on energy. Nepal is rich in hydroelectric power, and an increase in bilateral energy agreements between the two states could relieve Sri Lanka from its energy issues and, in turn, dependence on China. In the medium to long-term, expect the two to forge energy trade deals focusing on hydroelectric power and building infrastructure to export it to Sri Lanka.

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