Kathmandu, Sept. 11 -- In a step that could be a precursor to the US-backed Millenium Challenge Corporation (MCC) project to upgrade Nepal's power grid, the country this week signed an agreement with India to increase two-way electricity trade.

Nepal Electricity Authority (NEA) Managing Director Kulman Ghising on Wednesday signed an MoU with the state-run Power Grid Corporation of India (POWERGRID) for the construction of a second, transnational 400kV transmission line from Butwal to Gorakhpur.

This new power line will be connected to the 350km transmission line up to Butwal that will evacuate power from 3,000MW of electricity being generated from new power projects in Nepal in the next three years. However, this domestic power line has...