HighI Geo-Economics & Chokepoints14 September 2026, Monday
India agrees to sell 654 MW to Nepal, turned electricity importer after floods destroyed its hydropower plants
A glacier collapse and flood on 26 August killed more than 1,400 people in Nepal and Tibet and knocked out dozens of power plants. India has approved electricity exports of up to 654 MW for 18 hours a day until 31 December.
On 26 August an ice-and-rock avalanche in the Langtang area blocked the Lhende Khola stream; when the dam gave way, floods swept through the Bhote Koshi and Trishuli valleys. According to Mappr's 10 September update, the death toll stands at 1,408 in total, 1,365 in Nepal and 43 in Tibet. Police records list 4,077 people missing in Nepal and 519 in Tibet. According to the same source, 11 hydropower projects were damaged and 431 MW of capacity went offline. CARE, however, gives a figure of 14 affected projects with a total capacity of 748 MW. The Rasuwagadhi border crossing and the bridge to China were destroyed. According to Al Jazeera, on 14 September India approved electricity exports to Nepal of up to 654 MW for 18 hours a day until 31 December.
The disaster has turned Nepal, which meets almost all its energy needs from hydropower and has sold surplus electricity in recent years, back into an importer. Nepal's reconstruction cost is estimated at no less than 5 billion dollars; the UN emergency appeal is about 50 million dollars. The closure of the Rasuwagadhi route, through which a significant share of road trade to China passes, has weakened Kathmandu's access to Beijing and increased its dependence on India in energy and trade. This strengthens New Delhi's hand in the India–China rivalry. The region's vulnerability to glacier-driven disasters, meanwhile, is changing the risk calculus for hydropower investment.
Talay assessment
Bottom line
The disaster has turned Nepal from an electricity exporter into an importer and, with the Rasuwagadhi route closed, weakened its road access to China; Kathmandu's dependence on India will grow in the near and medium term. India's approval of power sales until 31 December makes this shift concrete. The most likely path is slow repairs with import needs extending beyond 2026; a financing gap against reconstruction needs of at least 5 billion dollars is a significant risk.
Likely effects
- Nepal's energy and public financesNegative1–6 months
Knocked-out hydropower capacity forces Nepal to import electricity; lost export revenue, the import bill and reconstruction costs of at least 5 billion dollars squeeze the budget and external balance.
- India–China rivalryUncertain6 months+
Growing dependence on India for energy and trade, combined with the severed road to China, strengthens New Delhi's influence over Kathmandu while setting back Beijing's regional connectivity projects.
- Himalayan hydropower investmentNegative6 months+
A glacial-collapse flood hitting dozens of plants may lead to a repricing of climate and geological risk in the region's hydropower projects and higher insurance and financing costs.
Possibilities, ranked
- 1Extended imports and dependence on India65%
Repairs to damaged plants progress slowly, Nepal keeps buying electricity from India beyond 2026 and turns to southern routes for trade.
Watch: India extending its power-sale approval beyond 31 December, and the repair timetable announced for damaged plants.
- 2China rebalances through reconstruction20%
Beijing quickly finances repairs to the border crossing and bridge in an effort to regain influence in Nepal.
Watch: A Chinese announcement of aid or construction commitments for the Rasuwagadhi route and bridge.
- 3Rapid repairs and partial recovery15%
Less damaged plants return to the grid in the dry season, import needs decline and the Rasuwagadhi crossing reopens temporarily.
Watch: An announcement that a large share of the lost capacity is back on the grid, and a temporary bridge at Rasuwagadhi.
Probabilities are calibrated judgement based on the sources, not measurement, and are revised as new information arrives. Not investment advice.