India and Nepal will build a 695 megawatt (MW) hydropower plant, officials said on Monday, as the Himalayan nation looks to exploit its abundant potential to generate clean energy to ease power shortages. India, which has an electricity trading deal with Nepal, is investing billions of dollars in infrastructure including hydropower plants, as New Delhi looks to grow its influence in its smaller neighbours, where China is also increasingly active. The Arun IV project will be jointly built on the Arun River in Nepal’s east by India’s Satluj Jal Vidyut Nigam (SJVN) Ltd and Nepal’s state-owned Nepal Electricity Authority (NEA) owing 51 per cent and 49 per cent of equity respectively, NEA spokesperson Suresh Bahadur Bhattarai said. “Nepal will get 152 megawatt of free electricity from the plant for its consumption and the rest will be split between the two on the 51 per cent and 49 per cent basis,” Bhattarai told Reuters without giving further details. “Cost of the project is being worked out and whatever it comes will be shared as per the above ratio.” The power plant agreement is among six deals concluded between India and Nepal during the Indian Prime Minister Narendra Modi’s fifth visit to the Himalayan nation on Monday, India’s Ministry of External Affairs said in a statement. During the visit Modi met his Nepali counterpart Sher Bahadur Deuba and took part in a Buddhist ceremony to mark the birth anniversary of Lord Buddha at Lumbini in southwest Nepal. Indian companies are negotiating with the government for power plants that would produce a total of 8,250MW and Nepal hopes to export excess energy to India, officials said. Nepal has the potential to produce 42,000MW of hydropower but now generates about 1,200MW – less than demand of about 1,750MW. The deficit is met by imports from India. India’s Modi meets Nepal’s Deuba in New Delhi summit Also on Monday, Nepal opened a Chinese-built airport intended to capitalise on Buddhist tourism. But Narendra Modi flew by helicopter directly from a nearby Indian airport to the Buddha’s birthplace at Lumbini, bypassing the new facility as his Nepali counterpart inaugurated it. The sequence of events illustrates the competition for influence in the landlocked Himalayan country by its two giant neighbours. Nepal has traditionally done a balancing act between New Delhi and Beijing, but analysts believe Indian influence over Kathmandu has been dwindling as China pours heavy investment into the landlocked Himalayan nation. The US$76 million airport project in Bhairahawa, the closest city to Lumbini, is funded by the Asian Development Bank and OPEC Fund for International Development but built by China’s Northwest Civil Aviation Airport Construction Group.