KATHMANDU: South Asian heads of state attending their first summit in three years reached a deal on energy sharing Thursday, but failed on two other economic agreements during a retreat where Prime Minister Nawaz Sharif and his Indian counterpart Narendra Modi shook hands.

On the last day of the two-day summit, the leaders flew to a mountain resort near Nepal's capital and agreed on electricity sharing among the eight nations through a common grid.

During the retreat, Nawaz and Modi shook hands and talked in a group, but did not have one-on-one dialogue, according to Nepalese officials.

Indian officials have already said exchanging courtesies among the leaders did not mean talks between the two South Asian rivals.

“If they interact, exchange courtesies and exchange a few words, that does not translate as dialogue,” Indian External Affairs Ministry spokesman Syed Akbaruddin said earlier.

The leaders of Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka boarded helicopters from Kathmandu to the retreat at Dhulikhel, 30 kilometres (19 miles) away.

The area is a popular viewing spot of the Himalayan mountains.

The trip Thursday gave them a final chance to reach agreements that were expected to be signed during the meeting.

Officials indicated that Pakistan had made last-minute objections to energy sharing, roads and railways connectivity agreements because of incomplete internal procedures, but at the end, the energy deal was clinched.

Earlier Nawaz and Modi also shook hands and met briefly during the retreat at the Saarc Summit, according to Indian media reports.

Sources say there was no separate conversation between the two leaders.

According to a report on NDTV, Modi and Nawaz shook hands and spoke briefly at an informal retreat for Saarc leaders at a resort outside Kathmandu.

The report also says that Nawaz will fly out of Nepal this evening, a little earlier than scheduled. He will miss a banquet and a meeting with the president of Nepal.

An Indian government source had earlier said that Modi may hold informal talks with his Pakistani counterpart at the Dhulikel resort in the Himalayan foothills on Thursday morning, although that had remained uncertain.

Modi held one-on-one talks with every Saarc leader except Prime Minister Nawaz Sharif on Wednesday, with both sides saying it was up to the other to request a meeting.

Read more: Leaders retreat to Himalayan hideout amid Indo-Pakistan chill

The 18th South Asian Association of Regional Cooperation (Saarc) summit kicked off Wednesday as leaders of the eight members states got together here at the capital of Nepal to find ways to make the regional grouping more viable and effective.

All the eight leaders were invited to the conference table and the ceremony began with the playing of the national anthem of Nepal.

Analysts have blamed Saarc's failure on the mutual mistrust between Pakistan and regional powerhouse India, which has taken a more assertive stance toward its northern neighbour since the election of a new Hindu nationalist government in May.

The Indian Express said there were “visible cold vibes” between the two leaders, who did not even exchange nods on Wednesday, let alone shake hands, despite being only two seats apart for around four hours.

Pakistan to host 19th Saarc summit, says Nawaz

Prime Minister Nawaz Sharif was speaking during a session of the summit and said that Pakistan would look forward to welcome the member states for the 19th Saarc Summit in Islamabad in 2016.

“The 18th Saarc summit has reaffirmed our resolve to create an inclusive, just, equitable partnership for peace, development and prosperity under the platform of Saarc,” he said, adding that the member states must adapt a realistic, pragmatic and step by step approach towards solution of issues which will open up new channels of cooperation.

Prime Minister Nawaz appreciated the ministers on organising a successful dialogue between the South Asian countries. “I would like to congratulate our foreign ministers, foreign secretaries and other officials who have so efficiently set a stage for successful conclusion of this important summit,” he said.

The prime minister extended his gratitude to the host Nepalese administration. “I would once again take this opportunity to collectively express our sincere gratitude to the Prime Minister of Nepal, Government of Nepal and the people of Nepal for extending a warm welcome and memorable hospitality to all of us in Kathmandu,” Nawaz said concluding his address.

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