In historic first, Nepal to export electricity to Bangladesh

Kathmandu, October 3 — After extensive homework and discussions, Nepal's electricity is set to be exported to Bangladesh. This agreement marks the first time that Nepal will export electricity to a third country, following India. Today, high-ranking officials from both countries agreed to sign a power purchase agreement, signaling the success of long negotiations, as informed by Chiranjeebi Chataut, Under Secretary and Spokesperson of the Ministry of Energy, Water Resources, and Irrigation.

Due to political changes in Bangladesh, there had been intensive discussions regarding the delayed electricity trade agreement in recent days. The sixth meeting of the Joint Technical Committee of the two countries concluded today, deciding to finalize the agreement on Thursday. The meeting was co-chaired by Suresh Acharya, Secretary of Energy from Nepal, and Mohammad Habibur Rahman, Senior Secretary from Bangladesh's Ministry of Power, Energy, and Mineral Resources.

According to Spokesperson Chataut, the first phase will see the export of 40 megawatts of electricity to Bangladesh. The agreement will involve signing a sales contract among Nepal Electricity Authority, Bangladesh Power Development Board, and the Indian agency NTPC Power Trading Corporation. A tripartite agreement signing ceremony is scheduled for today (Thursday), with the presence of Deepak Khadka, Minister of Energy, Water Resources, and Irrigation of Nepal, and Syeda Rizwana Hasan, Minister of Forest, Environment, Climate Change, and Water Resources of Bangladesh.

Furthermore, there is an agreement to establish a joint venture between the Authority and Bangladesh Power Development Board for the cooperative development of the Sunkoshi-III Hydropower Project.

A study on the technical and economic aspects of the proposed cross-border transmission line for electricity trade between Nepal and Bangladesh will be conducted. There will also be efforts to attract private sector investments from Bangladesh into Nepal's hydropower sector through business conferences. The two countries' energy secretaries agreed to finalize and sign a memorandum of understanding for cooperation between alternative energy promotion centers and their counterparts in Bangladesh.

Additionally, Nepal, Bangladesh, and India will initiate steps to create a tripartite mechanism for cooperation in electricity trade and the construction of cross-border transmission lines. Bangladesh has informed Nepalese officials regarding the electricity trade agreement between the Bangladesh Power Development Board and the Indian company GMR regarding the purchase of electricity from the Upper Karnali Hydropower Project.

In the sixth meeting of the joint working group held on May 15, 2023, the progress of work was presented, which included the construction and management of the cross-border electricity transmission line, advancing the development of the Sunkoshi-III hydropower project, and enhancing the transmission system.

Preparations were made to sign the electricity trade agreement in July, but it was ultimately postponed due to the political changes in Bangladesh. Despite the presence of energy ministers from Nepal, India, and Bangladesh, the agreement was put on hold at the last minute. The interim government of Bangladesh had been intensively discussing the matter and making necessary efforts. Nepal will export electricity to Bangladesh during the monsoon season using the Indian transmission line.

Additionally, the construction and development of the 680 megawatt Sunkoshi reservoir hydropower project are moving forward, with processes for signing a joint venture agreement between Nepal Electricity Authority and Bangladesh Power Development Board underway. This is another significant aspect. The Authority has indicated that it will sell 40 megawatts of electricity to Bangladesh for six months during the monsoon season over the next five years. The sale price will be set at NPR 9.30 (approximately USD 0.06) per unit.

Electricity from Nepal will be exported to Bangladesh through the operational Dhalkebar-Muzaffarpur cross-border line, and then via the 400 kV transmission line from Baharampur-Bheramara. The Authority will receive the specified price at the Muzaffarpur point in India. The technical losses between the Dhalkebar-Muzaffarpur transmission line will be borne by the Authority.

Though symbolic, selling electricity to Bangladesh is seen as a success for Nepal. It is significant for the government that Nepal's electricity reaches beyond the region after India. The Authority will supply electricity to the Indian company NVVN, which will then deliver Nepalese electricity to Bangladesh. The Authority has stated it will export electricity generated from the Chilime and Trishuli hydropower plants to Bangladesh.

The Bangladesh government had previously announced plans to import 9,000 megawatts of electricity from Nepal by 2040. A long-term agreement to export 10,000 megawatts of electricity over 10 years between Nepal and India has also been signed. On July 28, preparations were made for a tripartite agreement in the presence of the energy ministers of Nepal, India, and Bangladesh. Meetings at the energy secretary level between Nepal and Bangladesh have also been organized. However, political changes in Bangladesh led to the postponement of these events. A bilateral agreement on energy cooperation was signed between the two countries back in 2018. If implemented, the Authority projected an income of NPR 12.3 billion (approximately USD 93 million) from electricity sales during the monsoon season.

Bangladesh has expressed interest in importing 500 megawatts of electricity from the 900 megawatt Upper Karnali hydropower project being constructed by the Indian company GMR. While discussions regarding the electricity sales agreement have taken place several times, a final conclusion has yet to be reached.

Moreover, the agreement to establish a joint venture between the Authority and Bangladesh Power Development Board for the construction and development of the Sunkoshi-III hydropower project was reached during the fifth meeting of the Joint Secretary-level committee on May 15, 2023. That meeting also directed a technical team to study possible options for cross-border transmission lines for electricity trade between the two countries.

The first meeting of the Secretary-level mechanism between the two countries was held on December 3 and 4, 2018, in Kathmandu, where initial discussions were held on facilitating the export of Nepal's electricity to Bangladesh. Earlier, on August 10, 2018, then Minister of Energy, Water Resources, and Irrigation, Barshaman Pun, and Bangladesh's State Minister for Power, Energy, and Mineral Resources, Nasrul Hamid, signed an agreement to initiate bilateral cooperation in the energy sector. Following this agreement, meetings at the Secretary-level mechanism between the two countries have been regularly convened. Currently, the Authority has been exporting electricity only to India.