Historic tripartite deal: Nepal to export electricity to Bangladesh

The route for electricity export from Nepal to Bangladesh has officially opened. With the signing of an electricity sale agreement between three companies from Nepal, India and Bangladesh on Thursday, Nepal is set to export electricity to a third country for the first time. Nepal has been exporting electricity to India for the past three years.

A tripartite Power Sale Agreement (PSA) was signed between the Nepal Electricity Authority (NEA), the Bangladesh Power Development Board (BPDB) and India’s NTPC Vidyut Vyapar Nigam Ltd (NVVN) during a program held in Kathmandu. As part of this agreement, Nepal will export 40 MW of electricity to Bangladesh in the first phase.

The agreement outlines that Nepal will sell the electricity, which will be transported through India’s transmission lines, and Bangladesh will purchase it. NEA Executive Director Kulman Ghising, BPDB President Rejul Karim and NVVN CEO Renu Narang signed the agreement.

The signing took place in the presence of Nepal’s Minister for Energy, Water Resources and Irrigation Deepak Khadka, and Bangladesh’s Minister for Forest, Environment, Climate Change and Water Resources, Syeda Rizwana Hasan. The Indian Ambassador to Nepal, Naveen Srivastava, was also present at the event.

Although the tripartite agreement was originally scheduled for July, it was postponed due to political protests in Bangladesh.

NEA Executive Director Ghising described the agreement as a milestone in South Asia’s energy cooperation, stating, “This is the culmination of our shared vision. It will open doors for subregional and regional cooperation.”

According to the agreement, NEA will export electricity to BPDB at a rate of about Rs 8.64 per unit (6.40 US cents).

For the export to Bangladesh, BPDB will pay a ‘wheeling charge’ to NVVN for using India’s transmission lines.

Nepal will install an electricity meter in Muzaffarpur, India, where the amount of electricity exported to Bangladesh will be recorded. NEA will bear the technical losses incurred up to that point, while Bangladesh will cover the technical losses from Muzaffarpur to its border. As a result, the price of electricity will increase from 6.4 cents to 7.6 cents per unit by the time it reaches Bangladesh.

Bangladesh will receive electricity through the Brahmapur (India)–Bheramara (Bangladesh) 400 KV transmission line, which it currently uses to import electricity from NVVN.

The agreement, which is valid for five years, stipulates that 144m units of electricity will be exported to Bangladesh annually, Ghising stated. He also noted that around Rs 1.21trn worth of electricity will be exported to Bangladesh each year.

The export will begin after receiving the necessary permissions from India, making Nepal the first country to export electricity to a third country, according to Ghising.

He added that Nepal aims to export 10,000 MW of electricity to India and 5,000 MW to Bangladesh in the future.

The NEA plans to export electricity generated by the 25 MW Trishuli and 22 MW Chilime hydropower projects—both built with Indian subsidies and owned by the authority—to Bangladesh. Both projects have received approval for electricity export to India.

For the next five years, the authority will sell 40 MW to Bangladesh during the rainy season, from June 15 to Nov 15 each year.

Bangladesh had previously decided to import 40 MW from Nepal. On Dec 20 last year, the Economic Affairs Committee of Bangladesh’s Council of Ministers under then Finance Minister Mustafa Kamal approved BPDB’s proposal to import 40 MW.

NEA and BPDB agreed on the electricity rate in late February. A tripartite agreement was prepared in Kathmandu on July 13, but it was delayed due to political unrest in Bangladesh.