Electricity Trade Negotiations Between Bangladesh, Nepal & India

Although Bangladesh, Nepal, and India have reached an understanding, the state-owned Bangladesh Power Development Board (BPDB) is still unable to import electricity from Nepal. State Minister for Power, Energy and Mineral Resources Nasrul Hamid announced on August 28 that importing hydropower from Nepal was nearly finalized. It appears unlikely that power trade will occur before November, meaning that Bangladesh won't be able to export its surplus electricity to Nepal during the Himalayan nation's peak demand season in winter. During this time, electricity demand decreases in Bangladesh but increases in Nepal.

In May 2021, Nepal and Bangladesh agreed to a tripartite deal involving BPDB, the Nepal Electricity Authority (NEA), and NTPC Vidyut Vyapar Nigam Ltd (NVVN) of India. Once signed, NVVN will facilitate power exports from Nepal to Bangladesh. This agreement was reached during an energy secretary-level meeting held in Bangladesh.

Official sources report that after extensive discussions at both political and bureaucratic levels among the countries involved, India finally agreed to let Bangladesh initially import 40 MW of electricity from Nepal. This import was set to begin between August and September 2023, but negotiations on the tariff remain incomplete. The decision was finalized during a joint steering committee (JSC) and joint working committee (JWC) meeting on Bangladesh-Nepal power and energy sector cooperation held on May 14-15 in Patuakhali, Bangladesh.

Prior to this meeting, Nepalese Foreign Minister Narayan Prakash Saud visited Dhaka and urged Bangladeshi public and private sector officials to invest in Nepal's hydropower sector, which has approximately 60,000 MW of clean energy potential. Following the meeting at the Nepalese Embassy in Dhaka, Saud told UNB that he expected all issues would be resolved during the Nepalese prime minister's visit to India, thus facilitating electricity exports from Nepal to Bangladesh.

According to a Kathmandu Post report, during the Nepalese prime minister’s visit to India (May 30-June 1), India agreed to help Nepal export 40 MW of electricity to Bangladesh through the Indian transmission infrastructure. Additionally, India announced plans to purchase 10,000 MW of electricity from Nepal over the next decade. Kul Man Ghising, managing director of the NEA, said they are currently awaiting a final response from the Bangladeshi side before moving on to tariff negotiations.

Although both sides have agreed on all other aspects at the bureaucratic level, tariffs remain unresolved. Power Cell Director General Mohammad Hossain admitted he isn’t aware of the latest developments but mentioned that necessary arrangements for cross-border power trade have been made by both Bangladesh and Nepal. A planned arrangement involves Bangladesh importing electricity from Nepal through an Indian service provider that will first import electricity from Nepal via Indian transmission lines and then sell it to Bangladesh. Both Bangladesh and Nepal favor a tripartite or regional agreement in this matter, but India prefers bilateral deals.

Under this arrangement, Bangladesh must first sign a separate deal with India before signing one with Nepal. Each deal will be bilateral, followed by a trilateral agreement among all three nations to support cross-border power trade.

Presently, Bangladesh imports electricity from India through a similar setup involving the Indian company NVVN. In the case of the Dhaka-Kathmandu power trade, NEA must sign agreements with both NVVN and BPDB. Apart from the 40 MW import plan, Bangladesh also hopes to import 500 MW of hydroelectricity from Nepal via the Indian company GMR. Both Bangladesh and Nepal continue to push for India’s support for signing a tripartite deal to facilitate sub-regional power trade among the three countries.