Kathmandu, Nepal: Nepal and Bangladesh are set to finalize a deal for a 40MW electricity supply. Nepal will supply the 40MW to Bangladesh through India. This deal will involve the tripartite agreement between the Nepal Electricity Authority (NEA), India’s NTPC Electricity Trading Corporation (NVVN), and Bangladesh Power Development Board (BPDB).
Image source: Kathmandu Post
According to the agreement, Nepal will sell electricity at the rate of 6.40 US cents per unit. The project is estimated to generate $92 million over a five-month period from June 15 to November 15 every year. After months of negotiation and political unrest in Bangladesh, the present government, led by Mohammad Yunus, gave the green light to the project.
Key Highlights of the agreement:
Electricity price: 6.40 US Cents per unit
Revenue: Expected to generate $92 million in five months
Electricity Transmission Line: Dhalkebar-Muzaffarpur (Nepal-India) 400 kV transmission line to Behrampur-Bhedamara (India-Bangladesh) transmission line.
Negotiation and Agreement process
The deal was to be signed earlier on July 13. But, due to the political instabiltiy in Bangladesh, Prime minister Sheikh Hasina resigned. However, recent meetings between officials of Nepal, Bangladesh, and India led to the decision to move forward with the agreement this week. The contract will be signed after final meetings in Kathmandu between energy secretaries and joint secretaries from both countries on Tuesday and Wednesday.
The electricity will be supplied from Nepal’s Trishuli (25 MW) and Chilime (22 MW) hydropower projects. Both projects have received approval from India. This power will be transmitted through India using the Dhalkebar-Muzaffarpur transmission line. The electricity will then be routed from India to Bangladesh via the Behrampur-Bhedamara 400 kV transmission line.
Bangladesh’s Energy Demand and Approval
Bangladesh’s Cabinet, through its Economic Affairs Committee, approved the import of 40 megawatts of electricity from Nepal in principle on December 6, 2023. Following this, BPDB invited bids in early January 2024 for a five-year electricity purchase. Nepal initially proposed a price of 6.70 US cents per unit, which was later negotiated to 6.40 cents during discussions between the SAARC energy secretary-level meeting facilitated by the World Bank in Singapore.
Bangladesh’s Committee on Public Procurement (CCGP) formally approved the agreed-upon rate on May 29, 2024, and BPDB accepted Nepal’s bid in June, confirming its intent to proceed with the purchase. The draft power sales agreement was sent to Nepal shortly after, paving the way for the final signing of the deal.
This Agreement marks a significant step in the economy of Nepal. It helps in increasing the energy export potential. The Nepal Electricity Authority views this agreement as a gateway to further electricity export opportunities. As Nepal continues to develop its hydropower infrastructure, similar deals are expected to follow, cementing its position as a major player in the South Asian energy market.
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