Nepal and Bangladesh sign historic agreement for 40 MW electricity trade

October 3, 2024, 12:23:08 PM |

KATHMANDU: Nepal and Bangladesh have signed a landmark agreement today for the sale of 40 MW of electricity, marking a significant milestone in regional energy cooperation. This deal, facilitated through India, introduces a trilateral agreement among Nepal, Bangladesh, and India.

The agreement signing ceremony took place this afternoon at 4 PM at Hotel Yak & Yeti in the presence of energy ministers from both Nepal and Bangladesh. “We have previously only engaged in electricity trade with India, with which we share a border. Now, for the first time, we are expanding electricity trade with a non-bordering country, Bangladesh,” stated Kulman Ghising, Executive Director of the Nepal Electricity Authority (NEA). “This shift from bilateral to trilateral electricity trade is a major milestone for Nepal’s energy sector.”

The trilateral agreement involves the Nepal Electricity Authority (NEA), India’s NTPC Vidyut Vyapar Nigam (NVVN), and Bangladesh’s Power Development Board (BPDB). Ghising added that all necessary preparations have been completed, and the process for electricity exports to Bangladesh has begun, with exports expected to start during this monsoon season.

NEA plans to export electricity generated from the 25 MW Trishuli Hydropower Project, built with Indian assistance and under NEA ownership, and the 22 MW Chilime Hydropower Project, developed by an NEA subsidiary. Both projects have received approval for electricity exports to India.

Under the agreement, NEA will sell 40 MW of electricity to Bangladesh for six months each year (from June 15 to November 15) for five years. The electricity will be sold in US dollars, with NEA receiving 6.40 US cents per unit.

The electricity will be transmitted to Bangladesh via the 400 kV Dhalkebar-Muzaffarpur transmission line, the first cross-border transmission line between Nepal and India. NEA will receive payment for the electricity at the Muzaffarpur point in India, where the electricity for Bangladesh will be metered.

NEA will cover the transmission losses along the Dhalkebar-Muzaffarpur line. From Muzaffarpur, the electricity will continue to Bangladesh through the 400 kV Baharampur (India)-Bheramara (Bangladesh) transmission line.

Kulman Ghising emphasized that Bangladesh will bear all transmission costs, losses, NVVN’s trading margins, and other related fees and taxes beyond the Muzaffarpur point.

By the time the electricity reaches Bangladesh, the per-unit cost will be around 7.6 US cents. Ghising noted, “We will receive 6.40 US cents per unit at the Muzaffarpur point, and since the payment will be in US dollars, there is no risk of currency exchange losses. The rate we have secured for the monsoon season is favorable for us.”

This initial, symbolic electricity trade at the government-to-government level with Bangladesh is expected to pave the way for larger-scale regional electricity trade in the future, opening new avenues for electricity exports and enhancing energy cooperation in South Asia.

Fiscal Nepal |

Thursday October 3, 2024, 12:23:08 PM |