Nepal makes major energy advances amid flood recovery and regional electricity trade agreements

KATHMANDU: Nepal’s government has marked significant achievements in the energy sector within its first 100 days, highlighted by strategic agreements to export electricity to Bangladesh and progress in restoring hydropower projects damaged by recent floods. The government, focusing on the energy sector as a cornerstone for economic prosperity, has fast-tracked several critical projects, including both domestic recovery and international electricity trade.

Following the devastating floods and landslides triggered by continuous rainfall on October 11 and 12, hydropower projects across the country suffered extensive damage. More than three dozen government and privately-owned projects were severely impacted, including the 456-megawatt Upper Tamakoshi Hydropower Plant, Nepal’s largest electricity producer. The government has prioritized the restoration of this project, which has disrupted the national grid. The Ministry of Energy, Water Resources, and Irrigation, led by Minister Deepak Khadka, conducted a site inspection, pledging to resume operations as swiftly as possible.

Another longstanding issue has been resolved with the Middle Bhotekoshi Hydropower Project in Sindhupalchok, which had been stalled due to local opposition. The government has now cleared the path for the project’s completion. Additionally, the construction of transmission lines for the 102-megawatt Chilime-Trishuli line has gained momentum.

In a landmark regional deal, Nepal signed a 40-megawatt electricity export agreement with Bangladesh on October 1, marking the first time Nepal’s electricity will be exported to a third country after India. The agreement, signed by Kulman Ghising, Managing Director of Nepal Electricity Authority (NEA), Mohammad Rezual Karim, Chairman of Bangladesh Power Development Board, and Renu Narang, CEO of India’s NVVN, will utilize Indian transmission infrastructure to transport electricity from Nepal to Bangladesh. The electricity will be transmitted via the 400kV Muzaffarpur-Gorakhpur interconnection to Bangladesh through Indian power lines.

The NEA has confirmed that it will supply Bangladesh with electricity from the Trishuli (25 MW) and Chilime (22 MW) hydropower projects, both of which have received export approval from India. The power export is expected to commence in the coming days, with Bangladesh purchasing 144,000 megawatt-hours of electricity over a five-month period (June 15 to November 15) annually, generating significant revenue for Nepal.

Nepal has also initiated discussions with Bangladesh to establish a joint venture for the development of the Sunkoshi III hydropower project, which will involve tripartite cooperation with India. These talks are expected to conclude before the upcoming secretary-level meeting.

In addition to these developments, the Nepali government has been working to attract investment from Bangladesh’s private sector into Nepal’s hydropower industry. As part of the broader regional energy cooperation, Nepal, India, and Bangladesh are discussing the construction of additional transmission lines to facilitate future electricity trade between the three nations.

Meanwhile, Nepal’s electricity exports to India continue to rise, with the NEA exporting 754.61 MW of power in the first two months of the current fiscal year, generating NPR 7.54 billion in revenue. Despite flood damage disrupting some power plants and transmission lines, the NEA has successfully maintained its export flow. For the months of July and August, Nepal exported 492.86 million units and 536.29 million units of electricity to India, respectively, at an average rate of NPR 7.33 per unit.

Prime Minister K.P. Sharma Oli has convened key stakeholders to develop a concrete action plan for the continued growth of the energy sector. The government has prioritized completing ongoing projects, rebuilding flood-affected infrastructure, and improving overall electricity distribution.

Currently, nearly 99% of Nepal’s households have access to electricity, with efforts underway to extend the central grid to remaining areas such as Gosaikunda in Rasuwa and Susta in Nawalparasi. The government has also intensified efforts to reduce electricity theft and recover unpaid bills.

With energy reforms high on the agenda, the Ministry of Energy has been actively resolving long-standing disputes over the pricing of dedicated and trunk power lines, showing a renewed commitment to ensuring the country’s electricity sector is ready for future challenges.

This surge of activity, alongside regional electricity trade and reconstruction efforts, is positioning Nepal as a key energy player in South Asia, with long-term plans to increase electricity production to 28,500 MW by 2035 already in motion.