According to persons with knowledge of the situation, India, Nepal, and Bangladesh have finalized the text of a tripartite power trading agreement. This move is in keeping with New Delhi’s aim to establish stronger energy connectivity across the region. The three nations have accepted the proposed treaty, the first of its type, and it is anticipated that it will be inked in the next months. The accord would also satiate Bangladesh’s and Nepal’s long-standing requests for permission to trade electricity across the Indian system.
The intentions for India to make it easier for Nepal to sell hydropower to Bangladesh were disclosed by Indian Prime Minister Narendra Modi and Nepalese Prime Minister Pushpa Kamal Dahal during the latter’s early June visit to New Delhi. 50 MW will be exported, according to Dahal, but the individuals indicated there is possibility for this to be increased once the deal is in place. The action is consistent with India’s recent attempts to strengthen energy ties with Bangladesh, Bhutan, Nepal, and Sri Lanka via power transmission networks and petroleum pipelines. They continued by saying that one underlying goal is to lessen neighboring countries’ reliance on China.

In the past, bilateral agreements were used to conduct power trading with neighbors. The new arrangements were constructed using the recently finalized Cross-Border Trade of Electricity (CBTE) rules. The rules, which were developed after discussions with all interested parties, reportedly permit neighboring nations to engage in power exchanges and make purchases and sales via the Indian grid.

“The neighbors may provide electricity to the Indian system at one location and withdraw it at another, which can assist a nation like Nepal in sending extra power from one area to another via India. One of the individuals remarked, “There is a larger flow of energy and better connectedness.

The individuals said that the rules were written so that electricity from any Chinese-funded power project in a neighboring nation cannot be sold via the Indian system.

“India serves as a pivot, and market forces determine the modalities. India gains from transit fees as well, according to the aforementioned source.

India has contributed to the construction of cross-border pipelines with Bangladesh and Nepal in addition to building infrastructure for energy transmission in both nations. The first trans-border oil pipeline in South Asia, which runs from Motihari in Bihar to Amlekhgunj in Nepal and cost $324 crore to build, was opened in 2019 and has since given Nepal 2.8 million metric tonnes of diesel.

The two parties started construction on the second section of this pipeline, which would cost 183 crore, during Dahal’s visit. Additionally, the two parties decided to construct a second pipeline to connect Siliguri, India, and Jhapa, Nepal.

A 377-crore cross-border pipeline between India and Bangladesh was opened in March of this year, and it is anticipated to transport 1 million metric tonnes of diesel per year from Assam’s Numaligarh refinery to the northern regions of the neighboring nation. The pipeline is 132 km long, and an Indian grant was used to build a 127 km section within Bangladesh.

In order to help Colombo fulfill its needs for gasoline and LPG during the economic crisis in Sri Lanka, lines of credit made up a portion of India’s $4 billion in assistance. When Sri Lankan gas stations ran out of gasoline in June of last year, the state-run Indian Oil Corporation provided it via its subsidiary Lanka IOC. Amid rising worries over China’s influence in the nation, Sri Lanka and India have also decided to work together to build the oil tank farms in Trincomalee. Three months after taking office, Modi traveled to Nepal for the first time and there, three months later, he announced the “HIT” formula for building connections through highways, i-ways, and trans-ways. He addressed the main issues raised by Nepal, including the need for bridges to be erected across shared rivers, pipelines to replace trucks for oil exports, and infrastructure to facilitate the export of energy.

“As a result of this diplomatic effort, we are already importing more than 450 MW of power from Nepal, and the target is to take it to 10,000 MW,” a second individual added. Bhutan sells hydropower to India, and this kind of energy cooperation is an important part of India’s “Neighborhood First” strategy.

There is now a proposal to develop an overhead power grid connection with Sri Lanka after issues with the construction of an undersea transmission line. The second insider added that state-run power firms have been requested to look into the development of projects in Sri Lanka, much as in the case of Nepal.

The second individual said that a statement to maintain supply chain security with a focus on regional collaboration is anticipated to be adopted before the G20 conference in September. Plans exist to establish a regional electricity grid connecting Myanmar, Bhutan, Bangladesh, Nepal, and Sri Lanka as part of these efforts.

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