A trilateral power agreement including the provision of 40 MW of energy routed via India is anticipated to be signed shortly between Nepal, India, and Bangladesh.

Bangladesh would be the first third country to get electricity from the Himalayan nation if the plan is implemented, despite the fact that Nepal has been exporting power to India since November 2021.

At a news conference last week in Kathmandu, managing director of Nepal Electricity Authority (NEA), which is expected to sell electricity to Bangladesh, said, “We have reached a final stage of discussion with Bangladesh on the template of power selling agreement. “We’ll proceed with exporting power to Bangladesh once the tariff is established soon.”

Before power export from Nepal to Bangladesh starts, the Nepal Electricity Authority (NEA), the Bangladesh Power Development Board (BPDB), and the NTPC Vidyut Vyapar Nigam Limited (NVVN) of India are going to sign a tripartite agreement, according to the Ministry of Energy, Water Resources, and Irrigation in Nepal.

The Indian government has designated the NVVN as the key organization for cross-border power exchange with its neighbors.

A form of the agreement that Nepal and NVVN mutually agreed upon has been forwarded to Bangladesh for comment a second time after taking into account Bangladesh’s response on the initial document, according to Prabal Adhikari, power trade director at the NEA, who spoke to India Narrative.

“In early June, we again emailed the Bangladeshi side the agreement draft to get their feedback. The answer is currently being awaited, said Adhikari. Except for power pricing, he claims that every other information has been addressed by the template. “This is because, apart from electricity pricing, Bangladesh wants to finalize other technical and commercial agreements first. After agreement is obtained on other terms and conditions, a further discussion will be made about the tariff.

Determining the pricing for electricity exports to Bangladesh presents no difficulty for Nepal. “It will be in the range of the average prices Nepal is receiving from India’s power exchange market,” Adhikari added. The Indian government has so far permitted Nepal to sell 452.6MW of energy on the southern neighbor’s power exchange market. Since this would be Nepal’s first electricity export to Bangladesh, Adhikari stated, “We are not looking for a hard bargain on tariffs.”

The transmission price will be comparable to the amount that power merchants in India presently charge customers. The transmission pricing would comply with India’s open access regulations, according to the draft of the power selling agreement, said Adhikari. This indicates that depending on the technical state of the transmission system, including its loads, Bangladesh may have to pay 40 to 55 paise (in Indian currency) per unit.

He said that Bangladesh will pay the NVVN this sum. The Indian business will charge Bangladeshi businesses a “trade margin” or “service fee” for all of its services, including for its attempts to get clearance from India’s regulatory bodies. The normal amount levied by NVVN is “in the range of 4-7 paise (Indian Currency) per unit,” according to Adhikari. However, he said that Bangladesh will pay the service charge to India, so Nepal should not worry.

Despite being close by, Nepal and Bangladesh are not geographically adjacent. Indian land is shared between the two nations. Therefore, to facilitate the bilateral trade of power between Kathmandu and Dhaka, strong Indian help is required.

Bangladesh is the intended recipient of Nepal’s long-term power sale to them. We have suggested committing to a 25-year power selling agreement, said Adhikari. “However, the Bangladeshi side is insisting on a five-year agreement with a renewal clause.”

These changes have occurred as a result of different agreements between Nepal, Bangladesh, and India regarding the export of 40 MW of electricity from Nepal to Bangladesh.

The Joint Steering Committee on Energy Cooperation’s fifth meeting, held in Patuakhali, Bangladesh, in the middle of May, decided that Nepal and Bangladesh should begin trading power as soon as possible, with an export target of 40 MW from Nepal to Bangladesh. This decision was made after receiving the necessary approvals from Indian authorities.

According to a news release from Nepal’s Ministry of Energy, Water Resources and Irrigation after the meeting, “for this, the two countries aim to sign a trilateral power sale agreement among the entities including that of India as soon as possible.”

India and Nepal’s southern neighbor agreed to let Nepal export up to 40 MW of electricity to Bangladesh over already-existing Indian transmission infrastructure during Nepali Prime Minister Pushpa Kamal Dahal’s May 31–June 3 visit. “The Nepali side welcomed the decision of the Government of India to facilitate the first trilateral power transaction from Nepal to Bangladesh, through Indian grid with an export of up to 40 MW of power,” according to a statement from India’s External Affairs Ministry issued on June 2. “Both sides expressed their commitment to enhancing sub-regional cooperation, including in the energy sector, which would result in stronger economic ties for the benefit of all parties involved.”

The NEA has requested that the Indian government permit the sale of the electricity produced by the 52.4 MW Likhu-4 project to Bangladesh through India’s current transmission network.

“Efforts will be made to sign a tripartite agreement very soon so that Nepal could export power in the wet season this year (June-November),” Madhu Bhetuwal, spokeswoman for the Nepalese Energy Ministry, previously told India Narrative.

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