GMR, Bangladesh to sign power purchase pact


    Aug 14, 2018-GMR Upper Karnali Hydropower, the Indian company building the 900 MW Upper Karnali Hydropower Project located in western Nepal, is close to signing a power purchase agreement (PPA) with the Bangladeshi government to export electricity generated by the plant.

    Under the PPA, GMR will export up to 500 MW to Bangladesh using Indian transmission lines. GMR and the Bangladesh Power Development Board (BPDB), a statutory body of the Bangladeshi government, have agreed to the commercial terms of the PPA. The BPDB has sent the agreement to the office of the Bangladeshi prime minister for approval, according to a highly placed GMR source.

    “After their government approves the commercial terms, we will start negotiating the power purchase rate with the tariff committee, a secretary-level body of the Bangladeshi government,” said the source. “Once the tariff rate is finalised, we will sign the PPA with the Bangladeshi government.” The entire process, according to the source, will take around three to four months.

    The BPDB has already signed a memorandum of understanding (MoU) with India’s NTPC Vidyut Vyapar Nigam (NVVN) which will allow it to import electricity generated by the Upper Karnali scheme through the Indian power grid. The understanding was signed during Bangladeshi Prime Minister Sheikh Hasina’s visit to India in April 2017.

    As Indian laws don’t allow private developers to export electricity produced in third countries over Indian transmission lines, Bangladesh signed the MoU with the Indian state-owned cross-border electricity trading agency while GMR endorsed the pact as one of the signatories.

    The latest development has come as a respite to the Indian developer of the Upper Karnali project which is struggling to arrange funds for the construction of one of the largest large hydropower projects in Nepal. The PPA will help GMR find potential lenders to finance the construction of the project.

    Likewise, the PPA will also act as a guiding framework for Nepal to export surplus electricity to Bangladesh that Nepal is expected to produce in a few years. Last week, Nepal and Bangladesh signed a cooperation agreement in the energy sector with the aim of exploring the possibilities of initiating electricity trade between the two countries.

    Bangladesh is an energy hungry nation, and it plans to import electricity from neighbouring countries to sustain the high economic growth rate that it has been achieving for the last few years. Also, the price of electricity in Bangladesh is good compared to Nepal and India which will make a large number of hydropower projects in Nepal financially viable, according Khadga Bahadur Bisht, former president of the Independent Power Producers Association, an umbrella organisation of the country’s private hydropower producers.

    Source: The Kathmandu Post