Harnessing Nepal’s Hydropower: Regional Benefits for Bangladesh and South Asia

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Bangladesh’s neighbouring Nepal holds vast potential for hydropower generation. The Himalayan country has set an ambitious target to generate 28,000 megawatts (MW) of hydroelectricity by 2035, with significant portions aimed at export — 10,000 MW to India and 5,000 MW to Bangladesh. Bangladesh is hopeful to start importing 40 MW of electricity from Nepal in the first phase using the Indian gridline starting in July.

Moreover, Bangladesh seeks to boost the import of comparatively cheaper hydropower from Nepal. The biggest challenge in this endeavour is the construction of a dedicated transmission line between Nepal and Bangladesh. Recently, Gyanendra Lal Pradhan, a pioneering entrepreneur in Nepal’s power sector and the executive chairman of Hydro Solutions Pvt Ltd, visited Bangladesh for a summit. During his visit, he sat down with The Business Post’s Ashraful Islam Raana and discussed various issues comprehensively.

What is the potential for Nepal’s hydroelectricity?

Currently, Nepal’s power generation capacity is around 3,000 MW, but our domestic demand is only 2,000 MW. We export the remaining 1,000 MW to India. Green power has become essential, posing significant challenges, especially for Bangladesh which faces space constraints for solar energy. Even India, with its substantial investments, struggles with green power.

Hydropower is vital here, not just for generating electricity but also for managing water resources, controlling floods, and ensuring food security. Nepal’s hydropower can benefit the entire South Asia region, particularly Bangladesh and India.

Apart from using the Indian grid, is there any alternative to send the 40 MW of hydropower to Bangladesh in July?

This will follow our contract with India, and we plan to gradually increase the supply. By July or August, we aim to supply 1,000 MW to India and similarly to Bangladesh. However, the current transmission line between Nepal, India and Bangladesh can only handle 40 MW, hence, the initial limit. Realistically, Nepal could supply up to 500 MW to Bangladesh if the infrastructure allowed. Therefore, constructing a dedicated transmission line is crucial.

What are the challenges in constructing a dedicated transmission line between Nepal and Bangladesh?

The primary challenge is political relations. For instance, the Nepal-India blockade in 2015 highlighted how political issues can disrupt such projects. Currently, Bangladesh and India have strong relations, and purchasing power from Tripura and West Bengal. Nepal also sells power to India, and we now have access to the Indian Electricity Exchange (IEX), allowing us to buy and sell power every 15 minutes. The improved political climate and India’s changing mindset and bureaucracy support this initiative. We should pursue trilateral agreements involving Nepal, India and Bangladesh rather than bilateral ones.

Bangladesh and India have discussed a 765 kV gridline from Bihar to Assam through Bangladesh. Can this line help Bangladesh in importing power from Nepal?

That transmission line will help share electricity between western and eastern India and may benefit Bangladesh. However, it won’t fully support Bangladesh’s import of Nepal’s electricity. A dedicated line would provide more independence. Given Bangladesh’s strategic position linking northeast India, it’s beneficial for India to facilitate this connection. Therefore, a dedicated line involving Indian investment or collaboration should be considered from the start.

How can Nepal’s eastern part be particularly beneficial for Bangladesh?

In the past, Bangladesh made a deal for 500 MW with a project in western Nepal to GMR Group; this area is crucial for India, especially Delhi. Therefore, Bangladesh should focus on the eastern side of Nepal, which has around 6,400 rivers suitable for hydropower development. India has surplus power in West Bengal but needs more power in Delhi. Projects in western Nepal are thus more likely to be utilised by India. By focusing on eastern Nepal, Bangladesh can avoid these conflicts and ensure a steady power supply.

Do you see viability in joint investments for future projects?

Absolutely. It’s essential for both countries. Nepal needs revenue from power exports, and Bangladesh needs reliable power for development. For example, the Arun 3 project, initially planned for 300 MW, is now being developed at 900 MW due to higher demand. I think Bangladesh should also invest in Nepal’s hydro projects.

Would investing in Nepalese projects provide more dependable and low-cost power?

Yes. If Bangladesh invests in Nepal, the power cost would be based on the project’s production cost, making it more affordable. Collaboration with Nepalese companies can ensure a steady and cost-effective power supply. So that’s why I suggest Bangladeshi companies come to Nepal and join with Nepalese local companies.

What is the per unit cost of the initial 40 MW?

I think it’s around 6.4 cents per unit.

Do you think hydropower tariffs will be competitive?

Compared to fossil fuels, hydropower is more cost-effective. In Bangladesh, hydropower is significantly cheaper than gas plants. Initial costs might be high, but with low-interest financing from international markets, hydropower becomes the cheapest option in both the short and long term as there are no raw material costs.

Is there any revision or renegotiation process in the PPA?

The terms can change based on supply and demand and production costs. If market prices are higher, it will benefit the producer. This flexibility ensures that hydropower remains a viable and cost-effective energy source for Bangladesh because you don’t have the extra gas now to go for the oil.

Source: Business Post