Nepal, Bangladesh Close to Finalizing Power Trade Deal


Nepal is preparing to change projects whose electricity will be exported to Bangladesh once a tripartite agreement involving India gets signed.

Earlier, the state-owned Nepal Electricity Authority (NEA) had requested the Indian authorities to allow it to sell the power generated from the 52.4 megawatts (MW) Likhu-4 project to Bangladesh.

“As India has agreed to allow the transmission of a maximum 40 megawatts of electricity through its existing transmission line for export of Nepal’s power to Bangladesh, the NEA is preparing to send alternative hydropower projects for the southern neighbour’s approval,” said Prabal Adhikari, power trade director at the NEA.

Earlier, Nepal and Bangladesh had agreed to make efforts for trading of up to 50MW of electricity. But the southern neighbour notified that it would allow the transmission of up to 40MW only, considering the existing unused capacity of the southern neighbour’s transmission infrastructure.

“We now plan to sell electricity generated by the 24MW Trishuli Hydropower Project and another project whose combined capacity reaches 40 MW–41 MW,” said Adhikari. Trishuli was among first two projects to get the southern neighbour’s approval to sell power in the Indian market in 2021.

Nepal and Bangladesh are negotiating for a long-term power trade agreement for the export of 40MW electricity generated in Nepal to Bangladesh. As per the ‘Procedure for approval and facilitating Import/Export (Cross Border) of Electricity by the Designated Authority’, it is necessary to take approval from the southern neighbour’s concerned authority to do transactions of electricity through the Indian grid under the tripartite agreement.

“Once the issue of tariff is settled with Bangladesh, we will send the list of projects to India for necessary approval for exporting power to Bangladesh generated at those projects,” said Adhikari.

The NEA plans to choose projects for exporting power to Bangladesh which have already got the southern neighbour’s approval for exporting power to India.

“This will help fast-tracking the approval process from the Indian authorities,” said Adhikari. That’s why the NEA chose the Trishuli project which was built with the Indian government’s assistance.

Nepal has sought the Indian government’s approval to sell power generated by an additional 18 hydropower projects in the Indian market. The approval is stuck with the Indian bureaucracy and has been pending since August 2021.

The combined generation capacity of these projects is more than 1,000MW, according to the NEA.

India has also expressed its readiness to facilitate electricity trade between its two neighbours when Prime Minister Pushpa Kamal Dahal went on a state visit to India from May 31 to June 3.

Nepal and Bangladesh agreed to sign a tripartite agreement featuring the NEA, the Bangladesh Power Development Board (BPDB) and the NVVN of India during the energy secretary-level joint steering committee meeting held in Bangladesh in mid-May.

Nepali officials had said at that time that a consensus was reached on starting the trading of power within the wet season this year. But everything hasn’t been ready so far for the trading of power between Nepal and Bangladesh.

According to Adhikari, the only thing remaining in the bilateral negotiation is determining the tariff of electricity. “We are informed that the Bangladeshi side is in the process of forming a negotiation team on tariff,” he said.

On tariff, the NEA seems to be open to negotiations. “We plan to offer a good tariff as a goodwill gesture, as it will be a government-to-government deal,” NEA’s Managing Director Kulman Ghising has told the Post. “A reference point could be the existing electricity price in Bangladesh.”

The NEA officials, meanwhile, said the transmission charges and service fee to be paid to the Indian authorities have been more or less finalised. The transmission charges will be equivalent to what India’s power traders are currently charging power buyers and it will be levied as per India’s open access rules.

The Bangladeshi entities may also have to pay service fees for the Indian company’s efforts in obtaining its government’s regulatory approval.

The NVVN, which is India’s nodal agency for cross-border power trade, will be responsible for collecting the fees, according to Adhikari, the NEA power trade director.

Source : The Kathmandu Post