Nepal Begins 1st-Ever Electricity Export to Bangladesh via India

17-11-2024

Trilateral Power-Sharing Agreement: Nepal, India, and Bangladesh have signed a historic power-sharing agreement on October 3, 2024 in Kathmandu.
Under this agreement, Nepal began exporting electricity to Bangladesh via India on November 15, 2024.
This marks the first-ever electricity export from Nepal to Bangladesh, and the power is transmitted through the Indian grid.
Export is a "green energy initiative" that supports sustainable development in the region.
Details of the Export:
1. Initial Export: 40 MW of electricity was exported to Bangladesh, marking the formal beginning of the energy trade between Nepal and Bangladesh.
2. The export period for this year is from June 15 to November 15, covering five months.
3. Nepal is expected to sell 144,000 MWh of electricity annually at a rate of 6.4 US cents per unit.
4. The total duration of this agreement is 5 years, and the power will be supplied annually during the same period.
5. The 1st and last export of 2024 began on November 15, and is planned to continue in subsequent years, with the export resuming in mid-June each year.
Inauguration Event:
1. The inauguration of the power flow was held virtually and attended by key figures:
  - Nepal's Energy Minister
  - India's Union Minister for Power and Housing
  - Bangladesh’s Energy Adviser
Energy Crisis in Bangladesh:
1. Bangladesh has been facing an electricity crisis, exacerbated by several factors, including the suspension of power supply from Adani’s Godda plant, a key energy supplier.
2. In addition, Bangladesh’s Payra thermal power unit is under maintenance, further limiting electricity production.
3. Bangladesh’s energy sector is primarily dependent on fossil fuels, with hydroelectricity accounting for only 1% of the total energy generation.
4. Bangladesh’s urgent need for renewable energy sources, like hydroelectricity, makes the import from Nepal particularly significant.
5. Bangladesh is exploring ways to connect to other hydroelectric sources in the region, including those in Bhutan and Nepal, as part of a proposed South Asian electricity grid.
6. The Nepali electricity export is expected to alleviate some of the pressure on Bangladesh's power grid.
Geographical Considerations:
1. Nepal and Bangladesh are not directly connected.
2. They are separated by the Siliguri Corridor (a 22-kilometer stretch in India).
3. Thus, Nepal’s power is 1st transmitted to India through the 400KV Dhalkebar-Muzaffarpur cross-border transmission line and then transferred to Bangladesh.
Economic and Strategic Significance:
1. The energy export is expected to boost regional cooperation and help Nepal reduce its trade deficit, which currently stands at Rs 1.44 trillion.
2. The deal provides an opportunity for Nepal’s economy to earn foreign currency and tap into its hydroelectric potential, estimated at 40,000 MW.
3. Nepal's long-term goal is to generate 28,500 MW of hydroelectric power by 2035, with plans to export more electricity to India and Bangladesh.
Political and Diplomatic Context:
1. This agreement follows the visit of Nepal's Prime Minister Pushpa Kamal Dahal to India in May 2023, where both nations discussed enhancing sub-regional cooperation, especially in the energy sector.
2. The agreement was signed on October 3 2024, after the Central Electricity Authority of India gave approval for the export.
3. Geopolitical Implications: The export deal fosters closer diplomatic ties between Nepal, India, and Bangladesh, with the energy sector acting as a unifying force. It also positions India as a key transit hub for regional energy trade.
4. Economic Impact: The deal is expected to help Nepal earn significant foreign exchange through electricity exports, which will help balance the country's trade deficit.

This historic power export agreement has the potential to reshape energy dynamics in South Asia, contributing to economic stability, energy security, and environmental sustainability across the region.