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Nepal and Bangladesh agree on trading power through India in big boost to regional integration

Nepal and Bangladesh agree to trade power via India

Kathmandu: Nepal and Bangladesh have decided to take a number of measures to forge a trilateral partnership with India, which lies between them to enable the two to trade power with each other.

Though Nepal and Bangladesh are not far away, they are not geographically contiguous. Indian territory falls between the two countries. Consequently, active Indian support is necessary to enable bilateral trade of electricity between Kathmandu and Dhaka.

During the fifth meeting of the secretary-level Joint Steering Committee on energy cooperation between two countries held in Patuakhali, Bangladesh on Tuesday, they decided to start trading power at the earliest, with an export target of 40MW from Nepal to Bangladesh after receiving necessary approvals from Indian authorities.

“For this, the two countries aim to sign a trilateral power sale agreement among the entities including that of India as early as possible,” Nepal’s Ministry of Energy, Water Resources and Irrigation said in a press statement on Tuesday night.

According to the ministry, there is a plan to sign a tripartite agreement among Nepal Electricity Authority (NEA), the Bangladesh Power Development Board (BPDB) and the NTPC Vidyut Vyapar Nigam Limited (NVVN) of India.  The NVVN is the nodal agency designated by the Indian government for cross border power trade with the neighbouring countries.

“Efforts will be made to sign such a tripartite agreement very soon so that Nepal could export power as early as the upcoming wet season (June-November),” Madhu Bhetuwal, spokesperson at the Nepal’s Energy Ministry told India Narrative. “There is a plan to export power from Nepal by using the existing transmission infrastructure of all three countries.”

The NEA has sent a request to the Indian authorities, asking them to allow the sale of the power generated by the 52.4MW Likhu-4 project to Bangladesh through India’s existing transmission infrastructure.

During the 10th joint steering committee meeting on energy cooperation between Nepal and India, the South Asian giant had agreed to grant its approval once Nepal submits the proposal specifying the project whose power will be sold to Bangladesh, according to Nepal’s energy ministry.

If the plan materialises, it will be Nepal’s first export of power to a third country other than India. Since November 2021, Nepal has been selling its excess power to the Indian market after the southern neighbour gave regulatory clearance.

In recent years, India has been prioritising regional integration among South Asian countries, excluding Pakistan. As per the joint vision statement on power sector cooperation between Nepal and India issued in April last year, the two countries agreed to expand sub-regional cooperation in the power sector among Bangladesh, Bhutan, India and Nepal (BBIN).

India and Bangladesh are committed to collaborating on regional connectivity projects such as the BBIN Motor Vehicles Agreement and the Kolkata-Silchar-Imphal-Dhaka Bus Service, for mutual benefit.

Bangladesh has set a target of covering 40 percent of its power generation with clean energy by 2041 and to import around 9000MW under regional and sub-regional cooperation. Nepal, which is increasing its generation capacity rapidly lately, stands ready to fulfil the part of clean energy needs of Bangladesh.

By the end of the current fiscal year 2022-23 in mid-July, Nepal’s power generation capacity is expected to reach 2,853MW, 4,507 MW by mid-July 2024 and 5,251MW in mid-July 2025, according to NEA. But domestic consumption is expected to be half of the potential generation by 2025 which forces Nepal to sell electricity abroad, it said.

In July 2018, Nepali government issued a white paper targeting the growth in power generation. As per it, Nepal aimed to generate 15,000MW of power in 10 years and 5000MW will be exported.

Nepal has gross hydropower potential of 72,544 MW from three river basins: Koshi, Gandaki, and Karnali which covers 94 percent of the total gross potential of the country, according to a study carried out by Nepali government in 2019.

According to Nepal’s energy ministry, Nepal and Bangladesh also agreed to make joint efforts to create a high level trilateral administrative mechanism between Nepal, Bangladesh and India to forge partnership in the areas of power trade, building cross border transmission infrastructure and overall cooperation in the power sector.

The Joint Steering Committee meeting also instructed the Joint Technical Team (Transmission) under high level mechanism, to explore options of cross border transmission lines to enable trading of power between Nepal and India and submit a report within six months.

The Joint Technical Team had earlier identified two routes—Anarmari (Nepal)-Panchagarh (Bangladesh), and Anarmari (Nepal) to Thakurgaon (Bangladesh) for dedicated transmission lines.

The total length of the first route is 49km, of which a 24km section falls within the Indian territory. The second route has an 83km length, of which a 33km section falls in Indian territory.

Bhetuwal, who was also a delegation member of Nepal, said that two sides now would explore three options of transmission infrastructure to enable trading of power between the two countries in the short, medium and long run.

They include: using existing India-Bangladesh cross border link, enhancing the capacity of existing Baharampur-Bheramara link between India and Bangladesh and developing Duhabi (Nepal)-Purnia (India) and Barapukuria (Bangladesh) transmission link.

During the meeting, the Bangladeshi side also notified Nepal that the Bangladesh Power Development Board would soon sign power sale agreement with GMR, India to sell 500MW of electricity from 900MW Upper Karnali Hydropower Project based in Nepal, according to Nepal’s energy ministry.

The Indian company is working to generate resources to develop a Nepal-based hydropower project and securing power sale agreement would be important for the company to conclude financial closure.

In early May, the Constitutional Bench of the Supreme Court had paved the way for the Indian company to work towards financial closure of the project enabling it to sign power sale agreement with Bangladesh entity after the court vacated earlier interim order against the Indian company.

The two countries also decided that the NEA and BPDB would sign a   joint venture agreement within the next six months to develop the 683 MW Sunkoshi 3 hydropower project at the border of Ramachhap and Kavrepalanchowk districts of central Nepal, according to the energy ministry of Nepal.

Earlier, the two countries agreed to develop this project jointly but entities responsible for developing the project were not determined.

According to the ministry, Nepal will also take necessary facilitation measures to attract the Bangladeshi private sector in Nepal’s hydropower sector.

Also Read: Power surplus Nepal seeks Indian market as energy exports become next growth frontier

(Prithvi Shrestha writes on Nepal affairs from his perch in Kathmandu. Views expressed are personal)