Trilateral Agreement for Nepal-Bangladesh Electricity Trade awaits finalization of rates and transmission charges


August 16, 2023


Trilateral Agreement for Nepal-Bangladesh Electricity Trade awaits finalization of rates and transmission charges

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KATHMANDU: Nepal and Bangladesh have recently inked a trilateral agreement, facilitated by India, for the exchange of electricity.

The drafted rules and conditions governing the electricity trade between the two nations and India have been formulated and endorsed by officials from all three countries.

The Nepal Electricity Authority is gearing up to initiate electricity trade within a month, following the successful trilateral agreement. While most aspects of the agreement have been settled, there remain two critical points yet to be finalized.

The specifics of the purchase rate in Nepalese rupees per unit and the trade margin to be paid for utilizing India’s transmission line are the aspects under discussion. An official from the Ministry of Energy disclosed, “Until these matters are resolved, the agreement remains in draft form.”

Bangladesh is set to establish a committee to determine the electricity purchase rate on their end. The committee’s formation adheres to the regulations of their government. Once the committee’s decision is made, clarity will emerge on this front. “Business could potentially commence by August, with electricity deliveries likely to begin in September. The prospects for initiating electricity trade this winter are growing stronger,” the official added.

Initially, there were concerns raised by the Indian side regarding transmission line issues. However, Nepal’s proposal to initiate trade even at a capacity of up to 50 MW garnered a positive response, mitigating the obstacles.

An additional agreement is required between the Indian company NVVN and the Bangladesh Power Development Board (BPDB) to finalize transmission line charges. Presently, India levies transmission line fees ranging from 4 to 7 paisa per unit. This fee’s determination will also fall under the purview of the Bangladesh committee.

Bangladesh’s interest in procuring Nepalese hydropower has been a longstanding aspiration. Despite repeated overtures by Bangladesh, the lack of an agreement stemmed from India’s involvement. The utilization of India’s transmission lines for electricity trade between Nepal and Bangladesh necessitates Indian permission.