Nepal set to sell 40 MW electricity to Bangladesh from this rainy season

Kathmandu, July 10: After almost six years of continuous efforts for power trade between Nepal and Bangladesh, the two countries are finally close to ink an agreement to this effect.

The Bangladesh Power Development Board (BPDB) has written to the Nepal Electricity Authority to enter into an agreement for the trade of 40 megawatts of electricity produced in Nepal. 

Earlier, on August 21, 2022, the meeting of Joint Steering Committee between Nepal and Bangladesh held in Kathmandu decided that Bangladesh could purchase about 40-50 MW of electricity from Nepal. 

Similarly, it has also instructed Nepal Electricity Authority (NEA), NTPC Vidyut Vyapar Nigam (NVVN) and BPDP to go ahead to materilise the plan.

On August 10, 2018, Nepal and Bangladesh had signed a Memorandum of Understanding for the cooperation in the field of power sector. Under this MoU, the first meeting of Joint Working Committee (JWC) and Joint Steering Committee (JSC) between Nepal and Bangladesh held on December 3-4, 2018 in Kathmandu had decided to explore the possibility of electricity trade between Nepal and Bangladesh.

Similarly, the JWC and JSC meeting held in Bangladesh on September 13-14, 2021 decided to instruct the NEA on behalf of Nepal and BPDB on behalf of Bangladesh for the preparation to trade electricity between Nepal and Bangladesh.

According to the Nepal Electricity Authority (NEA) the BPDB has sent a letter on Monday for power trade agreement stating that the bid submitted by the NEA for power sales agreement (PSA) of 40 megawatts of electricity for six months of the rainy season has been approved by the concerned authorities of Bangladesh government.

According to the provision in the law, on January 1, 2024, BPDB called for a tender for the purchase of 40 megawatts of electricity generated in Nepal in accordance with the tripartite agreement between the entities of Bangladesh, India and Nepal for a period of five years. 

The Authority had submitted the tender document with the rate of electricity to be sold in the prescribed format for the sale of electricity. 

The BPDB informed the Authority of its intention to accept the bid after evaluating the submitted documents related to the bid and expecting that it had been accepted by the concerned relevant body.

The Authority shall give a written notification to the BPDB that the bid has been accepted within seven working days. 

“After that, the BPDB will provide the draft power purchase agreement to the Authority. An agreement should be made within 28 days of receiving the draft. There will be a tripartite agreement between the Authority, NTPC Vidyut Vyapar Nigam (NVVN), India and BPDB,” said the NEA. Managing Director of NEA Kul Man Ghising said that after completing all the remaining processes, the work has been started to export electricity to Bangladesh from this rainy season. 

"As the three bodies have agreed on the draft of the tripartite electricity sale accord, the agreement will be reached soon, then we will send the list of projects to the Central Electricity Authority of India for the approval to export electricity to Bangladesh. As new projects will take time for approval, the electricity produced from the projects that have already received electricity export approval in India will be sent to Bangladesh,” he said. 

The Authority has prepared to export the electricity produced by the 25 MW Trishuli and 22 MW Chilime hydropower projects, which were built with Indian subsidies and owned by it, to Bangladesh. Both of these are projects that have received approval for power export in India.

The Authority will sell 40 megawatts of electricity to Bangladesh for six months of the rainy season from June 15 to November 15 every year for five years, said the NEA. 

The Authority will get 6.40 US cents per unit by selling electricity to Bangladesh.

The Authority will get the price of electricity exported to Bangladesh through the first international Dhalkebar-Muzaffarpur 400 kV transmission line between Nepal and India at the Muzaffarpur point in India. The meter of electricity exported to Bangladesh will be in Muzaffarpur. 

The Authority will bear the technical leakage of the transmission line from Dhalkebar to Muzaffarpur. The electricity will reach Bangladesh through Bahrampur (India)-Bhermara (Bangladesh) 400 kV transmission line from Muzaffarpur through India's transmission line.

MD Ghising said that Bangladesh will bear all the taxes and fees, including transmission line fees, leakages, and trading margin taken by NVVN after the Muzaffarpur point. 

He said that the per unit rate of electricity would be around 7.6 US cents when it reached the border of Bangladesh.

"We will get 6.40 US cents at Muzaffarpur point, there is no currency risk as we will be paid in dollars, the rate we got is reasonable for the sale of electricity in the rainy season,” he said. 

“On the one hand, the electricity trade which is going to be done symbolically in the first phase with Bangladesh at the government-to-government level will help and facilitate large-scale trade in the region in the coming days, and on the other hand, it will open up many other avenues of electricity trade,” he said.