In a significant step towards regional energy cooperation, Nepal, India, and Bangladesh have signed a historic agreement allowing Nepal to export electricity to a third country for the first time.
This landmark deal marks a turning point in South Asia’s energy landscape, with Bangladesh set to import 40 megawatts (MW) of hydropower from Nepal.
The agreement, signed in Kathmandu, also includes India’s participation as the transmission intermediary, facilitating power transmission from Nepal to Bangladesh through its infrastructure.
The deal, finalized six years after the initial understanding between Nepal and Bangladesh, promises to boost energy trade and sub-regional cooperation in South Asia, opening the door for future renewable energy collaborations among the three countries.
A Historic Milestone in South Asian Energy Cooperation
The agreement was signed by key energy officials from all three nations: Kulman Ghising, Executive Director of Nepal Electricity Authority (NEA); Mohammad Rezaul Karim, Chairman of Bangladesh Power Development Board; and Renu Narang, CEO of India’s NTPC Vidyut Vyapar Nigam.
Present at the event were Nepal’s Energy Minister Deepak Khadka, State Minister for Energy Purna Bahadur Tamang, and Bangladesh’s Water Resources Minister Syeda Rizwana Hasan.
Nepal and Bangladesh are not territorially connected, necessitating India’s involvement to transmit the electricity. The Dhalkebar-Muzaffarpur 400KV cross-border transmission line between Nepal and India will be used to send the energy, which will then be redirected by India to Bangladesh.
As per the agreement, Nepal is expected to export 144,000 megawatt-hours (MWh) of electricity annually from mid-June to mid-November, earning approximately Rs 330 million for the country.
The deal’s significance was echoed by leaders from all three countries. Nepal’s Energy Minister Khadka hailed the agreement as a “landmark for Nepal’s energy sector development.”
His Bangladeshi counterpart, Minister Hasan, termed it a “milestone in energy cooperation in South Asia,” highlighting that hydropower from Nepal would be crucial in Bangladesh’s efforts to diversify its energy mix.
Addressing Bangladesh’s Energy Crisis with Renewable Solutions
Bangladesh, which has long been grappling with a high dependence on fossil fuels, views the import of hydropower from Nepal as an essential step in boosting renewable energy. According to the Energy Scenario of Bangladesh (2022-23), published by the country’s Energy and Mineral Resources Division, hydroelectricity accounts for only 1% of Bangladesh’s total installed generation capacity of 24,911 MW, with renewable energy contributing just 2% (459 MW).
The reliance on traditional energy sources has left Bangladesh vulnerable to environmental and economic challenges. Minister Hasan emphasized the importance of the deal, stating that it would enhance Bangladesh’s renewable energy portfolio and help reduce its dependence on coal and natural gas.
“Hydropower from Nepal will be vital for us,” she remarked, underlining the need for regional cooperation in tackling the energy crisis.
While the signing was originally scheduled for July 28, it was postponed due to political unrest and a change in the Bangladeshi government. Despite the delay, energy leaders and policymakers have praised the agreement as a timely and necessary move toward regional integration and sustainable energy production.
Paving the Way for Future Regional Cooperation
Although the agreement marks Nepal’s first international electricity trade deal with a third country, it is expected to be just the beginning. Speaking at the signing ceremony, NEA Executive Director Kulman Ghising emphasized that while there are still several technical procedures to complete before power exports begin, the goal is to start exporting electricity to Bangladesh as soon as possible, even if only for a day this season.
“We are working hard to ensure that the first export happens this year. This small step will eventually lead to larger cooperation in energy trade among the three countries,” Ghising said.
Nepal’s ambassador to Bangladesh, Ghanshyam Bhandari, echoed this sentiment, describing the deal as “a small but significant step” towards larger sub-regional cooperation. Former Nepalese Foreign Secretary Shanker Bairagi also highlighted the importance of the agreement, stating that it would serve as a springboard for future collaborations in South Asia’s energy sector.
With the tripartite agreement in place, Nepal is set to leverage its vast hydropower potential, helping its neighbors diversify their energy sources while earning valuable revenue for its own energy sector. The collaboration is also expected to inspire other countries in the region to consider similar arrangements, fostering greater energy independence and sustainability across South Asia.
The successful implementation of the deal will not only provide Bangladesh with much-needed renewable energy but also demonstrate the feasibility of regional energy cooperation in overcoming geographical and infrastructural barriers. For Nepal, this agreement represents a significant economic opportunity, allowing it to tap into new markets while promoting clean energy solutions.
In the long term, this historic deal is seen as a pivotal moment for all three countries, ushering in a new era of energy cooperation and positioning South Asia as a leader in renewable energy innovation.
