Bangladesh agrees terms, tariffs for import of energy

Published On: November 22, 2019 09:30 AM NPT By: Muna Sunuwar | @TheMunaSun

This undated photo shows the site office of the Upper Karnali Hydropower Project in Dailekh district. Photo: Republica Files

KATHMANDU, Nov 2: The tariffs, terms and conditions of Power Purchase Agreement (PPA) with GMR Energy have been finalized for the import of 500 MW power to Bangladesh from 900 MW Upper Karnali Hydropower Project (UKHP).

Speaking at the inaugural ceremony of Power Summit 2019, Minister of State for Power, Energy and Mineral Resources of Bangladesh, Nasrul Hamid, revealed that his government has agreed on the tariffs, terms and conditions on the purchase of electricity generated by Upper Karnali Hydropower project (900 MW).

He, however, did not divulge the details of the PPA.

The deal between the developer of the mega hydropower project and the government of Bangladesh marks a breakthrough in the project whose deadline for financial closure had expired last year.

The agreement, though yet to be signed formally, will also help in ending uncertainty over the fate of the mega hydropower project. The purchase of 500 MW electricity of UKHP is also expected to set an example of regional power trade arrangement whereby the project developed in Nepal by Indian company GMR Energy will be sold to Bangladesh through Indian grid.

“This is a remarkable achievement in terms of mutual cooperation in the SAARC region,” Nasrul Hamid said.

The project was awarded to GMR through a competitive bid process in 2008 as an export-oriented project aimed at the Indian market.

Nepal will receive 27% free equity and 12% free energy from the Upper Karnali project. This amounts to 108 MW of electricity, approximately equal to 15% of the current installed capacity in Nepal.

Officials of the Investment Board Nepal (IBN) say that the recent progress in negotiations could pave the way for extension of the financial closure deadline of the project.

“We were in a wait-and-see mode in the lack of satisfactory progress in terms of achieving financial closure. If the PPA is signed with Bangladesh, as has been announced during the power summit, we are positive about extend the financial closure deadline for GMR Energy,” Maha Prasad Adhikari, the IBN CEO, told Republica.

Meanwhile, S N Barde, CEO of GMR Energy, said his company faced hurdles in terms of regulations and other issues regarding transmission while signing the first trilateral agreement. But they were eventually resolved, he added.