Nepal and Bangladesh closer to finalizing the tariff of cross-border electricity trade

Published On: February 22, 2024 08:00 AM NPT By: Republica  | @RepublicaNepal

KATHMANDU, Feb 22: In a bid to materialize its effort to sell domestically produced electricity to third countries, Nepal is finalizing a deal with Bangladesh.

In this regard, a Nepali delegation led by Kulman Ghising, managing director of the Nepal Electricity Authority (NEA), left for Bangladesh on Wednesday. “We will finalize the tariff rates at which we will be selling electricity to Bangladesh,” Ghising said.

During Prime Minister Pushpa Kamal Dahal’s visit to India in May-June last year, the Indian side had promised to facilitate the export of electricity from Nepal to Bangladesh. In the initial phase, Bangladesh is set to purchase 40 MW of electricity from Nepal.

Bangladesh, in this regard, has already called for a tender to transmit electricity to its territory from Nepal.  Last month, Bangladesh sent a draft request for proposal asking the NEA to set tariffs of electricity at which it could sell to the SAARC country.

In response, the NEA proposed to provide electricity produced in Nepal at the tariff between Rs 8.96 per unit and Rs 9.28 per unit. Ghising said the tariff rate will be settled through bilateral negotiations.

The transmission of Nepal's electricity to Bangladesh will be facilitated through India's NVVN, which has been designated as the nodal agency by the Indian government. As per the preliminary trilateral agreement, Nepal will supply its electricity to the Nepal-India border, which will then be supplied to Bangladesh using 400 kV Dhalkebar-Muzaffarpur cross-border transmission line and related infrastructure built in India. The wheeling charge and cost of electricity losses will be borne by Bangladesh.

Bangladesh, in its strategic plan, aims to purchase 9,000 MW of electricity from Nepal by 2040.  The South Asian country, which is in pursuit of clean energy, has expressed its interest in investing in some important projects in Nepal as well.

Bangladesh has shown interest to purchase 500 MW of electricity to be produced by the 900MW Upper Karnali Hydropower Project in western Nepal. The Indian GMR company has received a license to develop this hydroelectricity project.

In addition, Bangladesh is also keen to invest in the 683 MW Sunkoshi 3 Hydropower Project. For this purpose, the country has agreed in principle to involve India, making the project a trilateral venture.

Provided the deal with Bangladesh is finalized, the country will be the second power trading partner country of Nepal. Since June 2022, Nepal has been selling its electricity to India through the Indian Energy Exchange. During June-November 2023, Nepal sold 1.7371 billion units of electricity at the rate of Rs 8.77 per unit to India. Through the power trade, the landlocked country earned Rs 15.23 billion, up from Rs 8.44 billion in the previous year.   

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