Bangladesh agreed to sign a 25-year power trade deal with Nepal to import 40MW of hydroelectricity, as reported by the Kathmandu Post.
Confirming the information, officials of The Bangladesh Power Development Board (BPDB) said a delegation of Bangladesh led by State Minister for Energy Nasrul Hamid will visit Kathmandu soon to sign the deal.
The officials, however, did not confirm the schedule of the visit.
While the tariff for electricity is yet to be negotiated, the duration of the agreement has been settled, ensuring a long-term market for Nepal's electricity in Bangladesh.
Kul Man Ghising, the managing director of Nepal Electricity Authority, told Kathmandu Post that they have agreed to a 25-year power sale agreement with Bangladesh, aligning with Nepal's proposal.
This agreement with Bangladesh resembles the long-term inter-governmental power trade agreement initiated between Nepal and India during Prime Minister Pushpa Kamal Dahal's visit to India earlier this year.
Initially, the Bangladeshi side preferred a five-year agreement with an option for renewal due to uncertainties in the power sector's evolution, as mentioned by Prabal Adhikari, the power trade director at Nepal Electricity Authority. However, Bangladesh eventually agreed to the 25-year deal, pending finalisation and signing. Ghising mentioned that, apart from the tariff, an understanding has been reached on all other issues.
The formalisation of the understanding will take place once Nepal, India, and Bangladesh sign a tripartite agreement on power sale, utilising the Indian Territory for the trade.
Bangladesh prioritised resolving issues other than the tariff during the negotiations. Technical and commercial aspects of the agreement were discussed, leading to a mutual understanding between the two sides.
Regarding the tariff, the Nepal Electricity Authority (NEA) is open to negotiation, intending to offer a favourable tariff as a government-to-government gesture. “We plan to offer a good tariff as a good gesture, as it will be a government-to-government deal,” Ghising said, “A reference can be the existing electricity price in Bangladesh but we are yet to decide on the rate.”
When it comes to transmission charges and service fees, Bangladesh will directly pay the NTPC Vidyut Vyapar Nigam Limited (NVVN), according to Adhikari, the power trade director at the authority.
The transmission charge will be determined based on India's current practice for power buyers, in line with India's open access rules mentioned in the proposed power sale agreement, said Adhikari. Depending on the technical conditions of the transmission infrastructure, including the load, Bangladesh may have to pay between 40 and 55 paisa per unit in Indian currency.
In addition, Bangladeshi entities may be required to pay service fees to cover NVVN's efforts in obtaining Indian regulatory approval. Adhikari stated that the service charge could range from 4 to 7 paisa per unit in Indian currency.
NVVN will be responsible for collecting these fees as part of the tripartite deal between Nepal, India, and Bangladesh.
The NVVN will be part of a tripartite deal between Nepal, India and Bangladesh to enable the export of 40MW power to Bangladesh. Once Nepal and Bangladesh reach an understanding on tariffs, it will pave the way for a tripartite agreement.
Nepal and Bangladesh agreed to sign a tripartite agreement among the NEA of Nepal, the Bangladesh Power Development Board (BPDB) and the NVVN of India during the energy secretary-level joint steering committee meeting held in Bangladesh in mid-May.
India has also expressed its readiness to facilitate electricity trade between its two neighbours. India clearly stated its willingness during Prime Minister Dahal’s India visit.
Nepali welcomed the decision of the government of India to facilitate the first trilateral power transaction from Nepal to Bangladesh, through the Indian grid with an export of up to 40 MW power, India’s External Affairs Ministry said in a statement on June 2.
Ghising said that India had also agreed to facilitate the electricity trade between Nepal and Bangladesh for 25 years.
Nepal and Bangladesh decided to request India to permit power trade through the high-voltage Baharampur-Bheramara cross-border transmission link.
The Nepal Electricity Authority has requested the Indian authorities to allow it to sell the power generated from the 52.4MW Likhu-4 project to Bangladesh.
