A historic milestone in regional energy cooperation was achieved on Nov 15, 2024 with the inauguration of the first trilateral power transaction from Nepal to Bangladesh through the Indian grid. This momentous occasion, celebrated with a virtual event, marks a significant step towards fostering sub-regional connectivity in the power sector, enhancing energy cooperation between the three countries.
First Trilateral Power Transaction From Nepal To Bangladesh Via Indian Grid
Why In News
- A historic milestone in regional energy cooperation was achieved on Nov 15, 2024 with the inauguration of the first trilateral power transaction from Nepal to Bangladesh through the Indian grid. This momentous occasion, celebrated with a virtual event, marks a significant step towards fostering sub-regional connectivity in the power sector, enhancing energy cooperation between the three countries.
About Agreement
- The virtual inauguration was jointly conducted by India’s Union Minister for Power and Housing & Urban Affairs, Manohar Lal, alongside key officials from Bangladesh and Nepal, including Md. Fouzul Kabir Khan, Adviser to the Ministry of Power, Energy and Mineral Resources of Bangladesh, and Dipak Khadka, Nepal’s Minister of Energy, Water Resources, and Irrigation.
- The event celebrated the commencement of power transmission from Nepal to Bangladesh via Indian infrastructure, a move that promises to strengthen ties and bolster regional energy security.
- The agreement was facilitated after Indian Prime Minister Narendra Modi approved the power export plan during Nepalese Prime Minister Pushpa Kamal Dahal ‘Prachanda’s visit to India in June 2023.
- During this visit, both governments expressed their commitment to enhanced cooperation in various sectors, particularly energy, which would foster greater sub-regional integration.
- Tripartite power sales contract was signed on October 3, 2024, between Nepal Electricity Authority (NEA), the Bangladesh Power Development Board (BPDB), and NTPC Vidyut Vyapar Nigam (NVVN), the Indian entity responsible for managing cross-border power trade.
- This agreement lays the foundation for Nepal’s first power export to Bangladesh, a development that holds significant implications for both countries’ energy futures.
- While Nepal has been exporting electricity to India since November 2021, the current agreement makes Bangladesh the first third-country recipient of Nepalese electricity.
- The export of up to 40 MW of power to Bangladesh is expected to deepen the energy cooperation between the countries, further integrating their energy markets.
- As noted by the MEA, “The Government of India had announced its decision to facilitate the first trilateral power transaction from Nepal to Bangladesh through the Indian grid.” The power transaction relies on the existing Indian transmission infrastructure, which connects Nepal and Bangladesh indirectly through Indian territory.
- This geographic necessity means that India plays a crucial role in facilitating power exchanges between the two neighbouring countries. A key component of the agreement includes the implementation of a transmission charge, which will be in line with India’s open access rules.
- This fee, detailed in the power sale agreement, will be paid by Bangladesh to NVVN, which will also charge a trade margin or service fee for its role in managing cross-border transactions and obtaining regulatory approvals from Indian authorities.
- This trilateral agreement represents a significant leap toward enhanced sub-regional energy cooperation.
- As noted during the joint meeting in Patuakhali, Bangladesh in May 2023, Nepal and Bangladesh were eager to start trading power as soon as possible, with the export of 40 MW as the initial target.
- The successful execution of this agreement sets a precedent for future energy exchanges in the region, contributing to the mutual benefit of all stakeholders involved.
- The initiation of power trade from Nepal to Bangladesh is expected to have far-reaching benefits. It will not only provide Bangladesh with a reliable source of electricity but also create new opportunities for Nepal to monetize its abundant hydropower resources.
- For India, facilitating this power trade underscores its role as a key energy hub in the region, capable of supporting energy exchanges that benefit its neighbours.
- As regional cooperation in the energy sector continues to evolve, this first trilateral power transaction serves as a promising model for future collaborations, aiming to enhance energy security, foster economic ties, and promote sustainable development across South Asia.
- The Government of India had announced its decision to facilitate the first trilateral power transaction from Nepal to Bangladesh, through Indian grid with an export of upto 40 MW of power during the visit of the former Prime Minister of Nepal, Mr. Pushpa Kamal Dahal ‘Prachanda’ to India from 31 May to 3 June 2023 .
- During the visit, both sides had expressed their commitment towards greater sub-regional cooperation, including in the energy sector, which would lead to increased inter-linkages between the economies for mutual benefit of all stakeholders.
Agreement Clauses
- As per the agreement, Nepal will charge 6.4 cent in terms of US dollar for each unit of electricity sold to Bangladesh.
- Friday’s export to Bangladesh came from Nepal’s 25-megawatt Trishuli and 22-megawatt Chilime hydropower plants and used India’s 400-kV Muzaffarpur-Beharampur-Bhedamara transmission line.
- The arrangement is “expected to boost sub-regional connectivity in the power sector” and added, power supply from Nepal began at a time when Bangladesh is trying to ensure steady electricity availability in the face of reduced supply from a power plant in Godda, Jharkhand.
