A trilateral power-sharing agreement between Nepal, India, and Bangladesh officially commenced on November 15, marking a milestone moment for regional energy cooperation. The exchange kicked off with Nepal exporting 40 megawatts (MW) of electricity to Bangladesh via the Indian grid, realizing a vision long held by the three nations.
This significant development not only highlights Nepal's growing capabilities as a clean energy supplier but also showcases India's role as the conduit for electricity exchange between the two nations. The virtual inauguration of this electricity flow was conducted by Nepal's Energy Minister Dipak Khadka, India's Union Minister for Power and Housing Manohar Lal, and Bangladesh's Fouzul Kabir Khan, adviser to the Ministry of Power, Energy, and Mineral Resources.
Historically, this is the first occasion Nepal has exported electricity to any country outside India, reflecting Nepal's potential as it seeks to expand its energy market. Notably, this tripartite agreement was anticipated since discussions began two years prior, during former Prime Minister Pushpa Kamal Dahal's visits to India.
Separately, Nepal and Bangladesh are not physically contiguous; they are separated by the 'Siliguri Corridor,' which is approximately 22 kilometers long, making the need for India’s power grid indispensable for facilitating this electricity trade. Bangladesh is particularly eager for hydroelectric resources, as it currently generates only about one percent of its total power from hydro sources, substantially relying on fossil fuels for its energy needs.
Under this new agreement, finance for the electricity trade has been structured so Bangladesh will pay for the imports, with India receiving transit fees for permitting the use of its grid. This arrangement not only hopes to bolster energy needs but also aims to strengthen economic ties among the three countries. The Nepal Electricity Authority's (NEA) estimates indicate annual earnings of around Rs 330 million from this electricity export.
Following the formal signing of the power sales agreement on October 3, the NEA is set to provide 144,000 megawatt-hours (MWh) of electricity to Bangladesh across designated five-month trading windows, starting from June to November each year, with the first transaction occurring from mid-June next year. With this formal export, Nepal is expected to earn six point four cents per unit of electricity.
India's Ministry of External Affairs has noted how this initiative marks ``a landmark feat`` for regional energy integration, catalyzing not just energy sharing but the fostering of broader economic relationships among Bangladesh, India, and Nepal. The move is expected to significantly benefit the economies involved, particularly Nepal, which stands to benefit from reduced trade deficits and enhanced foreign currency earnings from this new revenue stream.
A notable advocate for this initiative has been Professor Muhammad Yunus, chief advisor to Bangladesh, during his recent engagements, including conferences emphasizing the need for a South Asian grid to optimize the untapped hydroelectric potential from Nepal and Bhutan.
Nepal holds the potential to generate upwards of 40,000 MW of hydroelectricity; tapping this resource could alleviate dependence on fossil fuels for both Nepal and its neighboring countries, thereby contributing to sustainable energy goals for the entire region.
This electricity exchange agreement demonstrates immense promise not only for Nepal and Bangladesh but also serves as a precedent for future trilateral or multilateral cooperation on energy and other sectors across South Asia. With the successful commencement of this electricity trade, other neighboring nations may also be encouraged to look at similar collaborative frameworks, thereby fostering regional synergy.
While the power flows are expected to continue, it remains to be seen how this agreement evolves and what other countries may seek similar arrangements to boost their renewable energy portfolios. There is no doubt this initiative stands as progressive acknowledgment of collaborative energy security, representing hope for truer integration among South Asian countries as they stand at the brink of transformative regional partnerships.
