Despite the approval from Bangladesh's interim government to import 40 MW of hydroelectricity from Nepal last week, the cross-border power trade could be further delayed amid growing concerns over transmission charges, India’s role, and bureaucratic issues in Bangladesh, according to Bangladeshi media reports.
The agreement for Nepal's electricity export to Bangladesh, initially scheduled for July 28, was postponed after the country was engulfed in protests, initially demanding an end of the quota system in government jobs which later resulted in the ousting of then Prime Minister Sheikh Hasina on August 5.
The Nepal Electricity Authority, India's NTPC Vidyut Vyapar Nigam (NVVN) and the Bangladesh Power Development Board were scheduled to sign a tripartite agreement for Nepal to sell 40 MW of electricity to Bangladesh via India at 6.4 US cents per unit during the six-month rainy season for the next five years.
The agreement on electricity export from Nepal to Bangladesh, once signed, will mark the first time Nepal exports electricity to a third country. Since 2021, Nepal has been exporting electricity to India’s competitive energy market.
An interim government has been in place in the country under the leadership of Muhammad Yunus to hold general elections.
While the Bangladesh's Finance Division has raised objections over the transmission line charges imposed by the Indian government, a file related to the project went missing, reported The Business Post, a Bangladesh daily, last week. Authorities had to make a new file.
NVVN will receive a trading margin of Rs 0.0595, equivalent to Tk 0.09, along with transmission line charges of Tk 0.76, says the news report. It will cost Bangladesh TK 8.17 per unit for the purchase of electricity from Nepal. “Reports indicate that using the Indian grid to import this electricity will incur an estimated annual cost of Tk 130 crore, amounting to Tk 650 crore over five years.”
The country’s Finance and Power divisions are at odds over India’s stance to keep the charge flexible. While the Power Division has already agreed to it, according to the media reports, the Finance Division has preferred it to be fixed, citing the possibility of India unilaterally setting charges in the coming days.
Questions have also been raised in Bangladesh over tax related provision in the energy deal. While Bangladesh will be susceptible to the changes in tax policies in India during the trade, India will remain immune to such changes in Bangladesh and Nepal.
Moreover, the Bangladesh's National Board of Revenue, Bangladesh Bank and the Financial Institutions Division have yet to give feedback for the process to move forward.
Meanwhile, Ambassador of Bangladesh to Nepal Salahuddin Noman Chowdhury on Sunday (September 15) said that his country was ready to support Nepal in production of electricity, its trade and development of transmission lines.
The ambassador made the remark during a courtesy visit to Minister for Energy, Water Resources and Irrigation Dipak Khadka at Singha Durbar in Kathmandu reported RSS, the state-owned news agency.
Minister Khadka said he was confident that an upcoming meeting among secretaries and joint secretaries of both countries will be fruitful. It will discuss cooperation on large hydroelectric projects, agreement on cross-border transmission lines with the Indian side, and the initiation of electricity trade.
Khadka also said that he was assured of the Bangladesh Embassy’s support in finalising procedures for signing a joint venture between the NEA and Bangladesh Development Board for the development of the 680-MW reservoir-based Sunkoshi hydel project.
