Tensions between India and Bangladesh over recent trade restrictions have sparked concerns that Nepal’s electricity exports to Bangladesh could be affected. Nepal and Bangladesh have signed a 40-megawatt electricity purchase agreement, but electricity must be transmitted through Indian infrastructure.

As relations between India and Bangladesh have soured, doubts have emerged over whether India will continue to permit the use of its transmission lines for Nepal’s electricity exports to Bangladesh.

Recently, India withdrew permission it had been granting Bangladesh to export goods to third countries via Indian land customs checkpoints. In response, Bangladesh banned the import of several Indian goods, as well as two categories of goods from Nepal and Bhutan.

Amid this backdrop, Bangladesh has also strengthened ties with China and Pakistan, following India’s decision to grant asylum to former Bangladeshi Prime Minister Sheikh Hasina. International trade experts warn that these developments could impact Nepal’s power trade with Bangladesh if tensions continue to escalate.

Ravi Shankar Sainju, former joint secretary at the Ministry of Industry, Commerce and Supplies and an expert on international trade, said the escalating trade war between India and Bangladesh may obstruct Nepal’s electricity exports.

“With growing strain in India-Bangladesh relations, India may deny Bangladesh access to its power grid to buy electricity from Nepal. That could derail Nepal’s ambition of exporting electricity to third countries,” Sainju said. “Without India’s grid, it's not possible to sell electricity to Bangladesh.”

He added that not only electricity but all trade between Nepal and Bangladesh via India could be impacted unless relations improve.

On October 2, Nepal, India, and Bangladesh signed a tripartite agreement to export 40 megawatts of electricity from Nepal to Bangladesh. Under the agreement, Nepal is allowed to export power for five months annually—from June 15 to November 15—for a period of five years.

On November 15, Nepal exported electricity to a third country other than India for the first time under this agreement.

However, Hitendradev Shakya, Executive Director of the Nepal Electricity Authority (NEA), said it remains uncertain whether the India-Bangladesh trade conflict will affect the electricity deal. “If India refuses to allow grid access, we will sell the electricity to India instead,” he said. He noted that the rate offered by India would be lower compared to Bangladesh.

“Currently, India is supplying 1,600 megawatts of electricity to Bangladesh. If that supply continues despite the strained ties, Nepal can use the same transmission line,” Shakya said.

India’s Adani Power supplies electricity to Bangladesh from its coal-fired plant in Jharkhand. On October 31, Adani had cut its electricity supply in half after Bangladesh, facing an economic crisis, failed to make timely payments. The supply resumed in March after Bangladesh cleared its dues.

Rajan Dhakal, director of the NEA’s power trade department, also said the future of the trilateral power trade remains uncertain. “It is too early to say whether the trade dispute will affect power exports. So far, there has been no sign of disruption,” Dhakal said.