Uncertainty Looms Over Upper Karnali Power Export to Bangladesh

Uncertainty continues over whether Bangladesh will import 500 megawatts of electricity from Nepal’s 900-megawatt Upper Karnali Hydropower Project, amid political changes in Dhaka and a review of energy agreements signed by the previous government.

The plan to export electricity from the Upper Karnali project to Bangladesh has stalled following a shift in Bangladesh’s political leadership last year, which has strained relations between Bangladesh and India. The political upheaval led to the ouster of then prime minister Sheikh Hasina, who subsequently took refuge in India. A Bangladeshi court has since handed down a death sentence against her, further complicating bilateral relations and affecting agreements involving third countries.

In July last year, Bangladesh Power Development Board (BPDB) Chairman Rezaul Karim said the interim government had suspended all agreements signed under the Special Energy Act. Following that announcement, the proposed electricity export from Upper Karnali to Bangladesh entered a state of uncertainty.

Earlier, Upper Karnali Hydropower Limited had reached a preliminary agreement with the BPDB to supply 500 MW of electricity generated by the project to Bangladesh. The deal was part of a tripartite arrangement involving BPDB, India’s NVVN, and GMR Group, the project developer.

After assuming office, Bangladesh’s interim government began reviewing and, in some cases, cancelling agreements signed with India, placing several cross-border power deals under scrutiny.

“We have been verbally informed that our agreement is also under review,” KK Sharma, project chief of GMR Upper Karnali Hydropower Limited, told New Business Age. “However, we have not received any formal written communication so far.”

Sharma said that during Sheikh Hasina’s tenure, Bangladesh maintained very cordial relations with India, which helped facilitate the preliminary agreement to sell Upper Karnali’s electricity to Bangladesh in US dollars.

According to Sharma, the change in government in Bangladesh has placed not only the Upper Karnali power import agreement but also several other deals signed by the previous administration under review or cancellation.

“Politics and bureaucracy are different matters,” he said. “Since the agreement is under reconsideration, there remains a possibility that it could be reinstated in the future.”

GMR received approval to develop the Upper Karnali Hydropower Project through a global tender in 2008. The process to export 500 MW of electricity to Bangladesh moved forward from 2016 and culminated in an agreement in December 2024 involving BPDB, NVVN and GMR.

The estimated cost of the Upper Karnali project stands at Rs 146 billion.