The Bangladesh Power Development Board (BPDB) has sent a letter to the Nepal Electricity Authority (NEA) to sign an agreement for the purchase and sale of 40 MW of electricity produced in Nepal.

The BPDB informed that the bid submitted by the NEA for the sale of 40 MW of electricity during the six months of the rainy season has been approved by the relevant authority, and therefore, sent a letter on Monday for the electricity sale agreement.

In accordance with legal provisions, on 16th Poush 2080 (1st Jan 2024), the BPDB (Bangladesh Power Development Board) called for tenders to purchase 40 MW of electricity produced in Nepal for five years, under a tripartite agreement between the authorities of Bangladesh, India, and Nepal. The NEA (Nepal Electricity Authority) submitted the required tender documents, including the proposed electricity rate, for the sale of electricity. The BPDB evaluated the submitted tender documents, received approval from the relevant authority, and informed the NEA of its intention to accept the tender.

The NEA must provide a written notice of acceptance of the tender to the BPDB within seven working days. Following this, the BPDB will provide a draft of the electricity sales agreement to the NEA. The agreement must be signed within 28 days of receiving the draft. There will be a tripartite agreement between the NEA, NTPC Vidyut Vyapar Nigam (NVVN) of India, and the BPDB.

Managing Director Kulman Ghising of the NEA has stated that they have initiated work to export electricity to Bangladesh starting from this monsoon season, completing all remaining processes. He mentioned, “Once all three parties agree on the draft of the tripartite electricity sales agreement, the agreement will be finalized swiftly. After that, the NEA will send lists of approved arrangements to the Central Electricity Authority of India for approval of Bangladesh’s electricity export. Prior arrangements for electricity export to Bangladesh have already received approval in India, and proposals for approval will be sent promptly when new arrangements are submitted.

Preparations are underway to export electricity to Bangladesh from two hydropower projects constructed with Indian grants and owned by Nepal Electricity Authority (NEA): 25 MW from Trishuli and 22 MW from Sunkoshi. Both projects have received approval for electricity export to India.

The authority plans to sell 40 MW of electricity to Bangladesh annually for five years, from June 15 to November 15 each year, at a rate of 6.40 US cents per unit in American dollars.

Nepal and India’s first cross-border Dhalkebar-Muzaffarpur 400 kV transmission line will determine the price of electricity exported to Bangladesh, which the authority will find at the Muzaffarpur point in India. This means that the meter for electricity exported to Bangladesh will be located in Muzaffarpur. The authority will oversee the technical hurdles of the transmission line from Dhalkebar to Muzaffarpur. Through the transmission line from Muzaffarpur to Bheramara in Bangladesh, the electricity of Bangladesh will reach.

Managing Director Kulman Ghising mentioned that the NEA will bear all costs related to the transmission line beyond Muzaffarpur, including tariffs, technical hurdles, and trading margins incurred by NVVN, and these costs will be recovered from Bangladesh. Ghising noted that the electricity rate would be approximately 7.6 cents per unit when it reaches the border with Bangladesh.

“We will receive 6.40 cents at the Muzaffarpur point, so there is no currency exchange risk when receiving payments in dollars, making the exchange rate stable for us in electricity sales annually. The rate we have achieved for electricity sales is appropriate,” he said. “At the government-to-government level with Bangladesh, the initial phase of electricity trade has begun symbolically, and in the days ahead, this regional trade will support and facilitate large-scale trade on one side, which will open up electricity trade to many other sectors.”