Although Nepal is scheduled to begin exporting 40 megawatts of electricity starting from 15 June, Bangladesh has not yet opened the Letter of Credit (LC) as of the end of 2nd week of-June. As a result, there is uncertainty over whether the electricity export will actually begin in six days.

Bangladesh Power Development Board (BPDB) has still not paid the dues for the electricity exported by Nepal on November 15 last year. This year too, electricity exports will begin from June 15 as per the agreement, according to Nepal Electricity Authority spokesperson Rajan Dhakal.

On November 15, 2024, Nepal’s Minister for Energy, Water Resources and Irrigation, Deepak Khadka; India’s Minister of Power, Manohar Lal; and Mohammad Fozlul Kabir Khan, Advisor to Bangladesh’s Ministry of Power, Energy and Mineral Resources, jointly inaugurated the electricity export through a virtual switch-on ceremony. According to sources at the Nepal Electricity Authority, 470,000 units of electricity were sold on that day, generating an income of 30,080 dollars. However, the BPDB has not paid the amount yet.

An agreement was reached between Nepal, India, and Bangladesh on October 3, 2024, to sell electricity every year during the five-month monsoon period, i.e., from June 15 to November 15. However, due to uncertainty over whether electricity would be exported in 2025, the Letter of Credit (LC) process was not initiated, which is why last year’s payment has not been made, according to Nepal Electricity Authority spokesperson Rajan Dhakal.

Last year, amidst uncertainty over whether electricity would be exported or not, the export happened only on the final day, from 12 noon to 12 midnight,’ he said. ‘Therefore, the LC process was not initiated. Opening an LC for just one day’s payment over a six-month period was not feasible. Since they requested to make the payment together the following year, we agreed,’ he added.

According to Dhakal, since the BPDB has sent a draft of the Letter of Credit (LC), and some comments have already been sent back, the process of opening the LC is now in its final stage. “An LC is a guarantee of payment, and when it is opened, they must deposit the amount equivalent to three months of payment,” he said. “The LC will be opened soon. Electricity export will definitely happen as well.”

Previously, electricity trade was limited to Nepal and India only, but starting in 2024, Nepal’s electricity began to expand to a third country as well. Electricity produced in Nepal reached Bangladesh through India’s transmission infrastructure.

The electricity reaches India’s Muzaffarpur substation through the first international Dhalkebar–Muzaffarpur 400 kV transmission line between Nepal and India. From there, electricity is transmitted to Bangladesh through the India–Bangladesh 400 kV transmission line between Baharampur (India) and Bheramara (Bangladesh).

The Central Electricity Authority under India’s Ministry of Power has approved the export of 40 megawatts of electricity to Bangladesh, produced from the Trishuli and Chilime hydropower projects, generating 18.60 MW and 21.40 MW respectively. The Central Electricity Authority has granted approval to export 40 MW of electricity from these two projects to Bangladesh until October 2, 2029. Both of these projects have already received approval for electricity export to India.

The authority has stated that it will sell 40 megawatts of electricity to Bangladesh in US dollars for five years during the monsoon season. The electricity trade between Nepal and Bangladesh is conducted in dollars, according to the authority. The authority has signed an agreement to receive 6.40 US cents per unit for electricity sold to Bangladesh. The price for the electricity exported to Bangladesh will be received at India’s Muzaffarpur point. The authority will bear the technical losses on the transmission line from Dhalkebar to Muzaffarpur.

According to the authority, Bangladesh will bear all taxes and fees including transmission line charges beyond the Muzaffarpur point, technical losses, NVVN charges, and the trading margin taken by India. To transmit 40 megawatts of electricity from Nepal to Bangladesh using the Indian transmission grid, a tripartite electricity sales agreement was signed between Nepal Electricity Authority, India’s NTPC Vidyut Vyapar Nigam (NVVN), and Bangladesh’s BPDB.

After the tripartite electricity sales agreement, the authority sent the list of projects to India’s Central Electricity Authority on October 9 for approval of electricity export to Bangladesh. Electricity export began after receiving approval from India’s Central Electricity Authority.

As per the provisions of the law, BPDB on January 1, 2024 issued a tender for the purchase of 40 megawatts of electricity produced in Nepal, to be procured for five years in accordance with the tripartite agreement between the agencies of Bangladesh, India, and Nepal.

The authority submitted the tender documents, including the rate of electricity to be sold as per the specified format for electricity sales. After the approval of the tender submitted by the authority, the process for the tripartite electricity sales agreement moved forward.

Source: Kantipur