Nepal and Bangladesh are likely to sign an energy cooperation and power trade agreement in the near future as both governments are preparing a final draft of memorandum of understanding (MoU).

According to Dinesh Kumar Ghimire, joint secretary at Ministry of Energy, Water Resources and Irrigation (MoEWRI), the government had given its go-ahead for energy cooperation with Bangladesh in September. A draft MoU had been sent to the Bangladeshi government, but there had been no response from the latter until now.

“We are currently holding discussions with the Bangladeshi government to finalise the MoU,” said Ghimire.

According to him, the draft, which has been finalised from the Nepali side, includes setting up a joint energy mechanism for power trade and investment. This framework is based on South Asian Association for Regional Cooperation (SAARC) Framework Agreement for Energy Cooperation, which was signed by all the SAARC members in 2014.

Till date, Nepal has signed energy cooperation with China and India. Earlier, the Bangladeshi government had said it would build one large hydropower project in Nepal. Ghimire added that the Nepal government, in turn, had assured facilitations for Bangladeshi investors to invest in Nepal’s energy sector.

“Power trade between Nepal and Bangladesh is complex because the transmission lines would have to traverse India,” explained Ghimire.

Hence, after signing the MoU, the government plans to set up joint-steering and joint-working committees for bilateral energy cooperation with Bangladesh. After that, Nepal, Bangladesh and India will hold trilateral meeting to come up with a feasible solution to any pending issues related to the transmission lines.

In the recent years, Nepal government has been trying to tap into its huge hydropower potential, attract more foreign direct investment into the sector and cater to the energy needs of the entire South Asia.