The Independent Power Producers’ Association, Nepal (IPPAN) has welcomed the Power Sales Agreement (PSA) signed between Nepal and Bangladesh.

Issuing a press statement on Sunday, IPPAN welcomed the Power Sales Agreement signed between Nepal and Bangladesh citing that it was a historic agreement in power trading and cooperation.

It is said that the historic milestone was achieved after Nepal, India and Bangladesh signed the tripartite agreement allowing Nepal to sell its electricity to Bangladesh using the land and transmission infrastructure of India.

Nepal Electricity Authority (NEA), Bangladesh Power Development Board (BPDB) and NTPC Vidyut Vyapar Nigam (NVVN) signed the agreement at a programme organised in Kathmandu on Thursday last week in the presence of Minister for Energy, Water Resources and Irrigation Deepak Khadka of Nepal and Minister for Forest, Environment, Climate Change and Water Resources, Syeda Rizwana Hasan of Bangladesh.

IPPAN President Ganesh Karki said that along with the agreement, the power purchase agreement (PPA) which is halted by the Nepal Electricity Authority should be fully opened.

He said that the government should be ready to give licenses to the private sector for electricity export, banks and financial institutions should increase energy investment and the government should announce more concessions for energy production.

He said that the government should pay attention to resolve the policy, administrative and procedural problems currently seen for the construction of hydropower projects.

IPPAN has requested the government for immediate policy and procedural reforms for targeted exports of electricity to India and Bangladesh.

Since 1971, electricity has been exchanged between Nepal and India, and in 2014, a Power Trade Agreement (PTA) was signed between the two neighbouring countries.

On January 4, 2024, a long-term agreement was signed with India for the export of 10,000 megawatts of electricity in 10 years.

"This agreement with Bangladesh has not only opened up Nepal's electricity market to Bangladesh, it has also opened the way for cooperation, partnership and investment exchange between the two countries for energy development and expansion, government-to-government relations as well as private-private sector," President Karki said.

The government of Bangladesh has set a target of importing 9,000 MW of electricity from Nepal by 2039.

The government of Nepal has set a target of exporting 15,000 MW by 2035 and has set a target of exporting 5,000 MW to Bangladesh.

Karki said that the private sector of Nepal was always ready to implement this goal.

“If the target is implemented, it will increase the electricity trade between Nepal and Bangladesh and will contribute significantly to the economy of Nepal,” he said.

The sixth meeting of the Nepal-Bangladesh Energy Secretary-level Joint Steering Committee (JSC) held on October 2, 2024, agreed to organise a business conference to attract the private sector of Bangladesh to promote investment in Nepal's hydropower sector, and explore the possibility of promoting cooperation between the private sector of the two countries, the IPPAN said.

The IPPAN also requested the governments of Nepal and Bangladesh to create a solid environment to move forward by building the necessary mechanisms between the private sectors of both countries.

It has been 113 years since electricity was produced in Nepal. So far, about 3,200 MW of electricity generation capacity has been reached and 2550 MW (80 per cent) is being produced by the private sector.

At present, projects worth 4,000 megawatts in the private sector are under construction while projects worth 14,000 megawatts are about to go into construction.