Nepal has made a historic advance in electricity exports. Once overwhelmed by severe load-shedding, Nepal has now started exporting electricity not only to India but also to a third country, Bangladesh. With increased electricity production involving both the Nepal Electricity Authority (NEA) and private sectors, Nepal has begun exploring new markets, leading to exports to Bangladesh.

The NEA exported 40 MW of electricity to Bangladesh via the Indian transmission line on Friday. Nepal's Minister of Energy, Water Resources, and Irrigation, Deepak Khadka, India's Minister of Power, Manohar Lal Khattar, and Bangladesh's Energy and Water Resources Ministry Advisor, Muhammad Fozlul Kabir Khan, officially launched the electricity export from Nepal to Bangladesh through a virtual switch-on ceremony.

Energy Minister Khadka stated that the export of electricity from Nepal to Bangladesh is a historic achievement for the country. "The export of electricity from Nepal to Bangladesh via India has created more hope in the energy sector," Khadka said. "By utilizing the water resources here to produce electricity, we can earn foreign currency."

The door for Nepal's electricity export was opened after the signing of a tripartite electricity sales agreement on October 3 between the NEA, Bangladesh Power Development Board, and India's NTPC Electric Trade Corporation Limited. Electricity has been exported from Nepal to Bangladesh via Muzaffarpur in India.

Electricity is supplied through the Brahmapur (India) – Bhedamara (Bangladesh) transmission line, which is a 400 kV line. According to Kulman Ghising, Managing Director of the NEA, 14.4 million units of electricity will be exported annually to Bangladesh. In the first phase, electricity generated from the Trishuli (25 MW) and Chilime (22 MW) hydroelectric projects will be exported.

India's Minister of Power, Khattar, praised the use of India's transmission lines to expand electricity access in South Asian countries. "India has invested in various hydropower projects in Nepal," he said, "and India is ready to assist in the development of Nepal's electricity production."

The private sector in Nepal is also excited after the country began exporting 40 MW of electricity to Bangladesh in the first phase. The NEA will sell electricity to Bangladesh for five months during the monsoon season, from June 15 to November 15 every year. The authority will supply electricity to Bangladesh at a rate of 6.40 US cents (8.64 Nepali rupees) per unit. Bangladesh will pay India a transmission line usage fee of 0.059 Nepali rupees per unit as a trading margin for transporting electricity from Nepal.

Bangladesh has included the plan to import 9,000 MW of electricity from Nepal by 2040 in its strategic roadmap. Advisor to Bangladesh's Ministry of Energy and Water Resources, Khan, stated that integrating energy development could help make South Asian countries prosperous and contribute to the region's sustainable development. "Bangladesh, which has adopted a policy to reduce carbon emissions to zero, believes that Nepal's hydropower will boost the transition to renewable energy," he said. "The electricity imported from Nepal will contribute to Bangladesh's economic development."

Currently, India is exporting electricity to Bangladesh. As Bangladesh seeks clean energy, it has expressed interest in investing in some of Nepal's key projects. The government has already developed an energy development strategy with the goal of producing a total of 28,000 MW of electricity over the next 12 years. Of this, 13,000 MW is intended for domestic consumption, and 15,000 MW is targeted for export to countries including India. The government aims to bring about a qualitative change in the energy sector by involving the private sector in its development.

Nepal signed a long-term agreement with India regarding electricity exports last year. In October 2021, India had granted permission for the first time to export 39 MW of electricity from Nepal to India.

Nepal imports electricity from India during the winter season. Under the long-term energy agreement between Nepal and India, the goal is to export up to 10,000 MW of electricity from Nepal to India over the next 10 years. The NEA has set a target of exporting electricity worth 25 billion rupees in the current fiscal year. There are plans to expand the transmission line network to enable the export of 20,000 MW of electricity by 2035.

Nepal has also received approval to export around 1,000 MW of electricity to India. Previously, Nepal had received approval to export 690 MW, and in September, India granted permission to export an additional 251 MW of electricity to Bihar and Haryana. The route for exporting 941 MW of electricity from Nepal to India has now been opened.

The NEA stated that the surplus electricity produced during the monsoon season, which is consumed in excess in Nepal, will be sold to Bihar and Haryana every year from June to October. Currently. The NEA is selling 109 MW of electricity to the state of Haryana.

The Nepal Electricity Authority also signed medium-term electricity sales agreements with the distribution companies in Haryana and Bihar. In less than three years, this figure has increased by more than 24 times. The average rate of electricity exported so far is Rs 8.72 per unit. Currently, Nepal is selling about 700 MW of electricity daily to India in the medium-term, day-ahead, and real-time markets.

In the fiscal year 2023/24, the NEA exported Rs 1.94 billion units of electricity to India, generating an income of Rs 17.7 billion. Nepal imports electricity from India during the winter season. In the fiscal year 2022/23, Nepal imported electricity worth 1.944 billion rupees from India, while it exported electricity worth Rs 10.46 billion to India.

The long-term energy agreement between Nepal and India envisions the export of up to 10,000 MW of electricity from Nepal to India over the next 10 years. Nepal is moving forward on the path to becoming the leading hydropower exporter in South Asia. To facilitate electricity exports, the NEA has also accelerated infrastructure development. In accordance with decisions made through various energy mechanisms between Nepal and India, the capacity of the Dhalkebar-Muzaffarpur 400 kV transmission line has been increased from 600 MW to 1,000 MW.

A new 400 kV second cross-border transmission line from Butwal to Gorakhpur, capable of transmitting around 2,500 MW of electricity for trade with India, has begun construction. Eight years ago, the transmission line capacity for electricity import and export between Nepal and India was about 350 MW, but it has now increased to nearly 2,000 MW. The NEA has stated that a feasibility study is underway for the construction of additional transmission lines between Nepal and India. To further facilitate electricity trade between Nepal, India, and Bangladesh, the process of building a 400 kV transmission line from Inaruwa to Anarmani has also been initiated.