Nepal and Bangladesh have intensified interactions expected to lead to a power trade agreement with the Energy Ministry preparing a draft memorandum of understanding (MoU) on energy cooperation.

The draft includes mechanisms for conducting power trade between the two countries as envisioned by the Saarc Framework Agreement for Energy Cooperation signed by all the Saarc nations in November 2014, ministry officials said.

Likewise, it states that a joint technical team will be formed to carry out a study and develop a modality and mechanism under which electricity can be traded between Nepal and Bangladesh.

Last week, the ministry sent copies of the draft MoU to the Finance, Law and Foreign ministries for their approval. Energy Joint Secretary Dinesh Kumar Ghimire said they had already received the Foreign Ministry’s okay.

“Once we get the go-ahead from the Finance and Law ministries, the draft will be presented to the Cabinet for its final approval,” said Ghimire. “It won’t take much time for the MoU to be signed after that as Bangladesh is keen to conclude such an understanding.”  

The two countries have been holding discussions on power trading since the then energy minister Radha Gyawali visited Bangladesh in August 2014.

During the visit, the two parties held extensive talks on enhancing power sector cooperation between Nepal, Bangladesh and India. Gyawali also welcomed the initiatives of Bangladesh for trilateral cooperation involving Bangladesh, India and Nepal for hydropower development and grid connectivity.

Although, Nepal and Bangladesh are likely to sign the MoU pretty soon, actual power trading between the two countries is still a farfetched dream, according to officials at the Energy Ministry.

“Power trading between Nepal and Bangladesh is easier said than done,” said Ghimire. “It is difficult because the transmission lines for power trading between Bangladesh and Nepal have to go through India. Nevertheless, once the MoU is signed, the two countries will have something to work on.” 

Also, since Saarc members have signed the Saarc Framework Agreement for Energy Cooperation, power trading between Nepal and Bangladesh could actually materialise.

Article 7 of the agreement enables member states to plan cross-border grid interconnections through bilateral agreements between the concerned states based on the needs of power trade in the foreseeable future through studies and sharing of technical information.