The recently held Cabinet meeting of the Bangladeshi government has approved its statutory body’s proposal to import electricity generated by the Upper Karnali Hydropower Project in western Nepal, which is currently being developed by an Indian company.

The meeting approved the memorandum of understanding (MoU) signed by the Bangladesh Power Development Board (BPDB), a statutory body of the Bangladeshi government, with India’s NTPC Vidyut Vyapar Nigam (NVVN) which will allow it to import electricity generated by the Upper Karnali scheme through the Indian power grid. The understanding was signed during Bangladeshi Prime Minister Sheikh Hasina’s visit to India in April 2017.

As Indian laws don’t allow private developers to export electricity produced in third countries over Indian transmission lines, Bangladesh signed the MoU with the Indian state-owned, cross-border electricity trading agency, while GMR Upper Karnali Hydropower endorsed the pact as one of the signatories.

The decision means GMR, the Indian company building the 900 MW Upper Karnali Hydropower Project located in western Nepal, is a step closer to exporting up to 500MW of electricity to Bangladesh via Indian territory.

Last week, Bangladeshi State Minister of Power Nasrul Hamid informed his Nepali counterpart Barsha Man Pun about his government’s decision during the latter’s visit to Bangladesh, according to Roshan Khadka, press advisor of Pun. 

GMR, which is planning to finalise the power purchase agreement (PPA) deal with the Bangladeshi government, has said it will now start negotiations with the Bangladeshi government over the commercial term of the power purchase agreement. “We have already submitted the financial term of the agreement along with the tariff rates to the Bangladeshi government,” said a highly placed GMR source. “We are expecting a call from the Bangladeshi official within a week.” According to sources, the PPA deal with Bangladesh will be signed in around three months.  

The PPA deal between the GMR and the Bangladeshi government will act as a guiding framework for Nepal to export surplus electricity to Bangladesh in the near future. The Energy Minister inspired by this development has already asked Nepal Electricity Authority (NEA), the state-owned power utility, to sign a similar pact with the BPDB and the NVVN to export electricity generated by two other hydropower projects being developed in Nepal. The ministry plans to export electricity generated by the 850 MW Upper Arun and 800 MW Dudhkoshi storage hydropower projects to Bangladesh through India’s NTPC Vidyut Vyapar Nigam (NVVN).

Bangladesh promises to be a lucrative market for the hydroelectricity produced in Nepal as it is an energy-hungry nation and plans to import electricity from neighbouring countries to sustain the high economic growth rate that it has been achieving for the last few years.

According to experts, the price of electricity in Bangladesh is higher in comparison to Nepal and India, which will make a large number of hydropower projects in Nepal financially viable. A month ago, Nepal and Bangladesh signed an energy cooperation agreement with the aim of exploring the possibilities of initiating electricity trade between the two countries.