Nepal, India, and Bangladesh have signed a trilateral agreement to trade 40 megawatts of electricity.

The historic deal, signed in Kathmandu on Thursday, for the first time allows Nepal to sell electricity to a third country. Thus far, Nepal’s energy trade had been taking place only with India, the southern neighbour.

The agreement was signed by Kulman Ghising, executive director of the Nepal Electricity Authority; Mohammad Rezaul Karim, chairman of Bangladesh Power Development Board; and Renu Narang, CEO of India's NTPC Vidyut Vyapar Nigam amid a function in Kathmandu.

Energy Minister Deepak Khadka; Minister of State for Energy Purna Bahadur Tamang; and Bangladeshi Minister for Forest, Environment, Climate Change, and Water Resources Syeda Rizwana Hasan witnessed the signing.

As per the agreement, Bangladesh will now import 40 megawatts of electricity from Nepal. The Indian side has also been involved as Nepal’s electricity will be transmitted to Bangladesh through the transmission infrastructure on the Indian territory. Nepal and Bangladesh are not territorially linked.

Nepal is expected to sell 144,000 MWh (megawatt-hour) of electricity in five months—mid-June to mid-November—every year at the rate of 6.4 US cents a unit.

During the signing ceremony, ministers and other officials from the three countries hailed the tripartite deal as a historic one.

Energy Minister Khadka described the agreement as a landmark for Nepal’s energy sector development.

Bangladeshi Minister Hasan termed it a milestone in energy cooperation in South Asia. Stating that Bangladesh was working to add renewable energy in its energy system, the hydroelectricity to be imported from Nepal will be vital for them. In the energy mix of Bangladesh, hydropower has a very nominal portion.

According to the Energy Scenario of Bangladesh (2022-23) published by the Energy and Mineral Resources Division of the country in February 2024, hydroelectricity makes up just 1 percent of the total generation of 24,911 MW. Of this, renewable energy is only 2 percent (459 MW). This shows the urgent need for renewable energy in Bangladesh.

Originally scheduled for July 28, the signing was postponed due to political unrest and a government change in Bangladesh.

According to NEA Executive Director Ghishing, it will take a few weeks to complete the remaining procedures to actually export electricity to Bangladesh. “But we will start exporting electricity to Bangladesh this season, even if for a single day,” Ghising said.

Nepal’s ambassador to Bangladesh, Ghanshyam Bhandari, described the signing as “a small but significant step that will surely serve as a springboard for future sub-regional energy cooperation.”

Former chief secretary Shanker Bairagi, who also served as a foreign secretary, wrote on X, “A significant milestone in power sector collaboration has been achieved today in Kathmandu with the signing of a tripartite agreement among Nepal, India, and Bangladesh, enabling the export of 40 MW electricity from Nepal to Bangladesh.”

Nepal and Bangladesh have finalised the deal six years after they reached an understanding on energy cooperation.

For now, Nepal will transmit the energy to India through the 400KV Dhalkebar-Muzaffarpur cross-border transmission line before India transmits the equivalent to Bangladesh. The NEA will calculate the quantum of exported energy at the Mazaffarpur point. The NEA estimates a yearly earning of around Rs330 million for the country through the sale.