Nepal, India, and Bangladesh are scheduled to sign a landmark agreement on Thursday to export 40 megawatts of electricity generated in Nepal to Bangladesh.

The tripartite agreement will involve the Nepal Electricity Authority (NEA), NTPC Vidyut Vyapar Nigam Limited of India, and the Bangladesh Power Development Board (BPDB). Under the terms of the agreement, the NEA will receive 6.40 US cents per unit of electricity. The Indian side is involved in the deal as Nepal and Bangladesh are using the transmission line of India to transmit the energy through the territory of the southern neighbour.

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

Chiranjeevi Chataut, spokesperson for the Ministry of Energy, Water Resources, and Irrigation, said meetings at the energy secretary and joint-secretary levels will be held in Kathmandu on Tuesday and Wednesday to complete all the preparations for the agreement.

The NEA plans to sell electricity to Bangladesh annually during the rainy season, from June 15 to November 15. The expected export is 144,000 megawatt-hours, and the NEA estimates earnings of USD 9.216 million over these five months.

Electricity will be exported to Bangladesh via the Dhalkebar-Muzaffarpur 400 kV transmission line, with the metering point in Muzaffarpur. The NEA will bear any technical losses incurred in the transmission line from Dhalkebar to Muzaffarpur.

Electricity will reach Bangladesh through the 400 kV transmission line from Beharampur (India) to Bhedamara (Bangladesh). The NEA intends to export electricity generated from its 25-megawatt Trishuli project and 22-megawatt Chilime project, both of which have received approval for electricity exports to India.

On December 6, 2023, Bangladesh’s Cabinet Economic Affairs Committee granted in-principle approval for importing 40 megawatts of electricity from Nepal. Subsequently, BPDB issued a tender for the purchase of electricity for five years, in line with the tripartite agreement among Nepal, Bangladesh, and India, on January 1.

A team from the NEA held discussions with the BPDB’s tender evaluation committee on February 22 in Dhaka. Nepal initially proposed a price of 6.70 US cents per unit; however, an agreement could not be reached as Nepal insisted on not offering a lower price than that charged to India. After bilateral discussions at the SAARC Energy Secretary-level meeting hosted by the World Bank in Singapore, Bangladesh agreed to a reduced price of 6.40 US cents.

Although an agreement on the price was reached, the Bangladesh Cabinet’s Public Procurement Committee only approved the import price on June 11. After evaluating the submitted tender documents, BPDB informed the NEA on July 7 of its intent to accept the tender.

The NEA confirmed its acceptance of the tender and promptly received a draft of the electricity sales agreement from BPDB. The NEA then scheduled the agreement date and invited BPDB on July 10.

However, the deal became uncertain following widespread protests against the government in Bangladesh, which led to the resignation of then-prime minister Sheikh Hasina. Despite this, the interim government’s Chief Adviser, Mohammad Yunus, assured that importing electricity from Nepal would continue, paving the way for the forthcoming agreement.