Nepal’s plan to export 40 megawatts of electricity to Bangladesh starting June 15 has been uncertain, as Bangladesh has yet to open the letter of credit (LC).

According to the Nepal Electricity Authority (NEA), Bangladesh Power Development Board (BPDB) has not cleared the dues from last year either.

NEA spokesperson Rajan Dhakal, however, said the export is scheduled to begin next week as per the agreement between Nepal, India, and Bangladesh signed last year.

On November 15, 2024, Nepal’s Energy Minister Deepak Khadka, India’s Power Minister Manohar Lal, and Bangladesh’s Energy Ministry advisor Muhammad Fouzul Kabir Khan inaugurated electricity exports to Bangladesh jointly. That day, 470,000 units of electricity was sold, generating revenue of $30,080, which BPDB has yet to pay.

Nepal, India, and Bangladesh signed an agreement on October 3, 2024, that allows electricity trade during the five months of the monsoon, from June 15 to November 15, each year.

Due to uncertainties last year, electricity was exported only for 12 hours on the final day, November 15, from noon to midnight. As a result, no LC was opened. Dhakal said BPDB had requested to pay the dues along with next year’s payment, and NEA had agreed.

Although BPDB has sent a draft of the LC, the final opening is still pending. “Some comments were sent back, and the process is now in the final stage,” Dhakal said. “Opening the LC guarantees payment and requires coverage of three months’ worth of payments.”

Last year’s agreement paved the way for Nepal’s electricity export to a third country beyond India. The power is transmitted via the Dhalkebar–Muzaffarpur 400kV transmission line to India’s Muzaffarpur substation, then through India’s Berhampur–Bheramara 400kV line into Bangladesh.

The Central Electricity Authority of India has approved 18.60MW from Trishuli and 21.40MW from Chilime—totalling 40MW—for export to Bangladesh until October 2, 2029.

NEA has signed a five-year deal to sell this power to Bangladesh in US dollars at 6.40 cents per unit. The energy will be delivered at Muzaffarpur, with NEA covering technical losses up to that point. Bangladesh will bear all downstream costs—transmission losses, charges, and trading margins.

A tripartite agreement among NEA, India’s NTPC Vidyut Vyapar Nigam (NVVN), and BPDB facilitates this export. NEA had submitted the list of projects for approval to India’s Central Electricity Authority on October 9, 2024, and export began only after receiving approval.

Earlier, on January 1, 2024, BPDB had floated a five-year tender to purchase 40MW of electricity under this trilateral framework. The NEA submitted the necessary bid documents, including tariff details, based on which the tripartite agreement was finalised.