Bangladesh bargains for cheaper power from Nepal

Bangladesh wants to purchase electricity from Nepal at five cents per unit, while the Himalayan country seeks seven cents per unit, which is delaying a power deal between the two countries, according to Bangladesh Power Development Board (BPDB) sources.

Mohammad Hossain, director general of Power Cell, a government regulatory agency under the Ministry of Power, told The Business Standard, "Discussions are still in a preliminary stage, and a final decision has not yet been reached."

"However, we hope that a price will be settled somewhere in between," he added.

According to the agreement, Bangladesh anticipates receiving a total of 40 MW of electricity from Nepal, comprising 24 MW from the Trishuli project and 16 MW from another power plant. The electricity will be transmitted to the national grid at Bheramara, Bangladesh, via the Baharampur transmission line in India.

Power Division Senior Secretary Md Habibur Rahman said, "The price is currently under negotiation. We hope both countries can reach an agreement on the price, and there will be no significant issues."

He added, "We will discuss the matter in the next cabinet meeting, and a preliminary decision will be made by Bangladesh during that meeting."

According to sources at the Power Division, the two countries will convene another meeting soon to finalise the price.

Habibur Rahman said the agreement between the two countries is expected to be signed before 15 June. "We have reached a decision regarding the purchase of electricity from Nepal because it will benefit both countries," he said.

Mohammad Hossain said electricity can be procured from Nepal at a relatively cheaper price. "While coal-based electricity costs between Tk12 to Tk14 per unit, we can purchase electricity from Nepalese hydropower sources at less than half the cost," he said.

BPDB sources indicate that if the agreement is finalised, Bangladesh will also have the opportunity to export electricity to Nepal.

During Bangladesh's winter, when electricity demand decreases, Nepal experiences a dry season and requires additional electricity. Consequently, Nepal will have the option to import electricity from Bangladesh during such times, they say.

Bangladesh is actively seeking external sources to diversify its electricity supply and boost the proportion of renewable energy in its energy portfolio. The country is interested in purchasing 500 MW of electricity from Nepal, with an initial contract for 40 MW.

'They are ready to buy, we are ready to sell'

Meanwhile, The Kathmandu Post, a news outlet based in Nepal, also reported that the Bangladeshi side sought to negotiate a reduction in the price quoted by the Nepali utility.

"After Nepal stood its ground that the price it quoted was reasonable, they first wanted to discuss the matter with higher authorities," an official of the Nepal Electricity Authority (NEA) told The Kathmandu Post.

A delegation headed by NEA's executive director Kul Man Ghising visited Bangladesh recently.

Quoting NEA sources, The Kathmandu Post also mentioned that Nepal offers electricity at seven cents per unit, while Bangladesh proposes a rate of five cents per unit.

According to the Post, earlier NEA's Deputy Managing Director Pradeep Kumar Thike likened Nepal's proposed price to what an Indian company paid for a medium-term power purchase agreement last year.

In May last year, NEA inked a five-year power purchase deal with NTPC Vidyut Vyapar Nigam (NVVN) Limited-India, securing a net tariff of 5.25 Indian Rupees per unit for power supplied to India, without bearing transmission and trade margin costs, the report says.

Following the rate disagreement, the Nepali delegation returned home, although NEA officials remain hopeful about a tariff consensus in future talks.

Pradeep Kumar told The Kathmandu Post, "They are ready to buy, and we are ready to sell. The talks have been positive, and we are hopeful of a final agreement in the upcoming meeting."

According to him, the next meeting is yet to be scheduled.

A joint statement issued on 22 February said both parties intend to expedite a power sale agreement to facilitate Nepal's electricity export during the forthcoming rainy season.

NEA's proposal seeks to export 40MW of power from 15 June to 15 November, with the agreement slated for a five-year duration. The transmission will occur via the Nepal-India Dhalkebar-Muzaffarpur Cross Border Transmission Line and the India-Bangladesh Barampur-Bheramara Cross Border Transmission Line, the Post reports.

India has also already agreed in principle to facilitate the export of 40MW power from Nepal to Bangladesh.

During Nepalese prime minister Pushpa Kamal Dahal's visit to India last year, India pledged support for Nepal's power export to Bangladesh through its existing transmission infrastructure.

Upon tariff agreement, Nepal, Bangladesh and India anticipate signing a tripartite deal, marking Nepal's maiden power export to Bangladesh.

Nepal and Bangladesh in May last year agreed to sign a tripartite agreement between the NEA, the Bangladesh Power Development Board, and the NVVN during the meeting of the energy secretary-level joint steering committee, The Kathmandu Post mentioned.