Bangladesh to sign deal to buy 500MW electricity from Nepal

Bangladesh is going to sign a power purchase agreement (PPA) with Indian companies GMR Karnali Hydropower Company Limited and NTPC Vidyut Vyapar Nigam (NVVN) to buy 500 MW of electricity.

In the joint steering committee (JSC) meeting between the two countries held last Thursday, the Bangladeshi side expressed its commitment to sign a PPA with the Indian companies, according to the Ministry of Energy, Water Resources and Irrigation of Nepal, as reported by Kathmandu-based news portal Urja Khabar.

The signing is expected to take place within the month of September, that features the visit of the Bangladesh prime minister to Delhi.

The PPA is sought to be a strategic move to carry out cross-border energy trade between Nepal and Bangladesh. Bangladesh has been consistently expressing its interest in purchasing electricity from Nepal.

Bangladesh industry insiders said the import of 500 MW of electricity will be an addition to the country’s current generation capacity of over 25,000 MW of which more than 40 percent remains unutilized, while the power utilities have to resort to about 2000 MW of loadshedding daily under a rationing programme due to shortage of primary fuel.

They also said although Bangladesh will import electricity from Nepal, it has to sign PPA with two Indian companies as the Indian generation company GMR will generate electricity from Nepal while the NVVN will supply it through Indian territory.

As per a bilateral arrangement between Dhaka and New Delhi, if Bangladesh wants to import power that will come from Indian territory, it has to purchase it from an Indian company, they said.

GMR Karnali Hydropower Company Limited is a subsidiary of the New Delhi-based GMR Group while NVVN is a power trading in the country formed by Indian state-owned NTPC Ltd in the year 2002.

It may be mentioned that the Cabinet Committee on Government Purchase (CCPP) in a meeting in December 2019 approved the proposal of the Power Division to import 500MW electricity from the Indian company’s power plant in Nepal.

The bulk electricity will be imported through Indian company NVVN complying with the Indian regulatory commission’s terms and conditions.

As per the proposal, Bangladesh will import the electricity from Indian firm GMR at a tariff rate of $7.7172 (equivalent to Tk 736 if current US dollar rate is considered at Tk 95.49) per kilowatt hour (each unit) for over a period of 25 years.

For the import, the government will have to pay a total amount of over Tk 40,000 crore to GMR through NVVN over the period, said the Power Division sources.

Under the Power and Energy Increase of Speedy Supply Act (SPA) 2018, now the BPDB will sign power sales agreement with the NVVN to import the electricity from the GMR.

The Nepalese news portal reports that the Thursday meeting also reached a five-point bilateral consensus on energy cooperation between the two countries.

The discussion has pointed out the possibility that Bangladesh could utilize the unexploited capacity of its high voltage direct current structure at Veramara power plant to import 40-50 MW of electricity from Nepal in the initial phase.

With this possibility in place, the energy authorities of the two countries, Nepal Electricity Authority and Bangladesh Power Development Board will be requesting the Indian NVVN to sign a trilateral PPA.

Similarly, Nepal will be providing the environmental assessment report of 683 MW Sunkoshi-3 Hydropower Project to Bangladesh. In this regard, Bangladesh has consented to come up with necessary comments over the report soon to expedite forming a joint team to take forward the project construction.

Nepal and Bangladesh would like to initiate a trilateral agreement with India to construct a dedicated transmission line on the Indian land, prepare an agreement draft for cooperation in renewable energy including solar home systems, collaborate on providing training and make a future guideline for bilateral capacity building, according to the clauses that the two countries consented to in Thursday’s meeting, reports the Urja Khabar.