May 25, 2022, Wednesday
Nepal 1:37:26 pm

Trilateral cooperation is a need for Nepal- Bangladesh energy trade

The Nepal Weekly
March 29, 2022

In a general view, Nepal sees Bangladesh as a wider market to sale electricity generated in Nepal. So as Bangladesh intends to invest in hydropower projects to develop in Nepal to receive the generated electricity. Bangladesh also has a great deal of interest in buying the electricity generated by existing plants in Nepal.

This is to recall that, in February 2017 a news sparked to encourage people of Nepal as Bangladesh would import that hydropower generated in Nepal. The country also had shown interest in investing USD 2 billion in some suitable power projects.

Bangladesh had expressed its desire to invest in hydroelectricity projects in Nepal during the 9th South Asian Economic Summit it hosted in October, 2016. During the same period ministers of both countries signed an agreement to build two hydropower projects capable of generating more than 1,600 MW in Nepal. The proposed projects are the 1,110 MW Sunkoshi II and 536 MW Sunkoshi III located on the Sunkoshi River in central Nepal.

The two countries have agreed to develop the hydropower projects under the BBIN (Bangladesh, Bhutan, India and Nepal) initiative signed by the four countries to facilitate regional trade and business through road connectivity and electricity transmission systems mainly. As per the agreement, the electricity produced by hydropower projects in Nepal will be evacuated to Bangladesh via India under the BBIN economic corridor concept.

Bangladesh-Nepal bilateral relationship found new pace in August 2018 with the signing of an energy cooperation agreement to oversee investment, development and trade in hydroelectricity between the two countries. Under this arrangement, Bangladesh will import up to 9,000 MW of hydropower from Nepal by 2040.

Bangladesh, with an average GDP growth rate of around 7.5% in the last decade, has positioned itself as one of the fastest-growing economies in the world. The aspiration of elevating its stature to a high-income country by 2041 should be coupled with sustained production of energy to feed the ever-growing energy demand from the infrastructure and industrial sector. Since non-renewable natural gas is contributing 75 per cent of its total fuel consumption, Bangladesh is in haste to replace this scenario by importing energy from other countries so that the depleting gas reserve can be slowed.

Average electricity demand in Bangladesh is growing at over 10% per year, owing to rapid economic growth, industrialisation, expansion in grid connection, and the adoption of new electrical devices and appliances. Demand is projected for 2021 was about 23,800 MW, when more than 40% of electricity is expected to be consumed in the industrial sector. Furthermore, electricity will be consumed in the growing industrial sector if a reliable electricity supply can be guaranteed.

There are several reasons for Bangladesh’s interest in importing power from Nepal. The first is obviously to meet the ever-increasing demand to support its industrial growth as said above. The second is to diversify the power-mix so that over-reliance on natural gas is minimised. Studies have shown that Bangladesh has ample reserves of high-quality coal. However, Bangladesh’s recent inclination to massively expand its coal-based power plants is not equally welcomed by environmentalists and concerned citizens groups. Moreover, environmental and resettlement issues have surfaced, prompting the government to shift its focus on renewable energies.

Regional organisations like SAARC, BBIN and BIMSTEC can play a vital role in creating a common energy corridor that results in huge economic benefits for all the neighbouring countries. Although SAARC has not delivered as envisioned by the founders up until now, their idea of cooperation has become more relevant in recent years. Bangladesh, India and Nepal are member states.

If taken the situation to solve simply, the three countries – Bangladesh, India and Nepal – should open to cooperate each other so as all three parties get benefit out of the energy trade. That means, Bangladesh and Nepal should make India to be ready to provide transmission facility using the space above the surface in its territory. In return, India can collect a wheeling charge against use of its transmission infrastructure or Bangladesh or Nepal to construct a dedicated transmission line.

However, there might be some other causes and instances that India has to reconsider on providing the access. For all such outcomes only strong diplomatic dialogues and workout will work better.

Independent Power Producers’ Association Nepal (IPPAN) and Expo and Investment Management Services are organising Himalayan Hydro Expo, a three day event aiming promote hydropower business in Nepal with the theme “creating markets for Nepal’s hydropower”. The event is scheduled to take place in April, 2022 in Kathmandu. As the event features dialogues and discussions on policies and market management, it is expected to be able to discuss on solutions for energy trade between Nepal and Bangladesh. Similarly, modalities of cooperation and involvement from India will also be taken into consideration. This will be a step ahead for fruitful future of Nepal – Bangladesh energy trade. (PNR/The Nepal Weekly)