Tripartite power agreement between India, Bangladesh, Nepal could revive SAARC

New Delhi, Nov 15: The first-ever trilateral power transaction between Nepal, Bangladesh, and India was officially inaugurated, marking a major milestone in South Asian energy integration.

This successful project according to political pundits could be the first initial step towards the revival of SAARC which so far continues to be defunct since India and Pakistan’s relationship went spirally down,

The virtual ceremony, hosted by Nepal’s Ministry of Energy, Water Resources, and Irrigation, saw the participation of key officials: India’s Union Minister for Power and Housing & Urban Affairs, Manohar Lal; Md. Fouzul Kabir Khan, Adviser to Bangladesh’s Ministry of Power, Energy and Mineral Resources; and Nepal’s Minister of Energy, Water Resources, and Irrigation, Mr. Dipak Khadka.

According to a press release from the Ministry of External Affairs, this event “symbolises a new era of sub-regional energy cooperation, enhancing connectivity and fostering economic interdependence among the three nations.” The project facilitates the export of up to 40 MW of electricity from Nepal to Bangladesh through the Indian grid.

The groundwork for this trilateral power trade was laid during the visit of Nepal’s former Prime Minister, Pushpa Kamal Dahal ‘Prachanda’, to India from May 31 to June 3, 2023. During discussions with officials, both nations recognised the potential for greater sub-regional cooperation, particularly in the energy sector. The vision was to leverage India’s extensive power grid as a conduit for energy exchange between Nepal, rich in hydropower resources, and Bangladesh, a growing economy with increasing electricity demand.

The Ministry of External Affairs highlighted the strategic importance of this initiative, stating, “The collaboration will lead to increased inter-linkages between the economies, benefiting all stakeholders involved.” This power trade marks a significant step towards realising the South Asian Association for Regional Cooperation’s (SAARC) vision of energy connectivity and integration.

The journey towards this first power flow began with the signing of a tripartite power sales agreement on October 3, 2024, in Kathmandu. The agreement involves the NTPC Vidyut Vyapar Nigam (NVVN) of India, the Nepal Electricity Authority (NEA), and the Bangladesh Power Development Board (BPDB).

Under the terms, Nepal will export hydropower-generated electricity to Bangladesh via the Indian transmission network, initially allowing the export of up to 40 MW, with plans for expansion as infrastructure and capacity are enhanced.

The Ministry of External Affairs emphasised the cooperative spirit underpinning this project: “This tripartite agreement is a testament to the shared vision of sustainable energy development and economic integration among India, Nepal, and Bangladesh.”

Boosting SAARC

The successful launch of the first trilateral power transaction between Nepal, Bangladesh, and India has sparked new hope for the revival of the South Asian Association for Regional Cooperation (SAARC), an organisation that has long remained in political limbo. While SAARC has been largely inactive in recent years due to regional tensions and geopolitical challenges, this landmark energy project could signal a turning point, demonstrating the potential for practical cooperation that benefits multiple member states.

The integration of the Indian grid for cross-border electricity trade opens up new opportunities for countries like Nepal, which has an estimated hydropower potential of over 80,000 MW. For Bangladesh, which faces a growing electricity demand, importing power from its northern neighbour is a crucial step towards meeting its energy needs sustainably.

The Ministry’s press release concluded with an optimistic outlook: “This power trade will not only enhance sub-regional connectivity but also contribute to energy security and economic prosperity across the region. It reflects a shared commitment to sustainable development and mutual growth.”

As the power begins to flow from Nepal to Bangladesh, facilitated by the Indian grid, this initiative sets a precedent for future projects aimed at building a more interconnected and resilient energy market in South Asia.

The successful implementation of this trilateral power transaction could pave the way for broader regional collaboration, reinforcing the collective efforts to address energy challenges and achieve long-term economic stability as well as reviving the Saarc activities that continue to stay on a back burner.