Bangladesh Halts Power Purchase Deal with Nepal’s Upper Karnali Project

Bangladesh’s plan to import 500 megawatts of electricity from Nepal’s Upper Karnali Hydropower Project has landed in uncertainty.

According to Bangladeshi media, the government of Bangladesh is preparing to cancel its agreement with India’s GMR company after deciding to suspend all deals made under the country’s Special Power Act.

Quoting Bangladeshi officials, reports mention that the deal to import 500 MW of electricity from Nepal may no longer move forward.

The project was supposed to be implemented under a three-country model—Nepal, India, and Bangladesh. The electricity would be transmitted to Bangladesh using India’s transmission lines.

However, Bangladesh has recently shown reluctance to proceed, citing strategic and geopolitical concerns regarding the Indian transmission route.

The chairman of Bangladesh Power Development Board, Engineer Rezaul Karim, told the media that the government has decided to suspend all agreements under the Special Power Act. As a result, the proposed agreement with GMR is likely to be automatically cancelled.

Bangladesh and Nepal had signed a memorandum of understanding in 2024 to export power from the 900 MW Upper Karnali Project. In May 2023, a steering committee meeting involving energy secretaries from Nepal, India, and Bangladesh had witnessed the signing of a preliminary agreement.

Alongside power import, Bangladesh had also shown interest in investing jointly in Nepal’s hydropower projects. But with the current caretaker government cancelling several energy-related deals, the Upper Karnali project seems to be on hold for now.

Still, Nepal is currently exporting 40 MW of electricity to Bangladesh using Indian transmission lines. Nepal had started power export to Bangladesh for the first time on July 15 last year. This year too, the export began from midnight of June 15.

Last year, Nepal exported electricity to Bangladesh for only 12 hours on the final day of the season. But this year, the Nepal Electricity Authority plans to continue exporting electricity throughout the five-month monsoon period.