Bangladesh Suspends Deal to Import Electricity from Nepal

Bangladesh’s plan to buy 500 megawatts of electricity from Nepal’s Upper Karnali Hydropower Project is now uncertain. The deal, which involved Nepal, India, and Bangladesh, may not go ahead as planned.

Bangladesh Cancelling Old Power Deals

According to reports in Bangladeshi media, the government has decided to cancel all agreements signed under its Special Power Act. This includes the power deal with India’s GMR Group, which is building the Upper Karnali project in Nepal.

Engineer Rezaul Karim, head of Bangladesh’s Power Development Board, said the decision will likely cancel the deal with GMR, stopping the plan to buy electricity from Nepal.

A Three-Country Plan

The Upper Karnali project, 900 MW was part of a bigger plan. Nepal would produce electricity, India would provide transmission lines, and Bangladesh would be the buyer.

In 2024, Nepal and Bangladesh signed an agreement to move this plan forward. A year earlier, in 2023, government officials from the three countries had already met and signed a basic agreement.

Investment Plans Also Affected

Bangladesh had also shown interest in investing in hydropower projects in Nepal. But now, with the caretaker government in Bangladesh cancelling several deals, those investment plans may also be dropped.

Nepal Still Sending Power ??

Even though the big deal is stuck, Nepal is still sending 40 MW of electricity to Bangladesh through Indian lines.

This year, power exports began on June 15 and will continue during the five-month monsoon season. Last year, Nepal exported electricity to Bangladesh only once, and for just 12 hours, at the end of the season.

Impact on Nepal

This setback could slow Nepal’s plans to become a major electricity exporter and affect its ability to attract foreign investment in hydropower. The delay in the Upper Karnali project means Nepal may miss out on important revenue and regional energy cooperation opportunities. It also highlights Nepal’s dependence on neighboring countries for power transmission, which can cause challenges when political issues arise. Overall, the pause in this deal is a reminder that Nepal needs to find new ways to develop and export its hydropower more independently.