The long-anticipated cross-border electricity trade between Nepal and Bangladesh has now commenced with the formal launch of 38 megawatts (MW) of hydropower exports routed through India. This marks a watershed moment in South Asia’s evolving regional energy cooperation, grounded in clean energy diplomacy, mutual infrastructure use, and strategic necessity.
The formal supply of electricity began at noon on 15 June 2025, with the Nepal Electricity Authority (NEA) transmitting hydropower to Bangladesh via Indian power corridors managed by NTPC Vidyut Vyapar Nigam Limited (NVVN). As agreed, the energy will cost Bangladesh approximately 6.4 US cents per unit (roughly Tk7 per kilowatt-hour), which includes Indian transmission charges.
This agreement follows nearly a decade of trilateral negotiations among Kathmandu, Dhaka, and New Delhi and stems from the October 3, 2024, tripartite memorandum of understanding signed in Kathmandu. The document was endorsed by Bangladesh Power Development Board (BPDB), NEA, and NVVN, highlighting what energy diplomacy scholars might term “hydro-hegemonic pragmatism” (Zeitoun & Warner, 2006) — where regional interdependence is mobilized through negotiated infrastructures.
Background and Significance
The 38MW export is not large by global standards, yet symbolically significant. It represents the operationalization of regional energy trade in a geopolitically complex environment. South Asia has long suffered from poor intraregional cooperation, despite shared rivers and proximity (Bailes & Thorhallsson, 2006). The export also builds upon a one-day symbolic transaction on November 15, 2023, when Nepal sent electricity to Bangladesh as a test run to affirm the feasibility of future exports.
The current phase of the deal will see electricity flowing from mid-June to mid-November — Nepal’s peak monsoon season when its rivers swell and hydropower generation reaches its highest levels. This period also coincides with Bangladesh’s summer months, marked by intense heat and elevated demand for air-conditioning and refrigeration, resulting in peak load pressures on its grid.
BPDB Director of Public Relations Shamim Hasan confirmed the operational status of the deal. “We have been receiving an average of 38MW of hydropower from Nepal since noon today,” he stated. Md Zahurul Islam, BPDB’s Member (Generation), further added that the current agreement is expected to provide relief during the peak summer period and ensure a sustainable energy option amidst a backdrop of rising fossil fuel prices.
Regional Infrastructure and Multilateralism
At the heart of this cooperation lies India’s willingness to act as a conduit for power transmission — a crucial logistical move that required diplomatic coordination. India’s role, often characterized as a reluctant regional hegemon (Muni & Mohan, 2013), in this instance reflects constructive engagement.
In infrastructure terms, this operation leverages India’s grid and facilitates transboundary energy trading under the framework of the South Asian Association for Regional Cooperation (SAARC) energy cooperation charter, even though SAARC itself has largely stagnated due to political impasses (Haq & Pathak, 2019).
This trilateral power trade fits well into the concept of “energy interdependence” proposed by Barry Buzan and Ole Wæver (2003), wherein regional security complexes foster non-military cooperation based on shared needs and complementarities. In this case, Nepal has surplus hydropower during the summer; Bangladesh has the demand. India holds the infrastructural key.
Economic and Environmental Gains
The implications of this deal are multifaceted. For Bangladesh, which imports over 90% of its energy resources, this signifies a pivot toward clean, cost-effective alternatives that reduce dependency on expensive liquefied natural gas (LNG) and imported coal. The per-unit price of imported hydropower (Tk7) is comparable, if not cheaper, than fossil-fuel-based generation costs, which hover around Tk9–Tk12 per unit depending on fuel source and availability (World Bank, 2022).
Moreover, this move aligns with Bangladesh’s broader ambitions under its Power System Master Plan (PSMP) 2041, which seeks to incorporate more renewable and imported clean energy into its grid. Similarly, Nepal benefits by diversifying its export markets beyond India and achieving a steady stream of foreign revenue, enhancing its energy diplomacy stature (Shrestha, 2020).
From an environmental perspective, this agreement supports global climate commitments. Both countries are parties to the Paris Agreement and have pledged to reduce carbon intensity. Hydropower, despite debates about ecological displacement, remains among the cleanest large-scale energy sources. As argued by Sovacool (2016), transboundary hydropower agreements, if justly implemented, can reduce emissions and promote regional integration.
Prospects for Two-Way Trade
Energy Adviser Muhammad Fouzul Kabir Khan noted that technical and logistical arrangements were already finalized. He emphasized that this cooperation represents more than energy transfer — it is a strategic alignment of clean energy goals and regional goodwill. He also hinted at future possibilities of reciprocal trade. During winter months, Nepal’s hydropower output declines due to reduced water flows, while Bangladesh’s energy demand contracts slightly, creating an opportunity for Dhaka to export surplus electricity back to Nepal.
Such an arrangement would mark a step toward dynamic two-way trading models observed in energy-integrated regions like the Nordic Grid or the European Union (Helm, 2017). While technical capacity constraints currently limit the volume of trade, policy-level discussions on synchronized grids, capacity sharing, and integrated demand forecasting could expand opportunities.
According to ministry sources, Dhaka plans to invite Nepal’s Energy Minister to visit Bangladesh to initiate formal discussions. This potential for seasonally adaptive bilateral trade reflects the concept of “energy symbiosis” (Kim & Zerriffi, 2013), wherein countries with complementary generation cycles coordinate to optimize grid resilience and cost-efficiency.
Strategic and Geopolitical Implications
This hydropower deal also holds larger implications for regional geopolitics. In an area historically fraught with mistrust and conflict, the successful implementation of a trilateral energy transaction could build trust and set a precedent for other regional infrastructure projects. It challenges the perception that South Asia is immune to functional regionalism — a term coined by Amitav Acharya (2014) to describe cooperation that transcends political animosities.
Furthermore, this agreement marginally shifts the energy diplomacy landscape away from fossil-fuel-dominated Middle Eastern dependencies. It signals the possibility that South Asia can generate internal solutions to its energy security problems. In the long run, experts argue that transboundary grid cooperation — if scaled and stabilized — could serve as a foundation for a SAARC Energy Ring or a Bay of Bengal clean energy corridor (Chakrabarti & Chakrabarti, 2021).
Conclusion
The operationalization of Nepal’s hydropower export to Bangladesh via Indian infrastructure may appear numerically modest at 38MW, but strategically, it is a significant leap. It symbolizes a successful attempt to turn geographical proximity into functional interdependence. More than just electrons flowing across borders, this agreement demonstrates how clean energy trade can become a vehicle for diplomacy, economic synergy, and geopolitical balance.
As South Asia grapples with climate change, rising demand, and energy insecurity, initiatives like this offer a roadmap for sustainable development, regional stability, and environmental stewardship. In doing so, they echo the insights of Joseph Nye (2004), who argued that power in the 21st century is no longer about domination but about networked interdependence. And in that light, a single transmission line from Nepal to Bangladesh becomes more than an infrastructure project; it becomes a diplomatic bridge.
References
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