Hydropower from Nepal

The approval given by the Cabinet Committee on Government Purchase (CCGP) for import of 40 megawatts of hydroelectricity from Nepal is a significant step towards materialising the plan to strengthen the country's grid power. While the deal is primarily between Bangladesh and Nepal, it requires India to be a party to it making it a tripartite deal, in which the latter allows its transmission line to be used for the purpose. The electricity to be imported from Nepal will cost Tk 8.17 per unit.

Chaired by the finance minister, the meeting of the cabinet committee finalised the decision. Following the meeting, it was informed that the initial contract would be for five years, costing approximately Tk 1.3 billion annually, totalling around Tk 6.5 billion over the period. The power will be integrated into Bangladesh's national grid at Bheramara using the Indian grid. Bangladesh will have to pay India a trading margin of 0.059 rupees per unit for using its transmission grid in addition to the transmission costs -- to be determined later. Following the Cabinet's nod, the Bangladesh Power Development Board (BPDB) is now set to sign a tripartite deal with Nepal Electricity Authority (NEA) and NTPC Vidyut Vyapar Nigam (NVVN) Limited of India.

The idea of importing cost-effective electricity is essentially demand-driven, given the country's nagging power crisis. Currently, Bangladesh has an installed power generation capacity of 27,162 MW, with the majority being produced by gas-fired plants. The government plans to generate 40,000 MW by 2030 and 60,000 MW by 2041. Keeping this in view, there were attempts to gear up electricity generation since the past decade or so. As part of a Crash Programme to increase power generation, the government undertook rental, quick rental and peaking plants. The projects were floated as an emergency measure, and it was expected that these would be discontinued in three to five years. But as things turned out, the government continued to allow setting up of new rental power plants while simultaneously renewing contracts with most of the old plants. There are 26 rental power plants in operation now, generating more than 2,000 MW of electricity. The dark side here is that the money spent is astronomical. The government has to pay staggering amounts as monthly rent for each megawatt of electricity produced by the power plants on account of capacity charge. Besides, these captive plants are provided with fuel at subsidised rate and the end product is purchased at an exorbitant price. The ever escalating costs of the oil-based rental plants and the booming oil import bills that the government has to bear are strikingly at odds.

Clearly, it is the economic value that has prompted the government to import hydro power from Nepal. Compared to fossil fuels, hydro power is not only more cost-effective but also environmentally friendly. The deal going to be inked soon is viewed by many as mutually beneficial for both Nepal and Bangladesh. Nepal needs revenue from its power plants and Bangladesh needs power for development.