Kathmandu and Dhaka have agreed to a 25-year agreement to import 40 MW of electricity from Nepal to meet the deficit.
An official of the Nepal Electricity Authority (NEA) said officials from Kathmandu and Dhaka have agreed on the deal for a long time. He said that the only thing waiting now is to sign the contract.
The Kathmandu Post reports that although the two sides have not yet discussed the tariff for this imported electricity, the duration of the agreement has been fixed.
The agreement has expired even though the two parties are yet to negotiate on the imposition of electricity tariffs. As a result, a long-term electricity market between Bangladesh and Nepal will be ensured.
NEA Managing Director Kul Man Ghising told Kathmandu Post, "We have agreed to sign a 25-year power sale agreement with Bangladesh. This decision has been made according to our proposal to Bangladesh.
Nepal Prime Minister Pushpa Kamal Dahal visited India from May 31 to June 3. During the visit, a long-term intergovernmental power trade agreement was initiated with India. Kathmandu Post said that there will be a similar agreement with Bangladesh.
According to Prabal Adhikari, NEA's Director of Power Trade Affairs, Nepal has already made an offer to Bangladesh citing uncertainty in the power sector. That said, Nepal prefers a 5-year contract.
But according to Ghising, Bangladesh has finally agreed to a 25-year deal, which is yet to be signed. Apart from tariffs, we have reached an agreement on everything else, Ghising said.
The agreement will be formalized after Nepal, India and Bangladesh sign a tripartite agreement on selling electricity from Nepal to Bangladesh using Indian Territory.
Officials said Bangladesh wants to settle issues other than tariffs first. The technical and commercial aspects of the contract were discussed and both parties reached an agreement.
Also said, the NEA is apparently open to compromise on tariffs. As a gesture of goodwill, we have planned good tariff proposals, Ghisingh said. The agreement will be between the government and government.
A reference may be the prevailing price of electricity in Bangladesh. But we haven't decided on its rate yet. Prabal Adhikari said that when the issue of transmission charges, service fees comes up, Bangladesh will have to pay them directly to NTPC Vidyut Viper Nigam Limited (NVVN).
Charges equivalent to what India currently levies from electricity consumers will be applicable on transmission. He further said that depending on the technical condition of transmission infrastructure including load, Bangladesh may have to pay 40 to 55 paisa per unit transmission charge in line with India.
Bangladeshi companies may have to pay service fees for efforts made by Indian companies to get approval from Indian regulatory bodies. Prabal Adhikari said, this service charge can be 4 to 7 paisa in Indian currency per unit. NVVN will be responsible for collecting these fees.
NVVN will be part of a tripartite agreement between Nepal, India and Bangladesh. So that 40 MW electricity can be exported to Bangladesh. Once Nepal and Bangladesh reach an agreement on tariffs, the tripartite agreement will pave the way.