On November 15, 2024, a historic milestone was achieved in South Asia with the commencement of the first-ever trilateral power transaction between Nepal, Bangladesh, and India.This landmark event saw the flow of electricity from Nepal to Bangladesh through the Indian power grid, marking a significant step toward enhanced regional energy cooperation and integration. The trilateral power trade agreement, signed by the three nations, is expected to unlock multiple benefits for the countries involved, while also advancing broader goals of energy security and economic growth in the region.

 

The trilateral power transaction involves Nepal exporting surplus hydropower to Bangladesh via the Indian power grid. India acts as a facilitator in this trade, enabling the transmission of electricity from Nepal to Bangladesh through its vast and well-established transmission network.

 

Nepal has significant hydropower potential but has faced challenges in fully utilising this energy domestically due to limited infrastructure and capacity. On the other hand, Bangladesh, with a rapidly growing economy and a rising demand for electricity, has struggled to meet its energy requirements. This trilateral transaction not only provides Nepal with an outlet for its excess electricity but also helps Bangladesh reduce its power deficit and reliance on fossil fuels.

 

For Bangladesh, the deal provides a reliable and clean energy source to meet its electricity needs. By importing hydroelectric power from Nepal, Bangladesh can diversify its energy mix, reducing its dependence on traditional fossil fuels, which are more polluting and often subject to price volatility.

 

This deal enhances regional economic cooperation, creating a platform for further collaboration between Nepal, Bangladesh, and India. For Nepal, the ability to export power is a significant economic opportunity, as it opens up new revenue streams while also making better use of its hydropower capacity. Additionally, Bangladesh’s access to more stable electricity can support industrialisation, improve living standards, and foster economic growth.

 

The power being traded is hydroelectric, which is a clean, renewable source of energy. This trade aligns with global efforts to reduce carbon emissions and combat climate change, benefiting all three countries by promoting greener energy solutions.

 

The trilateral agreement symbolizes a step towards deeper regional integration and cooperation. The efficient use of cross-border energy grids can help strengthen the economic and diplomatic ties between the countries, ensuring greater stability and prosperity in the region.

 

While the inauguration of the power transaction is a significant achievement, several challenges remain in realising the full potential of this agreement and ensuring its long-term sustainability:

 

The success of this power transaction is heavily dependent on the capacity and reliability of the transmission infrastructure. India’s role as a transmission intermediary requires seamless integration of Nepal’s energy supply with Bangladesh’s demand. Continued investment in infrastructure upgrades and grid management is necessary to prevent power losses and ensure smooth transmission.

 

For trilateral cooperation to be sustainable, there must be continued alignment of policies, regulations, and pricing mechanisms. Any discrepancies in energy tariffs, taxes, or tariffs could lead to friction between the countries, making smooth trade difficult. Regular dialogue and agreements will be essential to navigate these issues.

 

The political landscape in South Asia is complex and subject to fluctuations. While the power deal has received positive support, the shifting political priorities within any of the three countries could impact the long-term success of the agreement. Therefore, robust frameworks and agreements that transcend political changes will be necessary to ensure stability in the deal.

 

The success of the Nepal-Bangladesh-India power transaction could pave the way for more extensive regional power cooperation in South Asia. If the current agreement proves successful, it may serve as a model for other countries in the region, such as Sri Lanka and Myanmar, to participate in an interconnected South Asian power grid. A unified regional grid could provide greater energy security, promote economic development, and lower energy costs across the region, which has long struggled with power shortages and energy insecurity.

 

In conclusion, the inauguration of the first trilateral power transaction from Nepal to Bangladesh through the Indian grid marks a new era of regional energy cooperation in South Asia. While challenges remain, the deal represents a promising step towards deeper integration, environmental sustainability, and economic collaboration in the region. The potential for a larger South Asian energy grid could be a game-changer, offering vast benefits to all participating countries.