Rippling Collaborations: Nepal’s Hydropower Surge and the Bangladesh Connection

In a significant development towards regional energy collaboration, Bangladesh is on the brink of finalizing the import of 40 megawatts (MW) of hydropower from Nepal through India. The State Minister for Power, Energy, and Mineral Resources, Nasrul Hamid, confirmed the near-completion of all processes during a meeting with the Nepalese Ambassador in Bangladesh, Ghanshyam Bhandari, on January 31, 2024. Additionally, State Minister Hamid highlighted the ongoing progress in processing another 500MW of hydropower, signaling a potential boost in energy cooperation between the two nations. To further facilitate this energy collaboration, the state minister disclosed plans to establish a committee at the ministry level. This committee will focus on enhancing power and energy business with Nepal, fostering mutual benefits through joint ventures and investments. The meeting between State Minister Hamid and Ambassador Bhandari reflects the growing momentum in Nepal’s energy cooperation with Bangladesh, paving the way for a shared commitment to harnessing the potential of hydropower resources.

As Nepal directs its attention towards the development of hydropower, with the dual objectives of meeting its domestic energy demands and exporting the surplus to neighboring nations, a recent study has revealed the immense potential for harnessing over 72,000 megawatts (MW) of hydropower across ten major river basins and their sub-basins in the country. This comprehensive assessment underscores the significance of Nepal’s abundant water resources, a well-known aspect of the nation’s geographical landscape, boasting approximately 6,000 rivers with a combined length extending to 45,000 kilometers. The findings of the study shed light on the considerable hydroelectric potential nestled within the ten major river basins and their sub-basins. This strategic evaluation aims to tap into these abundant water resources for various purposes, including hydroelectricity generation, irrigation, and providing potable water, with a forward-looking timeline stretching up to 2050. The study serves as a crucial component in the formulation of a unified river basin plan encompassing the regions of Koshi, Gandaki, Karnali, Mechi, Babai, Pashchim Rapti, Kankai, Kamala, Bagmati, and Mahakali.

The richness of Nepal’s water resources is underscored by an annual water runoff estimated at approximately 220 billion cubic meters, as indicated in a report by the Asian Development Bank (ADB). This substantial water flow from the multitude of rivers forms the backbone of Nepal’s hydropower potential, positioning the country as a key player in the regional energy landscape. As Nepal charts its course towards a future driven by hydropower, these insights from the study serve as a roadmap for strategic planning and resource management. The identification of such vast hydropower potential not only reinforces Nepal’s position as an energy-rich nation but also presents opportunities for collaborative ventures with neighboring countries, further enhancing regional energy security and cooperation. The implications of this study extend beyond domestic considerations, opening avenues for international partnerships and initiatives that align with the broader goals of sustainable development. As Nepal navigates the path of hydropower development, the judicious utilization of its water resources holds the key to not only meeting the present energy needs but also catalyzing a transformative impact on the country’s socio-economic landscape, regional collaborations, and global environmental sustainability

It has been suggested that the river basins and their tributaries in Nepal hold the potential to generate between 72,000MW and 73,000MW of hydropower, even when adhering to Q40 standards. A Q40 project, defined as a hydropower initiative capable of sustaining full electricity production for 4.8 months or 40 percent of the year, is integral to this estimation. This projected capacity aligns with the findings of a 2019 study, which assessed Nepal’s overall gross hydropower potential at 72,544 MW. Notably, the three major river basins—Koshi, Gandaki, and Karnali—were identified as contributing a substantial 94 percent to the total gross potential. Referencing a research report, the Asian Development Bank (ADB) study added depth to this understanding by indicating a technical potential for hydropower in Nepal reaching 83,000MW. However, the study noted that slightly over half of this technical potential is deemed economically feasible. This underscores the significance of considering economic viability alongside technical capability, as it implies that while Nepal possesses the technical capacity for extensive hydropower generation, economic factors play a pivotal role in determining the practical and economically sound exploitable capacity. The reciprocity between the projected hydropower potential, Q40 standards, and economic feasibility paints a sophisticated picture of Nepal’s hydropower landscape. Striking a delicate balance between technical capabilities and economic viability becomes paramount as the nation endeavors to translate its vast hydropower potential into tangible, sustainable, and economically sensible projects. The collaborative efforts of various stakeholders, including policymakers and international partners, will be instrumental in directing this complex terrain and realizing the comprehensive potential of Nepal’s hydropower resources.

Since the full operation of the 456MW Upper Tamakoshi Hydropower Project in August 2021, Nepal has enjoyed an energy surplus during the wet season. This surplus marked a significant milestone, leading to a transformative shift in Nepal’s energy dynamics. In a noteworthy development in early November 2021, India extended an invitation to Nepal to participate in its power exchange market, opening doors for Nepal to sell its electricity in the southern neighbor’s lucrative marketplace. Under this arrangement, Nepal was granted permission to sell up to 39MW of power generated from the 24MW Trishuli Hydropower Project and the 15MW Devighat Hydropower Project. The collaboration between Nepal and India took a positive turn as India progressively increased the import quota from Nepal. This culminated in Nepal receiving approval to export a substantial 632.6MW of electricity by mid-November of the same year during the wet season. The financial impact of this export was significant, with Nepal accruing revenue of Rs14.5 billion, as reported by the Nepal Electricity Authority (NEA).

The successful foray into the regional power market has sparked optimism in Nepal regarding the prospect of further expanding its power exports, not only to India but also to other South Asian markets especially to Bangladesh. This evolving scenario facilitates the way for new collaborations and partnerships, with the potential to strengthen regional energy cooperation.

An intriguing possibility on the horizon is the inclusion of Bangladesh in this burgeoning energy exchange. In September 2022, during the visit of Prime Minister Sheikh Hasina to India, Bangladesh expressed a keen interest in importing power from Nepal and Bhutan through India. This overture signifies Bangladesh’s recognition of the strategic importance of regional energy collaboration and its desire to actively participate in the burgeoning power dynamics of the region.

To facilitate this cross-border energy initiative, the Nepal Electricity Authority (NEA) has taken proactive steps, seeking authorization from Indian regulatory bodies to export a targeted 40-50MW of electricity to Bangladesh. The utilization of India’s existing transmission infrastructure for this purpose highlights the collaborative efforts aimed at creating a seamless and efficient energy-sharing network.

The potential import of power from Nepal to Bangladesh not only holds economic benefits for both nations but also presents ample opportunities for regional growth and stability. As the interconnected energy landscape unfolds, a successful collaboration in the energy sector between Nepal, India, and potentially Bangladesh can contribute significantly to the overall development of the region. It opens doors for shared prosperity, technological advancements, and sustainable practices in the evolving energy ecosystem of South Asia. The ongoing developments underscore the transformative potential of regional energy cooperation and set the stage for a new era of cross-border collaboration in the pursuit of a secure, sustainable, and integrated energy future.

[Photo by Krish Dulal, via Wikimedia Commons]

*Syed Raiyan Amir is a Research Associate at the KRF Center for Bangladesh and Global Affairs. He was a Research Assistant at the United Nations Office on Drugs and Crime (UNODC) and International Republican Institute (IRI). The views and opinions expressed in this article are those of the author.

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