India, Nepal, and Bangladesh inked an agreement on Thursday 3rd October to trade electricity.
The first of its kind deal was signed in Kathmandu, allowing Nepal to sell electricity to a third country. Nepal’s energy trade was previously taking place only with its southern neighbor, India.
The agreement was signed by officials of the Nepal Electricity Authority (NEA), India’s National Thermal Power Corporation and Bangladesh Power Development Board.
The agreement was signed by Kulman Ghising, executive director of the Nepal Electricity Authority; Mohammad Rezaul Karim, chairman of Bangladesh Power Development Board; and Renu Narang, CEO of India’s NTPC Vidyut Vyapar Nigam amid a function in Kathmandu.
Energy Minister Deepak Khadka; Minister of State for Energy Purna Bahadur Tamang; and Bangladeshi Minister for Forest, Environment, Climate Change, and Water Resources Syeda Rizwana Hasan witnessed the signing.
As per the agreement, Bangladesh will now import 40 megawatts of electricity from Nepal. The Indian side has also been involved as Nepal’s electricity will be transmitted to Bangladesh through the transmission infrastructure on the Indian territory. Nepal and Bangladesh are not territorially linked.
Nepal is expected to sell 144,000 MWh (megawatt-hour) of electricity in five months—mid-June to mid-November—every year at the rate of 6.4 US cents a unit.
As per word bank Nepal Development update 024 Nepal’s real GDP growth is projected to accelerate to 5.1 percent in FY25 and 5.5 percent in FY26. Wholesale, retail, construction, and manufacturing sectors- that collectively account for over one-fifth of GDP-are poised to benefit from the NRB’s loosening of monetary policy and easing of regulatory requirements, including the relaxation of working capital requirements, easing of loan classification and loan- loss provisioning for businesses that continue servicing loans despite closures due to unforeseen circumstances. These measures are expected to stimulate private investment, while remittance-driven private consumption and increased exports of hydropower and tourism are anticipated to further bolster economic growth.
Nepal’s real GDP growth accelerated to 3.9 percent in FY24, up from 2 percent in FY23. The services sector was the key driver, fueled by a 30.7 percent surge in tourist arrivals, which boosted activities in transportation, accommodation, and food services. Increased hydropower production, by over 450 MW, plus a 4.3 percent rise in paddy production also contributed to the growth.
The current account surplus is expected to narrow as the trade deficit widens. This widening will stem from a rise in both merchandise and service imports.
International remittances plays a significant role in Nepal’s economy, affecting household consumption, poverty reduction, and human capital development. There is also a risk that economic growth could slow if there is a shock in migrant-receiving countries.
While the medium-term outlook for Nepal remains positive, it is subject to several downside risks.
