PTC India Ltd, an Indian state-owned company, plans to set up a power trading company in Nepal that will supply electricity from the hydropower-rich neighbour to India and Bangladesh.
Indian media report that the company will act as an aggregator and trade power on multiple fronts, in contrast to PTC India's mandate of trading power to and from India.
However, Md Habibur Rahman, secretary, Power Division, told The Business Standard, "There has been no discussion with us yet about PTC India setting up a new company in Nepal and exporting power to Bangladesh. But we are in discussions with Nepal on bringing hydro power from Nepal."
He said, "Hydropower is cheap and will increase the contribution of renewable energy, so we are continuing to work on it."
But, there is a complication in bringing electricity through India and this has to be resolved through tripartite discussions, he added.
"The PTC India board has given us approval for starting a new trading company in Nepal. So, that's something we have not done outside the country. We have done a lot of business with Bhutan, Bangladesh and Nepal as a trading company in India, sourcing power from them. For the first time, we will try to have a company there in Nepal," PTC India CMD Rajib K Mishra told Mint, an Indian media outlet.
Noting that PTC has entered into partnerships with hydropower majors SJVNL and NHPC, Mishra said that the company is also in talks with other players that can be potential sources of power generation in the northern neighbour.
"We are proposing a joint venture company, both for the Indian public and private sector companies having an interest in the power sector of Nepal. There might be an entity from Nepal which can also be a stakeholder in the company. This is to ensure energy security and stability in cross-border trade," he said.
The PTC CMD thinks Nepal has the potential to generate surplus power of around 5,000MW to India in the next 3-5 years, depending on commissions of new hydro projects.
"For the first time this year, Nepal has exported 350MW of power during the past three-four months. This will increase going ahead. If the surplus power in Nepal needs to be brought to India and Bangladesh, there has to be an aggregator who has deep pockets and can handle 5,000MW," Mishra said.
Nepal and Bangladesh have decided to request India to allow export of 40-50MW of electricity from Nepal to Bangladesh in the initial phase by utilising the high voltage direct current power systems located in Bheramara of Bangladesh, reported The Kathmandu Post on 26 August.
In 2013, India and Bangladesh inaugurated the Baharampur-Bheramara cross-border power transmission link between the two countries that would initially facilitate the exchange of 500MW electric power.
As per the understanding reached at the secretary-level Joint Steering Committee (JSC) formed for energy cooperation between Nepal and Bangladesh last month, Nepal Electricity Authority and Bangladesh Power Development Board decided to request India's NTPC Vidyut Vyapar Nigam for a trilateral energy sales and purchase agreement through utilising the Baharampur-Bheramara cross-border power transmission link.
During the fourth JSC meeting on energy cooperation, Bangladesh informed Nepal that it would be concluding the deal to buy 500MW electricity from 900MW Upper Karnali hydropower project, which will be developed by India's GMR Group by September, according to a press statement issued by Nepal's Energy Ministry.
In 2019, GMR and Bangladesh signed a power purchase agreement (PPA) and the signed PPA was submitted to the Bangladesh cabinet for review.
Earlier in September 2021, Nepal and Bangladesh agreed to develop a dedicated transmission line between the two neighbouring countries. Besides, Dhaka expressed its interest in developing hydropower projects in Nepal.
Currently, Bangladesh imports 1,160MW power from India through the Baharampur-Bheramara and Tripura-Cumilla cross-border grid lines.
The country needs higher power cross-border transmission lines as it has a target of increasing the share of imported electricity by up to 15% by 2041 in the energy mix when the total generation capacity will reach 60,000MW.
At present, Bangladesh generates 52% of electricity from natural gas, 32% from liquid fuel and 8% from coal, while the remaining 8% of electricity comes from imports.