Nepali electricity will be costly

Energy experts are cautious about negotiation on the tariff proposal of Nepal Electricity Authority (NEA) before finalizing the tariff as the two sides are closer to ink the first-ever trading of 40MW of electricity from Nepal to Bangladesh.

Experts said as power import from Nepal could be increased based on future agreements and transmission infrastructure capacity, so we need to be more cautious as the first deal is likely to be the bench mark of tariff negotiations in every future project.

"We are set to buy hydro- electricity from Nepal, which is likely to be the cheapest source of electricity, but if the tariff would be close to Tk 10 (except the transmission cost) it would be really a high price," energy expert Dr Ijaz Hossain of BUET told the Daily Observer.

Pradeep Kumar Thike, the Deputy Managing Director of Nepal Electricity Authority (NEA), told the Nepalese side, "We recently sent a tariff proposal to the Bangladeshi side in a sealed envelope."

"The rate that we have proposed is approximately equivalent to the rate that we are charging India under a five-year power purchase agreement."

He didn want to divulge the actual tariff the NEA has proposed. But based on a five-year- long power purchase agreement signed between the NEA and the NTPC Vidyut Vyapar Nigam Limited (NVVN) Limited-India back in May last year, the tariff could be below Rs 10 per unit.

Bangladeshi entities may also have to pay service charges to the NVVN, which is Indias nodal agency for cross-border power trade, for the agencys efforts in obtaining its governments regulatory approval. The export will be facilitated by utilising the high-voltage Baharampur-Bheramara cross-border transmission link between India and Bangladesh.

"The government did not share the documents before signing any deal with any party. With the help of its officials (those are not expert in this regard), the government finalised all deals very poorly. What we see is when it comes to public domain. By that time we have nothing to do," Professor Dr Ijaz Hossain said.

He said we do understand that it is small project so its price would be little be high, but it is a base load plant, we need the full time guarantee of availability of power as its hydro aspect depends on water availability at the same time we are to be transparent in this regard, he added.

In the proposal, Nepal has also offered concession in the bill, provided the Bangladeshi entity pays early.

 "Bangladesh is expected to pay the bill within 45 days of its issuance," said Thike. "If the bill is paid within seven days of its issuance, the buyer will get a certain waiver in tariff."

He, however, said that Nepal has also proposed charging a higher tariff if the payment is delayed. "We have proposed a rebate and penalty clause depending on how early the bill is paid," Thike added.

Nepal exported power to India. Both Nepal and India have agreed, in principle, to involve Bangladesh as a partner for energy cooperation when they issued the Joint Vision Statement on Power Sector Cooperation in April 2022.

Nepal Electricity Authority (NEA) has introduced a range of rates at which reservoir, peaking and run-of-the-river projects could sell electricity to the state-owned power company.

As per the rates made public on Monday, reservoir type projects will get Nepali Rs12.40 per unit during the dry season (December to May). Power purchase rate (PPR) for the wet season (June to November) has been fixed at Rs 7.10 per unit.

PPR for peaking run-of-the-river projects, meanwhile, has been fixed at a range of Rs 10.55 per unit during the dry season and Rs 8.40 per unit during the wet season.

Similarly, run-of-the-river projects exceeding 100MW in capacity will get Rs 8.40 per unit during the dry season and Rs 4.80 per unit during the wet season.

These rates will be raised by 3 percent annually for a span of eight years, according to the ministry.

Nepal and Bangladesh in May last year agreed to sign a tripartite agreement between the NEA, the Bangladesh Power Development Board and the NVVN at the meeting of the energy secretary-level Joint Steering Committee.

"We now await the opinion of the Bangladeshi side on the tariff we have proposed," said Thike. As per the understanding reached between the two sides, Nepal will export power from June 15 to November 15, according to him. "The two sides have also agreed to sign a five-year power sale agreement," he said.

Earlier, Bangladesh had sent a draft request for proposal (RfP) in response to which Nepal proposed the tariff.

 Besides tariff, Nepal has also included details on how Nepal would deliver power to Bangladesh.

 According to official sources, after a long discussion at political and bureaucratic levels among the countries, India finally agreed to allow Bangladesh to initially import 40MW of electricity from Nepal through the Indian transmission infrastructure.

According to a new report of the Nepalese daily The Kathmandu Post, the tariff of per unit electricity (each kilowatt hour) is below Nepalese Rupee 10. One (1) Nepalese rupee is equivalent to Bangladesh Tk 0.83.

Echoing the voice of Dr. Ijaz Hossain, the former energy adviser to the caretaker government Dr. Tamim said, "it seems a higher price to me, we could be able to get lower rate power from solar or gas based power plants in future, then these projects would be serious financial issue for the country."