Highlights:
- Nepal’s landmark trilateral power deal with Bangladesh and India marks one year, but the agreed expansion from 40MW to 60MW has been blocked by India’s transmission constraints.
- India is simultaneously the region’s indispensable transit node and its most consequential bottleneck, controlling every megawatt Nepal can sell to Bangladesh.
- The deal proves multilateral power trade is technically possible in South Asia, but the gap between a 40MW pilot and a 15,000MW export vision reveals a deficit in infrastructure, regulation, and institutions.
The Nepal Electricity Authority earned NPR 4.57 billion from electricity trade in the financial year 2024-25, a record that would have seemed implausible a decade ago. Nepal, a country that spent decades importing power from India during winter shortfalls, had become a net electricity exporter. And on 15 June 2025, it crossed a threshold that South Asia’s energy architects had been inching toward for years: Nepal began exporting 40 megawatts of electricity to Bangladesh through India’s transmission network, under the region’s first functioning trilateral power trade arrangement.
As it marks exactly one year since that current betrgan to flow, it is a reasonable moment to assess, with precision rather than ceremony, what has actually changed.
How the Deal Was Built
The architecture of this arrangement was years in the making. Bangladesh and Nepal signed a Memorandum of Understanding on power sector cooperation as far back as August 2018, creating a Joint Steering Committee and a Joint Working Group to advance the relationship. The substantive breakthrough came at a Nepal-India Joint Steering Committee meeting in January 2024, which agreed in principle to allow Nepal to export 40 megawatts to Bangladesh using India’s transmission infrastructure. By October 3, 2024, a tripartite Power Sales Agreement was signed in Kathmandu among the Nepal Electricity Authority, the Bangladesh Power Development Board, and India’s NTPC Vidyut Vyapar Nigam Limited. Token trading followed on November 15, 2024, when power flowed for a single symbolic day. Then, on June 15, 2025, the seasonal commercial export began in earnest: 40 megawatts of clean hydropower, generated from the Trishuli and Chilime projects in Nepal, transmitted through India’s 400-kilovolt Muzaffarpur-Baharampur-Bheramara line, arriving in northern Bangladesh at a price of 6.4 US cents per unit.
Nepal’s Energy Minister called it a milestone; India’s Ministry of External Affairs described it as the first trilateral power transaction carried out through the Indian grid. For a region where cross-border electricity trade had been confined to bilateral government-to-government arrangements since the 1970s, this was a qualitatively different kind of cooperation—multilateral power trade, where one country’s surplus travels through a third country’s infrastructure to reach a fourth country’s consumers.
What Has Changed in Twelve Months
The symbolic value of the deal should not be dismissed. Nepal has, for the first time in its history, sold electricity to a country other than India. Cross-border electricity trade in the Bangladesh-Bhutan-India-Nepal (BBIN) subregion had already nearly tripled from 7.8 terawatt-hours in 2013 to 21 terawatt-hours in 2024, according to the Observer Research Foundation’s March 2026 issue brief on South Asia’s integrated grid. The trilateral arrangement adds a multilateral dimension that did not previously exist.
For Nepal, the economics are meaningful. The Nepal Electricity Authority recorded 699 gigawatt-hours of net electricity exports worth approximately NPR 4.5 billion in FY 2024-25. Nepal’s total installed generation capacity reached 3,591 megawatts by year-end against system peak demand of 2,901 megawatts, making it a structurally surplus producer during the monsoon season. Bangladesh, in turn, represents a new long-term customer under a five-year deal running through October 2029. Diplomatically, the 7th Joint Steering Committee meeting held in Dhaka in November 2025 discussed alternative transmission routes through Barapukuria, Panchagarh, and Comilla, and endorsed an expert committee to evaluate the 683-megawatt Sunkoshi III hydropower project on a joint venture basis.
The 20-Megawatt Problem
The anniversary assessment, however, runs into a hard fact. At that November 2025 Joint Steering Committee meeting, Bangladesh and Nepal agreed in principle to expand the export by an additional 20 megawatts, bringing the total to 60 megawatts starting from June 2026. The Kathmandu Post reported on June 14, 2026, that India’s NTPC Vidyut Vyapar Nigam Limited has informed Nepal that the India-Bangladesh transmission corridor cannot accommodate the additional 20 megawatts. The expansion requires India’s Central Electricity Authority approval for every additional increment of power that uses Indian transmission infrastructure. That approval has not come. On this first anniversary, Nepal is exporting exactly what it was exporting on day one: 40 megawatts. The ambition has outpaced the architecture.
This is not a procedural footnote. It reveals the central structural tension in South Asian cross-border electricity trade. India is simultaneously the region’s most important enabler and its most consequential chokepoint. Every unit of power that Nepal sells to Bangladesh transits Indian territory, through Indian infrastructure, under Indian regulatory approvals, on timelines determined by Indian administrative processes. Nepal and Bangladesh can agree to whatever volumes they choose at their Joint Steering Committee meetings, but without India’s Central Electricity Authority clearance, no additional power flows. The proposed 20-megawatt expansion now awaits a Nepal-India Joint Steering Committee meeting that has not yet been scheduled.
Transmission, Markets, and Institutions: The Deeper Bottlenecks
The 20-megawatt blockage is a symptom of a broader set of constraints that the first year has not resolved. Transmission capacity remains the foundational limit. India’s existing interconnections with Bangladesh operate near capacity, and new links require financing, right-of-way negotiations, cost-sharing agreements between governments, and years of construction. The India-Sri Lanka interconnection offers an instructive parallel: its feasibility study was completed in 2002, its memorandum of understanding signed in 2010, and the project has still not advanced because the two countries cannot agree on cost allocation.
Power market access is an equally pressing gap. Bangladesh does not yet have direct access to India’s power exchanges, including the Indian Energy Exchange’s day-ahead market, where Nepal and Bhutan now trade power flexibly during monsoon surpluses and winter shortfalls. A day-ahead market allows generators to sell electricity for the following day at prices determined by supply and demand, replacing rigid government-to-government contracts with transparent, short-term price signals. Market coupling across national exchange platforms remains a longer-term aspiration, but one that South Asian energy planners cannot defer indefinitely if the region’s clean energy targets are to mean anything.
Institutional fragility compounds everything. The common minimum grid code adopted under the South Asia Forum for Infrastructure Regulations is voluntary, not binding. The SAARC energy framework has been largely ineffective due to political mistrust between India and Pakistan. BIMSTEC has emerged as a more practical vehicle, but it remains limited in capacity and lacks the legal mandate that made Europe’s energy integration durable. Without an institutional anchor comparable to what the European Network of Transmission System Operators for Electricity provides for Europe, South Asian integration depends on the willingness of governments to cooperate at any given political moment.
Proof of Concept, Not Proof of Scale
The Nepal-India-Bangladesh power deal has proven that trilateral electricity trade in South Asia is technically feasible and politically survivable. The current flows. The payment mechanism works. The seasonal arrangement has been renewed for a second year. Nepal’s credibility as a regional electricity exporter has been established, and Bangladesh’s appetite for clean, competitively priced hydropower is clear.
What one year has not proven is scalability. Bangladesh’s electricity demand is large, its dependence on fossil fuel generation is significant, and its target of 30 percent renewable energy by 2040 will require cross-border clean power at volumes that make 40 megawatts look like a footnote. Nepal has outlined plans to generate 28,500 megawatts and export up to 15,000 megawatts by 2035 under its Energy Development Roadmap. The 683-megawatt Sunkoshi III project alone, if it proceeds as a joint venture, would transform the bilateral relationship. But between a 40-megawatt seasonal arrangement and a 15,000-megawatt export vision lies a transmission infrastructure deficit, a regulatory harmonisation gap, an institutional vacuum, and an approval process that, as of today, cannot accommodate even an additional 20 megawatts.
The first year of the Nepal-India-Bangladesh power deal is best understood as a proof of concept, not a proof of scale. It demonstrated what is possible. It has not yet demonstrated how to get from 40 megawatts to what South Asia actually needs. That is the work of the next year, and the year after that: expanding the transmission corridors, opening market access, building institutional architecture that does not require a Joint Steering Committee meeting every time a country wants to add 20 megawatts. The current is flowing. Now South Asia needs to widen the pipe.
