Uncertainty looms over upper Karnali hydropower project amid Bangladesh’s policy shift

Dhangadhi: The future of the Upper Karnali Hydropower Project has become uncertain following Bangladesh’s recent decision to suspend all agreements under its Special Power Act, casting doubt over its earlier plan to import 500 megawatts of electricity from Nepal.

Bangladeshi media have reported that preparations are underway to cancel the agreement with India’s GMR Group, which is developing the 900 MW Upper Karnali Hydropower Project in Nepal. Citing government officials, the reports indicate that the proposed tripartite arrangement involving Nepal, India, and Bangladesh for electricity import may no longer proceed.

Bangladesh Power Development Board (BPDB) Chairman Engineer Rezaul Karim confirmed to the media that the government has decided to suspend all existing agreements under the Special Power Act, including the proposed deal with GMR. The plan had envisioned importing power from Nepal through Indian transmission infrastructure.

Currently, Nepal exports 40 megawatts of electricity to Bangladesh using the same Indian grid route. The Nepal Electricity Authority (NEA) resumed exports on Asad 1 (June 15) this year, and plans to continue for five months during the monsoon. Last year, Nepal exported electricity to Bangladesh for the first time on Kartik 18 (July 15).

The initial memorandum of understanding for the 500 MW power trade was signed during a steering committee meeting held in May 2023, attended by top energy officials from Nepal, India, and Bangladesh. Bangladesh had also expressed interest in jointly investing in hydropower development in Nepal.

However, with the interim Bangladeshi government reconsidering major energy agreements, including those related to oil, gas, and power generation, the future of the Upper Karnali project under GMR now appears to be in jeopardy. Reports also suggest that geopolitical concerns and strategic questions surrounding the transmission route may have influenced Bangladesh’s stance.

Despite this development, the NEA has confirmed its commitment to continue exporting electricity to Bangladesh through existing arrangements during the current rainy season.