IMAGE: REUTERS
ON NOVEMBER 15TH 2024, Nepal sold electricity to Bangladesh for twelve hours. Forty megawatts travelled south through Indian transmission lines, then east into Bangladesh. Kathmandu hailed it as a historic breakthrough: the first time Nepal had ever exported power to a country other than India. Three governments signed a tripartite agreement. Ministers called it a milestone in South Asian energy co-operation. So it was. Looked at from a different angle, however, it was also a demonstration of the limits built into the deal. Nepal and Bangladesh cannot conduct that trade, let alone expand it, without India’s say-so. Every extra megawatt needs a fresh clearance from India’s Central Electricity Authority (CEA). That approval may come warmly, even generously. But must it come.
The structural reality has turned practical. At a joint steering committee meeting in Dhaka in November 2025, Nepal and Bangladesh agreed to raise exports by another 20 megawatts, to 60MW. The target start date was June 15th 2026—the monsoon window, when Nepal’s rivers run high and its hydropower plants produce more electricity than the domestic grid can absorb. As of mid-May, the CEA had still cleared no such thing. The expansion, Nepal’s energy ministry conceded, was uncertain.
The geography makes the dependency unavoidable. Nepal’s power flows south along the Dhalkebar-Muzaffarpur line into India’s grid, then east along the Baharampur-Bheramara corridor into Bangladesh. Nepal and Bangladesh share no border; the power cannot move otherwise. Metering happens at Muzaffarpur, on Indian soil. The technical intermediary is NVVN, India’s state-owned power trading arm, which sits at the centre of the tripartite agreement signed in October 2024.
None of this is sinister. India has been a willing partner in Nepal’s export ambitions. In January 2024 New Delhi formalised a promise to import 10,000 megawatts of Nepali electricity over the next decade under a 25‑year deal. Nepal earned Rs18.26bn from power exports to India and Bangladesh in the first five months of fiscal 2025‑26—a 38% bump from a year earlier. The CEA has processed applications project by project: 18.6MW from Trishuli, 21.4MW from Chilime, cleared for Bangladesh until October 2029.
The concern is structural not malicious. India’s approval is required not once but continuously. Every increment of volume needs fresh clearance. Every new source project needs specific authorisation. Nepal’s government, led by Balendra Shah on a platform of economic transformation through hydropower, has set a target of 30,000 megawatts of domestic generation capacity within the decade—against an installed base today of roughly 4,200MW and an existing 10,000MW export commitment to India. The arithmetic of getting from here to there runs entirely through one neighbour’s willingness.
One reason India has been accommodating is that it benefits. Nepal’s hydropower is cheap, clean and increasingly abundant during monsoon months when Indian demand peaks. Delhi has counted Nepali imports towards buyers’ Hydropower Purchase Obligations under its renewable energy rules, creating a commercial incentive for Indian distributors to buy. The bilateral relationship on energy has been reasonably functional: Nepal sells surplus monsoon power that India can use, with approvals generally following negotiations.
The problem is what happens when interests diverge. India has established, through practice rather than public declaration, that it will buy no power from Nepali projects involving Chinese investment, equipment or contractors. The Kathmandu Post first documented the restriction in January 2022; multiple Nepali officials and industry representatives have confirmed it since. “We have heard from Indian officials that they won’t buy electricity from companies that have Chinese investment,” said Ganesh Karki, vice‑president of Nepal’s independent power producers’ association. “Furthermore, they won’t buy electricity from those companies using Chinese equipment.”
The 456MW Upper Tamakoshi project—Nepal’s largest domestically operated hydropower plant, completed in 2021—has received no Indian export approval, ostensibly for that reason. Nepal has responded by removing Chinese developers from at least six hydropower projects and awarding contracts to Indian firms instead. A realignment driven not by engineering judgement but by export market access.
The CEA’s project‑by‑project approval structure gives India a functional veto over which of Nepal’s generators can reach the regional market—without any formal policy statement or bilateral confrontation. For Kathmandu, that is a strategic constraint it cannot negotiate away.
Nepal and Bangladesh have agreed to jointly study alternative transmission routes—to Barapukuria, Panchagarh, Thakurgaon and Comilla—that run through different sections of Indian territory. Sensible contingency planning. But the routes still run through India. A direct Nepal‑Bangladesh connection is geographically impossible. The geometry of South Asia places India at the centre of any substantial energy integration in the subcontinent. That is as true for the additional 20 megawatts pending clearance today as it will be for the 15,000 megawatts Nepal’s energy planners hope to export across the region by 2035.
None of this means the 60‑megawatt deal will fail. Nepal and Bangladesh both want it; India has refused nothing. The approval is pending, not denied. But pending, for a country whose export window opens on June 15th and closes on November 15th, is its own form of constraint. The 40 megawatts that began flowing in 2024 is 0.13% of the generation capacity Nepal aims to build within a decade. The dependency that a small additional 20‑megawatt approval lays bare will only matter more as the turbines multiply. ■
