Nepal Cross-Border Electricity Trade: Exports to India & Bangladesh

For decades Nepal suffered chronic electricity shortages and long daily load-shedding, importing power from India to plug the gap. A rapid build-out of hydropower changed that: by the early 2020s Nepal generated more electricity than it could consume during the monsoon, when swollen rivers push run-of-river plants to full output. The country crossed a historic threshold on 3 November 2021 (Kartik 2078 BS), when the Nepal Electricity Authority (NEA) sold its first units on India's competitive market.

That first export was modest: 39 megawatts (MW) generated by the Trishuli (24 MW) and Devighat (15 MW) plants, cleared on the day-ahead market of the Indian Energy Exchange Limited (IEX) after New Delhi granted access in late October 2021. Since then approved export volumes have climbed steadily, and Nepal now ships around 1,000 MW of surplus power on peak wet-season days.

Nepal's power trade is inherently seasonal. During the monsoon (roughly mid-June to mid-October) generation vastly exceeds demand and Nepal exports; during the dry winter, river flows and hydropower output fall sharply, and Nepal imports from India to keep the lights on. The country is therefore a net exporter over the wet months and a net importer over the dry months, with the annual balance now tilting in Nepal's favour.

In fiscal year 2024/25 (2081/82 BS) Nepal exported electricity worth about NPR 17.46 billion, of which NPR 17.19 billion went to India and NPR 266.7 million to Bangladesh, according to the NEA. Total exported energy reached roughly 2.35 billion units (kWh), a jump of about 21 percent in quantity over the previous year even as the monetary value rose only about 3 percent, reflecting softer average prices.

Because Nepal still buys power in the dry season, the gross export figure is not pure profit. In the same year Nepal imported electricity worth around NPR 12.92 billion from India, leaving a trade surplus of roughly NPR 4.5 billion. The NEA separately reported a net profit of about NPR 4.57 billion from power trade for FY 2024/25 (announced 16 August 2025).

Nepal sells its surplus through several channels: the day-ahead and real-time segments of the IEX at market-determined rates, and medium-term bilateral sale agreements with Indian states such as Haryana and Bihar. In August 2025 India approved an additional 199.7 MW for sale to Haryana (mid-June to end-October) at about NPR 8.72 per unit, illustrating how bilateral contracts complement exchange sales.

On 3 October 2024 (Ashwin 2081 BS) Nepal, India and Bangladesh signed a landmark trilateral power-trade agreement in Kathmandu, allowing Nepal to sell electricity to a third country for the first time. The pact lets Nepal export 40 MW to Bangladesh, amounting to about 144,000 megawatt-hours (MWh) each year, delivered during a roughly five-month window from mid-June to mid-November when Nepal has surplus.

The agreed tariff is about 6.4 US cents per unit, projected to earn Nepal on the order of NPR 330 million a year. The agreement was signed by NEA Executive Director Kulman Ghising, Bangladesh Power Development Board (BPDB) Chairman Mohammad Rezaul Karim, and Renu Narang, CEO of India's NTPC Vidyut Vyapar Nigam (NVVN), which acts as the trading intermediary across the Indian grid.

Because Nepal and Bangladesh share no border, the power is wheeled through India: it travels from Dhalkebar to Muzaffarpur in Bihar on the 400 kV cross-border line, then onward through India's grid toward Bangladesh via the Baharampur-Bheramara interconnection. Regular exports began on 15 June 2025, and Bangladesh has signalled ambitions to import far larger volumes of Nepali hydropower over the coming decades, though additional MW increases still require Indian regulatory clearance.

The backbone of Nepal-India power trade is the 400 kV Dhalkebar (Dhanusha, Nepal) to Muzaffarpur (Bihar, India) line, charged in 2016 and long the only high-capacity cross-border link. Its usable capacity was raised in phases and now stands at about 1,000 MW for import and export; the line has a technical capacity near 2,000 MW but is limited by the 'N-1' reliability standard until reinforced.

A second major link, the 400 kV Butwal-Gorakhpur line, is under construction. Part of it is being built through the US-funded Millennium Challenge Account Nepal (MCA-Nepal) compact, and the full corridor is designed to add roughly 3,500 MW of cross-border capacity, greatly expanding Nepal's export headroom once complete.

In October 2025 Nepal and India signed agreements to build two further 400 kV double-circuit lines: Inaruwa (Sunsari) to New Purnea in Bihar, and New Lamki/Dodhara (far-west) to Bareilly in Uttar Pradesh, both targeted for completion around 2030. These are being developed through cross-holding joint ventures between the NEA and India's Power Grid Corporation, deepening grid integration for two-way trade.

Smaller and lower-voltage interconnections also carry trade, including the Tanakpur-Mahendranagar link (used for dry-season imports of tens of MW) and several 132 kV and 33 kV border ties. As new 400 kV corridors come online, Nepal's constrained transfer capacity, currently the main bottleneck on both exports and imports, is expected to ease substantially.

Most of Nepal's hydropower is run-of-river, so generation collapses in winter when river flows recede, often to roughly a third of installed capacity. During these dry months Nepal's peak demand exceeds domestic supply, forcing the NEA to import from India to avoid load-shedding. This is why headline export earnings must always be read alongside import costs.

India periodically renews import quotas for Nepal for the dry season. In one recent winter arrangement, India allowed Nepal to import up to about 654 MW, roughly 600 MW through the Dhalkebar-Muzaffarpur line plus about 54 MW via Tanakpur-Mahendranagar, with round-the-clock access to the day-ahead and real-time markets. In practice, however, delivered volumes during peak evening hours are often far below the permitted ceiling because of transmission limits and high Indian demand.

The structural fix is storage and reservoir capacity. Run-of-river plants cannot store monsoon water for winter use, so large reservoir and peaking projects, such as the planned 1,200 MW Budhi Gandaki and 750 MW West Seti, are seen as key to flattening the seasonal swing and reducing dry-season import dependence over time.

Nepal's power-trade ambitions are anchored by a long-term agreement with India signed on 4 January 2024, under which India committed to import up to 10,000 MW of Nepali electricity within about ten years. The framework runs on a multi-decade horizon with auto-renewal provisions, giving Nepal's hydropower investors the demand certainty that a small domestic market alone could not provide.

The NEA has publicly framed even larger goals, targeting on the order of 10,000 MW of exports to India and up to 5,000 MW to Bangladesh over the long run, while Bangladesh has spoken of importing several thousand megawatts of Nepali hydropower by 2040. Meeting these figures depends on simultaneously building generation, expanding cross-border transmission, and securing firm Indian transit and market access, since almost all Nepal-Bangladesh trade must pass through India.

For now, Nepal has India's clearance to export power from more than 30 hydropower plants, with the approved export ceiling rising past 1,100 MW in 2025 as new plants and bilateral contracts were added. The trajectory points toward electricity becoming one of Nepal's largest export earners, transforming a resource that once symbolised scarcity into a strategic regional commodity.