Nepal–India Power Trade: 2014 PTA, 10,000 MW Deal & Bangladesh Export

For most of its modern history, Nepal has been an energy paradox: a country with an estimated 83,000 megawatts (MW) of theoretical hydropower potential—roughly 43,000 MW of it considered economically feasible—that endured hours of daily load-shedding as recently as the mid-2010s. That picture reversed within a decade. Once the Nepal Electricity Authority (NEA) ended routine power cuts and new run-of-river plants came online, Nepal began producing more electricity than it could consume during the June–November monsoon. In the fiscal year 2080/81 BS (2023/24 AD), Nepal became a net exporter of electricity, selling power worth about NPR 16.93 billion to India.

Turning that seasonal surplus into revenue required a legal architecture that older treaties never provided. Nepal's classic water agreements with India—the Koshi (1954), Gandak (1959) and Mahakali (1996) treaties—dealt with rivers, barrages and project-specific arrangements, not with routine commercial electricity trade. Three modern instruments now fill that gap: the 2014 Power Trade Agreement (PTA), the January 2024 long-term power trade agreement targeting 10,000 MW of exports to India within a decade, and the 3 October 2024 trilateral power sales agreement that lets Nepal sell 40 MW to Bangladesh across Indian territory. Together they form the contractual backbone of Nepal's hottest economic story: monetising Himalayan hydropower in regional markets.

The foundational document is formally titled the 'Agreement between the Government of Nepal and the Government of the Republic of India on Electric Power Trade, Cross-Border Transmission Interconnection and Grid Connectivity', universally known as the Power Trade Agreement or PTA. It was signed on 21 October 2014 (Kartik 2071 BS) at the Prime Minister's Office in Singha Durbar, Kathmandu, by Nepal's Energy Secretary Rajendra Kishore Kshatri and India's Power Secretary Pradeep Kumar Sinha. Nepal had first sent a draft to India in 2010, but the process was fast-tracked after Indian Prime Minister Narendra Modi's landmark visit to Kathmandu in August 2014; the text was initialled in New Delhi on 4 September 2014 and endorsed by both cabinets before signature.

The PTA entered into force upon signature and remains valid for 25 years, renewing automatically every ten years thereafter unless either side gives three months' written notice of termination. Its core promise is non-discriminatory, mutually agreed access: governmental, public and private producers, buyers and traders of both countries may engage in cross-border electricity trade, including through power exchanges, while both governments work to harmonise policies and remove tariff and non-tariff barriers. It also created two standing mechanisms—a Joint Working Group at joint-secretary level and a Joint Steering Committee at secretary level—that still steer bilateral energy cooperation today.

The PTA is often associated with the 18th SAARC (South Asian Association for Regional Cooperation) Summit because it was signed just five weeks before Kathmandu hosted the summit on 26–27 November 2014. At that summit the eight member states signed the SAARC Framework Agreement for Energy Cooperation (Electricity) on 27 November 2014, which envisaged a regional electricity market. The bilateral PTA and the regional SAARC framework together laid the conceptual groundwork for what eventually became sub-regional trade—including Nepal's later exports to Bangladesh.

Agreements need hardware. The single most important piece is the roughly 140-kilometre, 400 kV Dhalkebar–Muzaffarpur double-circuit transmission line linking Dhalkebar in Nepal's Dhanusha district with Muzaffarpur in Bihar, India—the first high-capacity cross-border interconnection between the two countries. It was commissioned in February 2016 and jointly dedicated by the two prime ministers. Initially used mainly to import Indian power into a load-shedding-hit Nepal, the line's direction of flow would later reverse each monsoon.

The regulatory doorway opened through India's Cross Border Trade of Electricity framework—guidelines issued in 2016 and revised in December 2018, followed by detailed procedures in 2021—which allowed entities from neighbouring countries to transact in India's power market. In April 2021 Nepal began purchasing power through the Indian Energy Exchange (IEX) day-ahead market, and in November 2021 it made its first-ever market sale there: 39 MW from the 24 MW Trishuli and 15 MW Devighat hydropower stations, making Nepal the first South Asian country to sell surplus power on the Indian exchange.

Approvals then grew rapidly. By August 2024, India had authorised the sale of 941 MW from 28 Nepali hydropower projects, and in August 2025 approval of a further 200 MW took the total to about 1,140.7 MW. Because most Nepali plants are run-of-river, exports remain concentrated in the wet season, while Nepal still imports Indian power in the dry winter months.

The political headline came first: on 1 June 2023, during Nepali Prime Minister Pushpa Kamal Dahal's visit to New Delhi, Indian Prime Minister Narendra Modi announced that India would aim to import 10,000 MW of electricity from Nepal within ten years. That commitment was converted into a binding instrument on 4 January 2024 (Poush 2080 BS), when Nepal's Energy Secretary Gopal Sigdel and India's Power Secretary Pankaj Agarwal signed the long-term power trade agreement in Kathmandu, during Indian External Affairs Minister S. Jaishankar's visit for the seventh meeting of the Nepal–India Joint Commission. Prime Minister Dahal described the deal as 'a quantum leap' for Nepal's energy trade.

The agreement runs for an initial 25 years and renews automatically every ten years thereafter. Its operational significance goes beyond the headline number: it opens the door to medium- and long-term power purchase agreements of five to ten years between entities of the two countries, giving Nepali hydropower developers predictable offtake instead of relying solely on volatile day-ahead exchange prices. That bankability matters for financing new projects, since Nepal's official energy roadmap targets about 28,500 MW of installed capacity by 2035, with up to 15,000 MW earmarked for export.

The energy deal was one of several outcomes announced the same day. India pledged NPR 10 billion for reconstruction after the November 2023 Jajarkot earthquake, the NEA and India's NTPC Limited signed a memorandum of understanding on renewable-energy cooperation, and three new cross-border transmission links—Raxaul–Parwanipur, Kushaha–Kataiya and Nautanwa–Mainahia—were jointly inaugurated. Meeting the 10,000 MW target will also depend on larger interconnections now in the pipeline, notably the 400 kV Butwal–Gorakhpur line under development as a joint venture.

Bangladesh, which is seeking to import about 9,000 MW of hydropower by 2040 as part of its clean-energy plans, has long looked to Nepal as a supplier—but the two countries share no border, so any power must transit India. Nepal and Bangladesh signed a Memorandum of Understanding on Cooperation in the Field of Power Sector on 10 August 2018, creating a Joint Steering Committee at energy-secretary level and a Joint Working Group. Six years of negotiation later, and after India's 2018 cross-border electricity guidelines made trilateral transactions possible, the deal was done.

The tripartite power sales agreement was signed in Kathmandu on 3 October 2024 (Ashwin 2081 BS) by NEA Managing Director Kulman Ghising, NTPC Vidyut Vyapar Nigam (NVVN) Chief Executive Renu Narang and Bangladesh Power Development Board (BPDB) Chairman Md. Rezaul Karim. NVVN, a subsidiary of India's state-owned NTPC, acts as the intermediary trading company. The signing had originally been scheduled for 28 July 2024 but was postponed after political unrest in Bangladesh that culminated in a change of government.

Nepal's first electricity export to a country other than India took place on 15 November 2024 (Kartik 2081 BS), when 40 MW flowed to Bangladesh for about 12 hours, from afternoon until midnight. Because the 2024 export window had almost closed by the time all approvals were in place, the three governments agreed to a symbolic one-day transaction, inaugurated virtually by Nepal's Energy Minister Deepak Khadka, India's Power Minister Manohar Lal and Bangladesh's Energy Adviser Muhammad Fouzul Kabir Khan. It was the first time Nepal earned convertible foreign currency from electricity.

The first full season ran from 15 June to 15 November 2025, earning Nepal about USD 9.436 million according to the NEA. Momentum continued at the seventh Nepal–Bangladesh Joint Steering Committee meeting in Dhaka on 26–27 November 2025, where Bangladesh agreed to import an additional 20 MW, taking the planned total to 60 MW. However, the arrangement's dependence on India was underlined in June 2026, when the 2026 season began with only the original 40 MW because India had not yet approved the additional 20 MW, citing transmission-capacity constraints.

Taken together, the three agreements mark Nepal's transition from an aid-framed hydropower narrative to a commercial one. The 2014 PTA created the legal right to trade; the 2024 long-term agreement created scale and predictability with a 10,000 MW destination market; and the trilateral deal proved that Nepali power can reach third countries across the Indian grid—a template often cited as the seed of a wider Bangladesh–Bhutan–India–Nepal (BBIN) sub-regional electricity market. For a country whose imports have long dwarfed exports, monsoon electricity is emerging as a rare large-scale foreign-exchange earner.

Significant constraints remain. Every kilowatt-hour Nepal sells abroad must currently pass through Indian territory and receive Indian regulatory approval, and India's cross-border trade guidelines restrict purchases from projects with investment from countries with which India has no bilateral power agreement—widely read as excluding Chinese-financed or Chinese-built plants from the Indian market. Transmission capacity is another bottleneck: the Dhalkebar–Muzaffarpur line carries both Nepal–India commerce and the Bangladesh transit, and expansion of exports depends on new corridors such as Butwal–Gorakhpur and a proposed dedicated Nepal–Bangladesh link. Exports also remain seasonal, since run-of-river plants slump in winter, when Nepal still buys Indian power.

The forward agenda is nonetheless ambitious. Nepal and Bangladesh are negotiating a joint venture to develop the 683 MW Sunkoshi III hydropower project, and Dhaka has separately pursued a plan to buy 500 MW from the 900 MW Upper Karnali project being developed by India's GMR. Whether these plans materialise on schedule will determine how quickly the agreements signed between 2014 and 2024 turn Nepal's rivers into a durable export industry.