Nepal-Bangladesh Synergy

Nepal has entered a new political and economic era with successful conclusion of local, provincial and federal elections last year. With the conclusion of peace process and implementation of new republican constitution and a stable government in the centre the country is now poised for rapid economic development. Nepal has been endowed with abundant natural resources, water resource in particular, which holds the potential to transform the country’s economy and lift it into an advanced country in a short period of time. Nepali and foreign investors alike are ready to invest in Nepal’s hydropower while successive governments have said they are prepared to do anything to promote the energy sector. However, the country has so far failed to cash in on this huge opportunity with the total power generation standing around 1,000 MW against the capacity to generate over 40,000 MW of power that can cater not only to domestic need but the entire South Asia and even China. There are several factors – internal and external – behind this dismal scenario in the power sector, the main being prolonged political transition and policy uncertainty, wavering attitude of the political parties that support or protest particular hydropower projects for short-term gains, widespread corruption in hydropower sector, poor distribution system and excessive leakage.

The government has always claimed Nepal to be an ideal destination to invest in hydropower sector, but the results have been far from satisfactory. Amid these shortcomings, Nasrul Hamid, Minister of State of Power, Energy and Mineral Resources of Bangladesh, has arrived in Nepal to explore the potential of joint investment in Nepal’s energy sector. Bangladesh has shown interest to work with Nepal in the field of power generation for long and has said that it is ready to import around 5,000 megawatt of electricity to be generated from Upper Karnali Hydropower Project by Indian company GMR. According to the Ministry of Energy, Water Resources and Irrigation Hamid would hold a meeting with Energy Minister Barsha Man Pun and sign an agreement for collaboration in the field of power generation. There is a good prospect of partnership between the two countries as Bangladesh is in need of more power while Nepal possesses abundant amount of water resources. In order to expedite cooperation, the two countries need to first sign a separate Power Trade Agreement. However, exporting power to Bangladesh is going to be tricky as Nepal’s Power Trade Agreement with India requires the former to get latter’s consent to export energy to a third country. So the government needs to win the confidence of the southern neighbour for attracting more investment in this field and earning foreign currency through the export of surplus energy.

On home front, the government and political parties must adopt policies that create an investment friendly environment and attract more foreign direct investment. Unless the political parties adopt a common policy for the development of hydropower sector and shun short-term partisan interests, the problem is likely to linger for many years, even decades, to come. Besides, there is widespread corruption in hydropower projects which results in inordinate delay in the construction and completion of projects, so there is a need of accountability to complete the ongoing projects on time. Unless concrete measures are taken to tackle these issues, the dream to transform the national economy by means of hydropower development will only be limited to rhetoric.

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