Bangladesh Payment Guarantee Delay Puts Nepal's June 15 Power Export Plan in Doubt

40MW Export Awaits a Bank Guarantee

Nepal's plan to begin exporting 40 megawatts (MW) of electricity to Bangladesh on June 15, 2025, faces uncertainty because Bangladesh has yet to open the bank guarantee required to secure payment. As of June 10, the Nepal Electricity Authority (NEA) still expects supplies to begin on schedule, but the financial arrangements remain unfinished.

The Bangladesh Power Development Board (BPDB) also owes $30,080 for electricity supplied during the countries' first brief trading operation on November 15, 2024, according to NEA spokesperson Rajan Dhakal. That unpaid bill adds to concerns as Nepal prepares for a much longer export season.

The planned trade would send electricity from two Nepali hydropower projects through India's transmission network to Bangladesh. A five-year agreement sets the price at 6.40 US cents per unit and allows exports during the five-month monsoon season, from June 15 to November 15 each year, through 2029.

For Nepal, the arrangement opens a market beyond India, which previously accounted for its electricity trade. For Bangladesh, it provides another source of electricity at a time of energy shortages. Its immediate success depends on completing a financial step: opening a Letter of Credit (LC) that gives Nepal assurance it will be paid.

Why the Letter of Credit Matters

A Letter of Credit is a payment guarantee issued by a bank. The bank promises to pay the seller when the conditions set out in the arrangement are met. In this trade, the seller is NEA, and the electricity buyer is BPDB.

The required LC is supposed to cover three months' worth of electricity payments. That provides a financial safety net for Nepal while it supplies power across the border. Without the completed guarantee, NEA faces uncertainty over payment for the electricity it plans to deliver.

Dhakal said BPDB has sent NEA a draft LC. The two sides are exchanging comments and finalizing its terms, but the final opening remains pending. A draft sets out the proposed arrangements; the bank guarantee still needs to be put in place.

Dhakal described the process as being in its final stage and remained optimistic that exports would start as planned. No confirmed date for opening the LC was given. With the June 15 start approaching, the unfinished guarantee leaves the export timetable uncertain despite that expectation.

A Short First Export Left an Unpaid Bill

Nepal's first electricity export to Bangladesh took place on November 15, 2024, when energy officials from Nepal, India and Bangladesh ceremonially launched the arrangement. The launch came on the final day of the permitted annual trading season.

Procedural uncertainties meant electricity was exported for only 12 hours. During that period, Nepal delivered 470,000 units, generating $30,080 in revenue at the agreed tariff. BPDB has yet to pay that amount, according to Dhakal.

The unpaid bill and the unfinished LC are two separate financial issues. The bill concerns electricity already delivered in 2024. The LC would provide payment security for the planned 2025 supplies. Both matter to NEA as it moves from a brief opening operation toward a full season of exports.

How the Three Countries Built the Arrangement

Nepal, India and Bangladesh signed the tripartite agreement on October 3, 2024. A tripartite agreement involves three parties. Here, it allows Nepal to sell electricity to Bangladesh using India's transmission infrastructure, giving each country a role in moving power from the producer to the buyer.

The agreement permits Nepal to export up to 40MW during the annual monsoon trading window. Nepal has abundant hydropower resources and aims to become a major electricity exporter in South Asia. The Bangladesh arrangement extends that ambition beyond its traditional electricity trade with India.

The main dates show how the agreement moved from signing to its first delivery and then toward the planned 2025 season:

• October 3, 2024: Nepal, India and Bangladesh signed the agreement enabling electricity exports through India's network.
• November 15, 2024: Officials launched the trade, with 12 hours of exports on the season's final day.
• June 10, 2025: Bangladesh's LC remained pending, while NEA continued to expect exports to start on schedule.
• June 15, 2025: The planned start of the next export season.
• November 15, 2025: The end of the annual five-month trading window.

Where the Electricity Will Travel

The planned 40MW supply comes from Nepal's Trishuli and Chilime hydropower projects. Trishuli is to provide 18.60MW, while Chilime is to provide 21.40MW. Together, those contributions make up the agreed export amount.

Electricity will first pass from Nepal into India through the Dhalkebar–Muzaffarpur 400kV transmission line. It will then travel onward to Bangladesh through the Berhampur–Bheramara 400kV line. The 400kV designation describes the voltage of the transmission lines carrying the electricity.

India's network is therefore central to the arrangement. Nepal supplies the power, Bangladesh purchases it, and India provides the transit route. The agreement demonstrates India's willingness to support regional electricity trade, while the pending payment guarantee shows that the commercial arrangements must also be ready for supplies to proceed.

Bangladesh's Currency Shortage Adds Pressure

Bangladesh has been grappling with a broader shortage of foreign currency that has affected its ability to pay for energy imports, including supplies from India. Regional energy analysts have linked those financial constraints to delayed payments and threats of supply cuts by major suppliers such as India's Adani Power.

Foreign currency is money used to settle international payments. Bangladesh's difficulty securing it puts pressure on its ability to pay overseas energy suppliers. The Nepal agreement sets its tariff in US cents, making payment arrangements a central part of the trade.

Bangladesh also faces mounting energy shortages. Its electricity buyer must balance the need for reliable imports with the country's financial constraints. Delays in securing LCs could place further strain on electricity supplies and economic stability.

BPDB's draft LC indicates that work on the guarantee is continuing. Dhakal's expectation of a timely start rests on the two sides completing that process, even as the outstanding payment from November remains unresolved.

What Is at Stake for Nepal and India?

Nepal's ambition to become a reliable regional electricity exporter depends on dependable payments as well as the ability to generate and transmit power. The pending LC and unpaid bill expose financial risks as it seeks to establish sustained trade with Bangladesh.

Investors in Nepal's hydropower sector are also concerned about the government's recent shift from take-or-pay to take-and-pay power purchase agreements. Under take-or-pay arrangements, payment commitments provide producers with greater revenue security. Under take-and-pay arrangements, payment depends on the electricity actually taken, which can make income less certain.

That policy concern adds another source of uncertainty for hydropower investment alongside the payment risks in export markets. Nepal's electricity ambitions require confidence that power producers and exporters can receive the revenue on which their plans depend.

India, meanwhile, remains the essential transit country for the Bangladesh trade. Persistent payment problems could prompt Indian suppliers to reconsider their export strategies. Energy sector experts have also warned that continued financial uncertainty and delays could weaken trust among regional partners and slow the momentum for electricity trade across South Asia.

The Next Step Is Completing the Guarantee

NEA officials remain hopeful that Bangladesh will open the LC soon enough for exports to begin on June 15. The five-year agreement remains a milestone for Nepal's energy ambitions, with a defined seasonal window, an agreed tariff and a route through India's transmission network.

Nepal, Bangladesh and India continue to work through the arrangements. Completing the payment guarantee would give NEA the financial security required for the planned supply, while settling the $30,080 bill would address the outstanding obligation from the first export.

The immediate focus is the approaching start date. The broader issue is whether reliable payment mechanisms and consistent policies can support the regional trade that the three countries have agreed to pursue. Other countries seeking to expand electricity cooperation in the region will be watching the outcome.

Key Points

• As of June 10, 2025, Bangladesh had not opened the LC required for Nepal's planned 40MW exports starting June 15.
• The guarantee is intended to cover three months of electricity payments; BPDB has submitted a draft.
• BPDB also owes $30,080 for 470,000 units supplied over 12 hours on November 15, 2024, according to NEA spokesperson Rajan Dhakal.
• The agreement permits exports from June 15 to November 15 each year through 2029 at 6.40 US cents per unit.
• Power from Trishuli and Chilime will reach Bangladesh through India's transmission network.
• Bangladesh's foreign currency shortage and concerns about payment security continue to weigh on the trade, although NEA still expects a timely start.