Under this arrangement, Nepal will export hydroelectricity to Bangladesh via Indian transmission lines.

• It underscores a broader movement towards cross-border energy cooperation in South Asia.

Initiatives for Cross-Border South Asian Energy Co-operation

• Cross-Border Electricity Trade:
  • India-Bangladesh: Upcoming Electricity corridor from Katihar in Bihar to Bornagar in Assam.
  • India-Nepal-Projects like Arun III, Upper Karnali hydropower projects (UKHP).
  • India-Bhutan: E.g. Kurichu, Tala, Chukha and Mangdechhu.
• Energy Pipelines: TAPI Pipeline to transport natural gas, India-Bangladesh Friendship Pipeline, Motihari-Amlekhganj pipeline etc.
• Renewable Energy Cooperation: Exemplified by International Solar Alliance initiative’s Green Grids Initiative, OSOWOG etc.

Significance of Energy Co-operation

• Countering Chinese influence: China is developing energy infrastructure for importing energy from its South Asian partners.
• Economic integration: Energy trade is key enabler of regional integration.
• Other Significances: Energy Security, environmental sustainability etc.

Challenges in Energy Co-operation

• Environmental damage: Opposition of UKHP in Nepal for impacts on Himalayan environment.
• Hurdle Rates: Represents costs due to structural grid barriers between countries which needs to be factored for electricity trade.
• Other Issues: Regional Frictions (E.g. conflicts between India and Pakistan), Limited Utility of Hydropower Projects