Bangladesh has scrapped its plan to import 500 megawatts (MW) of electricity from Nepal’s 900MW Upper Karnali Hydropower Project, being developed by GMR Upper Karnali Hydropower Ltd (GUKHL), an Indian-owned joint venture firm.
The Power Division made the decision after GUKHL proposed a 25-year power supply agreement starting in 2029 under the now-defunct Special Power Act.
“The government has decided to suspend all agreements under the Special Power Act. Therefore, the proposed deal with GMR has also been cancelled,” said Bangladesh Power Development Board (BPDB) Chairman Engr Rezaul Karim to Just Energy News.
The cancellation comes as part of the government’s broader move to terminate power and energy contracts signed under the Special Power Act, many of which have already been revoked by the current administration.
In February 2025, GUKHL Chairman S.N. Barde sent a letter to Bangladesh’s Power Secretary, expressing interest in formalizing the Power Supply Agreement (PSA) to export electricity from Nepal to Bangladesh.
However, official sources said the interim government showed little interest in advancing a project initially backed by the previous Awami League-led administration.
Geopolitical concerns also reportedly played a role. India had proposed using its 117-kilometre-long, 765kV high-voltage transmission corridor to transport the electricity—raising logistical and strategic questions for Dhaka.
The tripartite PSA was finalized and initialed on December 5, 2024, between BPDB, India’s NVVN (NTPC Vidyut Vyapar Nigam), and GUKHL. Negotiations began in 2016 and led to a Letter of Intent (LoI) in January 2020. GUKHL also deposited USD 5 million as proposal security.
The draft agreement was signed during the 23rd Bangladesh-India-Nepal steering committee meeting in Khulna in May 2023, attended by Power Division Secretary Md Habibur Rahman and Indian Power Secretary Alok Kumar.
GUKHL maintained the PSA was well-structured to meet BPDB’s needs, considering the run-of-the-river nature of the project and regulatory requirements for cross-border transmission. The company also pointed to the recent successful 40MW trilateral electricity trade among Bangladesh, Nepal, and India as a model.
“This would have been the cheapest and greenest power source for Bangladesh over a 25-year term,” GUKHL Chairman Barde noted in his letter.
With the deal now cancelled, GUKHL is exploring alternative markets for the electricity generated by the Upper Karnali project.