With Start of Trilateral Hydropower Trade, South Asia Begins Historic Cooperation - The Diplomat – Asia-Pacific Current Affairs Magazine
Published December 19, 2025
Historic Trilateral Hydropower Trade Marks New Cooperation in South Asia
In a significant move towards regional cooperation, South Asian nations have initiated a trilateral hydropower trade agreement. This development is set to enhance energy security and promote sustainable development within the region. The agreement involves Nepal, India, and Bangladesh, which have agreed to exchange hydropower resources, paving the way for a collaborative approach to energy management.
The trilateral agreement was officially launched during a ceremony in Kathmandu, where officials from the three countries gathered to celebrate this milestone. The deal is expected to facilitate the export of up to 1,000 megawatts of hydropower from Nepal to Bangladesh through India’s power grid. This arrangement not only addresses Bangladesh's growing energy needs but also provides Nepal with a vital revenue stream from its abundant hydropower resources.
As part of the agreement, Nepal will be able to utilize its vast hydropower potential, estimated at around 83,000 megawatts, of which approximately 43,000 megawatts are considered economically feasible for development. Currently, Nepal has an installed hydropower capacity of about 1,400 megawatts. The new agreement is expected to encourage further investments in Nepal’s hydropower sector, as the country seeks to develop its infrastructure and meet its energy production goals.
India plays a critical role in this trilateral arrangement, serving as the transit country for the electricity being exported from Nepal to Bangladesh. The Indian government has expressed its commitment to enhancing regional connectivity and energy cooperation. The Indian Minister of Power, R.K. Singh, emphasized that this agreement would not only help in meeting the energy demands of Bangladesh but also strengthen ties between the three nations.
The energy trade agreement is also seen as a strategic move to mitigate energy shortages in Bangladesh, which has been grappling with power supply issues. Bangladesh's energy demand has been on the rise, with the country aiming to achieve a target of generating 24,000 megawatts of electricity by 2021. The introduction of hydropower from Nepal is expected to contribute significantly to meeting this target and diversifying Bangladesh's energy mix.
The cooperation among Nepal, India, and Bangladesh is not limited to hydropower trade alone. The three countries are also exploring opportunities to collaborate on other renewable energy projects, including solar and wind energy. This broader approach to energy cooperation is aligned with regional goals to transition towards cleaner energy sources and reduce reliance on fossil fuels.
The trilateral hydropower trade agreement is a part of a larger framework established by the South Asian Association for Regional Cooperation (SAARC), which aims to promote economic integration and cooperation among member states. The SAARC Energy Centre has been instrumental in facilitating discussions around energy cooperation in the region, and this new agreement is a testament to the progress being made.
Moreover, this initiative aligns with global efforts to combat climate change and promote sustainable energy practices. By harnessing hydropower, the participating countries are taking steps to reduce greenhouse gas emissions and enhance energy sustainability. The use of renewable energy sources is crucial for achieving the United Nations' Sustainable Development Goals (SDGs), particularly Goal 7, which aims to ensure access to affordable, reliable, sustainable, and modern energy for all.
In addition to the environmental benefits, the trilateral agreement is expected to have significant economic implications for the region. The trade of hydropower can lead to job creation, infrastructure development, and increased foreign investment in the energy sector. Furthermore, it can foster stronger economic ties and interdependence among the countries involved, contributing to regional stability and growth.
As the agreement unfolds, it will be essential for the three countries to address potential challenges, such as regulatory hurdles, infrastructure limitations, and the need for a robust power transmission system. Collaboration on these fronts will be vital to ensure the successful implementation of the hydropower trade and to maximize the benefits for all parties involved.
Looking ahead, the trilateral hydropower trade agreement serves as a model for future cooperation in South Asia. It highlights the potential for regional collaboration in addressing shared energy challenges and promoting sustainable development. With continued commitment and cooperation, Nepal, India, and Bangladesh can pave the way for a more integrated and sustainable energy future.
In conclusion, the initiation of the trilateral hydropower trade marks a historic step in South Asia's energy landscape. By working together, these countries are not only addressing their immediate energy needs but also laying the groundwork for a more sustainable and cooperative regional energy framework. The success of this agreement could inspire similar initiatives in other sectors, further enhancing regional cooperation and development in South Asia.
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