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India has proposed a new charge on electricity supplied to Bangladesh as part of a mechanism for settling cross-border power transactions.
The proposed charge is 0.005 Indian rupees per unit and, if implemented, would add a small amount to Bangladesh’s electricity import costs.
The proposal comes as Bangladesh prepares to sign a new agreement with India for handling payments and other grid-related transactions. Any delay in finalising the agreement could create complications for Bangladesh’s import of 1,160 megawatts (MW) of electricity through an Indian state-owned company.
According to a report by Prothom Alo, Bangladesh’s Power Division has sought the Finance Division’s opinion on signing a Settlement Nodal Agency (SNA) agreement between the Bangladesh Power Development Board (BPDB) and NTPC Vidyut Vyapar Nigam Ltd (NVVN).
The Power Division sent a letter to the Finance Division on August 18 seeking its views on the proposed arrangement.
The proposed SNA charge was introduced by India’s Central Electricity Regulatory Commission (CERC) for cross-border electricity transactions. CERC had initially proposed a fee of 0.01 Indian rupees per unit.
Following an application from the BPDB, the charge was reduced by half to 0.005 Indian rupees per unit.
Officials from the Power Division and BPDB, cited in the report, said the fee is separate from the actual price of electricity. It is intended to cover the cost of managing power transactions, including grid operations and settlement of payments.
They said the additional financial burden on Bangladesh would therefore be relatively small.
According to the report, the proposed agreement is also expected to make the payment process simpler for Bangladesh. At present, electricity imported through different arrangements may require separate settlements with individual power producers.
Under the SNA system, NVVN would act as the nodal agency for settling the relevant transactions, reducing the need for separate billing arrangements with different power plants.
According to BPDB officials, cited in the report, the charge would cover services such as scheduling the amount of electricity to be supplied at different times, collecting meter readings, matching electricity supplied with consumption and managing grid-related transactions.
The SNA system has also been applied to cross-border electricity trade between India and its neighbours Nepal and Bhutan.
Bangladesh currently has agreements to import a combined 2,656MW of electricity from India through several arrangements.
Of this, government-level agreements involving NVVN cover 250MW from an NTPC plant, 300MW from Damodar Valley Corporation (DVC) and 160MW from the Tripura State Electricity Corporation. Bangladesh also imports 200MW from a Sembcorp Energy India plant through PTC India and another 250MW directly from Sembcorp.
The proposed SNA agreement between BPDB and NVVN covers 1,160MW of these imports.
Separately, Bangladesh imports 1,496MW from the Adani Power plant in Godda, Jharkhand. BPDB officials said the existing power purchase agreement with Adani already contains provisions covering such charges, meaning a separate SNA agreement will not be necessary for that supply.
The proposed charge is 0.005 Indian rupees per unit and, if implemented, would add a small amount to Bangladesh’s electricity import costs.
The proposal comes as Bangladesh prepares to sign a new agreement with India for handling payments and other grid-related transactions. Any delay in finalising the agreement could create complications for Bangladesh’s import of 1,160 megawatts (MW) of electricity through an Indian state-owned company.
According to a report by Prothom Alo, Bangladesh’s Power Division has sought the Finance Division’s opinion on signing a Settlement Nodal Agency (SNA) agreement between the Bangladesh Power Development Board (BPDB) and NTPC Vidyut Vyapar Nigam Ltd (NVVN).
The Power Division sent a letter to the Finance Division on August 18 seeking its views on the proposed arrangement.
Charge proposed for cross-border power trade
The proposed SNA charge was introduced by India’s Central Electricity Regulatory Commission (CERC) for cross-border electricity transactions. CERC had initially proposed a fee of 0.01 Indian rupees per unit.
Following an application from the BPDB, the charge was reduced by half to 0.005 Indian rupees per unit.
Officials from the Power Division and BPDB, cited in the report, said the fee is separate from the actual price of electricity. It is intended to cover the cost of managing power transactions, including grid operations and settlement of payments.
They said the additional financial burden on Bangladesh would therefore be relatively small.
SNA agreement to simplify payments
According to the report, the proposed agreement is also expected to make the payment process simpler for Bangladesh. At present, electricity imported through different arrangements may require separate settlements with individual power producers.
Under the SNA system, NVVN would act as the nodal agency for settling the relevant transactions, reducing the need for separate billing arrangements with different power plants.
According to BPDB officials, cited in the report, the charge would cover services such as scheduling the amount of electricity to be supplied at different times, collecting meter readings, matching electricity supplied with consumption and managing grid-related transactions.
The SNA system has also been applied to cross-border electricity trade between India and its neighbours Nepal and Bhutan.
Bangladesh imports 2,656MW from India
Bangladesh currently has agreements to import a combined 2,656MW of electricity from India through several arrangements.
Of this, government-level agreements involving NVVN cover 250MW from an NTPC plant, 300MW from Damodar Valley Corporation (DVC) and 160MW from the Tripura State Electricity Corporation. Bangladesh also imports 200MW from a Sembcorp Energy India plant through PTC India and another 250MW directly from Sembcorp.
The proposed SNA agreement between BPDB and NVVN covers 1,160MW of these imports.
Separately, Bangladesh imports 1,496MW from the Adani Power plant in Godda, Jharkhand. BPDB officials said the existing power purchase agreement with Adani already contains provisions covering such charges, meaning a separate SNA agreement will not be necessary for that supply.
