The United States Agency for International Development (USAID) has conducted a feasibility study for India's electrical grid inter-connections with Bangladesh and Sri Lanka, official sources said here.

Of particular interest to India are abundant water resources in Nepal and Bhutan, which can be successfully tapped to supply electricity.

Nepal is estimated to have hydro electricity potential to the tune of 42,000MW, of which just 568MW capacity is operational. Three major multipurpose projects in NepalSaptakoshi, Pancheshwar and Karnaliare under discussion between India and Nepal for mutual benefits, according to the sources.

The two countries already have in place a joint committee on harnessing water resources for power generation. Indian energy majors like Tata Power Company, Reliance Energy, GMR Energy, Essar Power and Torrent Group are understood to be keen to explore the power potential in Nepal.

Besides, leading Indian and international financial institutions, like Asian Development Bank, Standard Chartered Bank, State Bank of India and insurance companies, including Tata, AIG and ICICI Lombard, are similarly interested in investing in Nepal's hydro electricity sector.

Bhutan has an estimated potential of 30,000MW of electricity generation. The country recently signed an agreement with India on Tala hydro project.

Bhutan exported some 1,764 units of power to India from Chukha and Kurichu projects in the Himalayan kingdom in 2005, up from 1,748 million units in 2003, said the sources.

India's state-owned National Thermal Power Corporation is in negotiation with Sri Lanka for setting up a 500MW project based on imported coal, they said. The cooperation among the countries of the region is a key element of the regional grouping Bay of Bengal Initiative in Scientific, Technical and Economic Cooperation (Bimstec) countries comprising India, Bangladesh, Nepal, Bhutan, Thailand, Sri Lanka and Myanmar.