Bangladesh, Nepal setting up state-owned power traders

Planned interconnected grid will allow power to be traded as any other commodity to meet electricity demand in the Saarc region

energy-transmissionNew Delhi: Prospects of greater electricity trade are prompting Bangladesh and Nepal to set up state-owned power traders and maximize the benefits of electricity commerce, as energy security holds key to development in the region. The eight-member South Asian Association for Regional Cooperation (Saarc) had signed a framework agreement on electricity trade at its Kathmandu summit in November. An interconnected grid planned under the agreement will allow power to be traded as any other commodity to meet the electricity demand in the region. Saarc groups India, Pakistan, Nepal, Bhutan, Bangladesh, Sri Lanka, Afghanistan and the Maldives. India already has power grid links with Bhutan, Nepal and Bangladesh, and has plans to develop transmission links with Myanmar and Sri Lanka. However, such pursuits have not always made progress. Prime Minister Narendra Modi visited Sri Lanka as part of his recently concluded three-nation tour, where Indian state-run power utility NTPC Ltd’s plan to build a 500-megawatt (MW) plant has stalled. India and Pakistan had plans to establish 220-kilovolt links to supply 500MW of electricity, gradually increasing it to 2,000MW. That plan too has not taken off. “Bangladesh and Nepal are setting up power trading organizations to gear up for the electricity trade that is anticipated in the region with India being a prominent player. The most important thing for these plans to succeed is political will,” said a person aware of the development, requesting anonymity. While India buys 1,450MW from Bhutan, Bangladesh and Nepal get 500MW and 150MW from India, respectively. Nepal and Bangladesh have a shortage of around 550MW and 10,000MW, respectively. In comparison, India has a power generation capacity of 2,58,701.46MW and plans to add another 88,537MW by 2017. Another person aware of the development confirmed it and said, “Right now, electricity trade happens between India and countries such as Bhutan, Bangladesh and Nepal. Once their power trading organisation is in place, they will be able to trade in the region.” While queries emailed to a spokesperson of the Bangladesh High Commission in New Delhi remained unanswered till press time, a spokesperson for the Nepal Embassy in New Delhi said that it was not aware of the development. A senior Indian government official requesting anonymity said, “This is a huge opportunity. A case in point being Bangladesh, which wants 500MW over and above what we are supplying. There is a price differential of around Rs.5 per unit between what is available in India and in Bangladesh. So, even if they buy from the open market in India, they will have huge savings given the 10,000MW shortage there.” State-owned Power Grid Corp. of India Ltd will be commissioning by 2016 four strategic electricity transmission links in the North-East and neighbouring Bhutan to supply power to other parts of India. The projects, planned in 2009, will result in transmission of 6,000MW of electricity generated by hydropower projects, sufficient to meet the entire power demand of Delhi. The planned commissioning comes in the backdrop of India’s so-called Act East policy—a focus on South-East Asia. “While India supplies Nepal around 150MW, we get around 1,500MW from Bhutan. We supply to them in the night and during winters. Also, Myanmar has asked for some electricity,” said the Indian government official quoted above. The transmission links from Bhutan will help boost India’s efforts to step up energy diplomacy in the neighbourhood. India is helping the Himalayan country build 10,000MW of hydropower with concessional finance, with the overall investment expected to be about $10 billion. Around 90% of the power generated through these projects will be sold to India.

Speaking at a meeting of Saarc energy ministers in New Delhi in October, India’s minister for power, coal and new and renewable energy Piyush Goyal had said, “Hydroelectric power generated in northeast India could be transported via Bangladesh, India and Pakistan on to Afghanistan, or offshore wind projects could be set up in Sri Lanka’s coastal borders to power Pakistan or Nepal. The possibilities are limitless!” In a 17 October statement, the power ministry quoted the minister as saying that energy security is key to the economic sustainability of the Saarc region, as 30% of the region’s energy demands are met through imports. “In order to resolve this, Shri Goyal advocated a three-pronged strategy by leveraging (a) harnessing conventional and renewable sources of energy (b) building inter-connected transmissions grids and (c) forging efficacious power trading agreements,” the statement said.

Elizabeth Roche contributed to this story.