Electricity export idea snagged by lukewarm India

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    KATHMANDU, May 9:

    Nepal has yet to find a market for its potential electricity exports. A Memorandum of Understanding on signing a Power Trade Agreement (PTA) was forwarded to Delhi in 2010 but the Indian side has not paid any attention to the proposal. 

    Following the proposal, officials and political leaders had drawn attention to it at several bilateral meetings with their Indian counterparts but the only response they got was that the issue was under consideration. 

    The PTA proposal was forwarded as per a secretary-level meeting of the Nepal-India Joint Committee on Water Resources (JCWR) held in Pokhara in 2009. 

    Talking to this daily, Balananda Paudel, former energy secretary, said Nepal had raised the PTA agenda at the ensuing JCWR annual meeting and it was also the top agenda of then prime minister Baburam Bhattarai during his visit to Delhi. “But the Indian side only wanted to sideline the issue, saying the agenda is under consideration,” added Paudel. 

    Even during the 7th JCWR meeting held in January, 2013 in Kathmandu, the Indian side said the process would take a little more time in spite of continuous follow up, because the proposal was a new idea for the government of India. 

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    “A PTA with India is essential for Nepal´s energy export because electricity is an exportable commodity of a special nature,” said Paudel, adding that no export-oriented hydropower projects would be commissioned until Nepal and India include electricity among ´traded commodities´ in their bilateral ´trade and transit treaty´ and sign the PTA. 
    Because of its geography, Nepal is dependent on India for exporting electricity. 

    President of the Independent Power Producers´ Association of Nepal (IPPAN) Khadga Bahadur Bista said that following India´s cool response, export-oriented project developers have downsized their manpower and become idle, awaiting ´market assurance´ before resuming construction. 

    Developers of over a dozen export-oriented projects (with a total capacity of about 4,000 MW) are working on different phases of their projects but they remain snagged by uncertainty over the ´electricity market´. 

    Arun III (900 MW), Upper Karnali (900 MW), Upper Marshyandi (600), Lower Arun (400), Upper Marshyandi (180), Manang Marshyandi (282), Tila I (400) and Tila II (420) are the major export-oriented projects under construction. 

    Australian company SMEC had walked out without commissioning its project after 16 years of study and millions of rupees invested because there was ´no market access´. 
    Several high-level officials acknowledge that the market is in India and Nepal is dependent on India´s responses. 

    Some officials feel that India does not want any third country power developer in Nepal and wishes to be able to decide unilaterally about electricity trading. 
    India also does not want Nepal to deal with India´s power traders on a competitive basis but rather intends to control any deal, said Surya Nath Upadhyaya, a former energy secretary. 

    To makes matters worse, following a forecast of wet energy waste after the commissioning of the 456 MW Upper Tamakoshi Hydropower Project by 2017/18, NEA has informally decided to stop signing power purchase agreements with any run-of-river projects for domestic use, saying that surplus wet energy incurs huge loss to the state-power monopoly.

    NEA´s PPA decision has also thrown several hydropower projects for domestic consumption into uncertainty. Bista of IPPAN also said that the PTA is the only way to overcome the problem of not having PPA for several ongoing hydropower projects. PTA is essential to make the power supply reliable by exchanging power with India as most run-of-river projects generate at far lower levels in winter when demand almost doubles. ´Energy banking´ is a concept proposed to India for power supply management. 
    Bangladesh also has shown interest in buying electricity from Nepal but Indian consent is a must. 

    INDIAN LEADERS OFTEN SHOW INTEREST IN NEPAL´S HYDROPOWER 
    While Nepal desperately awaits the PTA, Indian leaders often stress energy cooperation at public forums. During a visit to Nepal in December last year, India´s renewable energy minister Farooq Abdullah said India was ready to buy electricity from Nepal. Likewise, in the sidelines of the BIMSTEC meeting in Myanmar in March, Indian Premier Man Mohan Singh told Nepal´s Prime Minister Sushil Koirala that India was ready to cooperate in hydropower development. 

    PTA LIKELY SOON, SAYS MOE OFFICIAL 
    Though there is uncertainty over power sector development in Nepal, MoE joint secretary Keshav Dhwaj Adhikari is hopeful of the future as India is likely to see things in the context of regional energy cooperation. It has already entered into a new power trade regime with Bhutan and Bangladesh. India has started to import 500 MW from Bhutan and is working on transmission lines to import 5,000 MW by 2020. Likewise, India started to export 500 MW to Bangladesh from October. 

    Officials also say that the South Asia region is in desperate need of electricity and this likely to be highlighted during the 18th SAARC summit in Nepal in November. 

    Adhikari said that a bilateral joint mechanism at secretary level is proposed between Nepal and India to focus on energy cooperation. Adhikari said the PTA will come under the purview of this joint mechanism. During a visit here in March, Indian Power Secretary Pradeep Kumar Sinha had floated the idea of a joint mechanism, saying that the energy agenda could not get addressed at JCWR. JCWR deals with diverse issues such as flooding and irrigation.

    Source : Republica