Electricity trading prospects

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    Energy interdependence is not a new phenomenon. However, in South Asia it is still in nascent stages. A recent working paper by Asian Development Bank (ADB) presents the study on the economic rationale of electricity trading among South Asian countries, namely: Afghanistan, Bangladesh, Bhutan, India, Nepal, Pakistan and Sri Lanka.

    First thing first, the power-starved South Asia can seriously improve its power supply by better cooperation between countries in the region over electricity buying and selling. Electricity trade is a practice in many developed and emerging economies, and this region should be no exception in adopting efficient market practices; such electricity trading would allow utilities in the region to optimally use the resources at hand to satisfy demand across South Asia.

    However, lack of amicable bilateral relations between countries, especially the arch rivalry between Pakistan and India, stands in the way of any sort of regional cooperation. Along with intra-regional electricity trade, ADB’s working paper also sheds light on the benefit that would accrue to the region through cooperation with Central Asian region bordering Afghanistan over energy.

    Precisely, the study examines the costs and benefits of six ongoing or planned cross-border electricity transmission interconnections. Two of these that are of prime importance to Pakistan are: India-Pakistan 220 kilovolt and 400 kilovolt transmission link, and India-Pakistan 400 kilovolt transmission link coupled with CASA 1000 transmission link.

    Acute power shortage in Pakistan, along with shortage of capacity, high cost of fuel for power generation, inefficiencies and poor governance has landed the country’s power sector an utter mess. At such point in time, diversification of power supply will help the country alleviate sector related challenges.

    The first case presented in the study consists of short term and medium term power transfer between India and Pakistan. The 250MW with India is a short term trading opportunity with a 220 KV AC interconnection through construction of a short 45 km line will have annualised cost of transmission of $6 million along with annual benefit of $335 million including $122 million in fuel cost savings. The extension of this transfer project is the 400 KV transfer of 500 MW with annualised cost of $18 million and annualised benefit of $491 million including $163 million in fuel savings.

    The second source of interdependence over electricity for Pakistan is its linkage with the Central Asia; the much talked about CASA 1000 is mega power transmission project that will interconnect Tajikistan and Kyrgyz Republic to Afghanistan and Pakistan to transfer hydroelectric surplus of three to six terawatt hours annually from Kyrgyz Republic and Tajikistan to South Asia. As per the study, this project has an annualised cost of $229-243 million with annualised benefit of $3861-4127 million.

    Amid the stalled privatisation process and transparency issues in Pakistan, the Ministry of Water and Power is said to have prepared the Electricity Act 2015, according to which private electricity market will be developed for trading, generation and distribution of electricity across the country.

    Ideally, this Act should help the country to become fully equipped to be part of the market-driven cross-border power trading together with a regulatory framework to improve power supply in the region. However, the situation is far from satisfactory, and requires much work.

    ===========================Installed
    Country Capacity Generation Demand(MW) (GWh) (GWh)
    =================================================
    Afghanistan 620 880 3,890
    Bangladesh 9,821 42,195 36,233
    Bhutan 1,510 6,750 1,640
    India 237,742 957,734 802,567
    Maldives 141 290 270
    Nepal 787 3,558 3,448
    Pakistan 22,860 92,860 76,860
    Sri Lanka 3,362 11,962 10,632
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    Source : BR