Pros and cons of regional electricity grid

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    south-asiaSigning of an agreement at the 18th Saarc Summit to establish a regional electricity grid and meaningful smiles and shaking of hands between Prime Minister Nawaz Sharif and Prime Minister Modi are the two high points at the summit and perhaps the only significant achievements of the organisation, which is struggling to find ground over the last ten years.

    In the region Nepal and Bhutan have massive hydroelectric power potential which is much in surplus to their need. India and Pakistan are deficient in power and they both would benefit from this environment-friendly and cost effective source of power. India’s installed power grew from 120,000 MW in 2006 to around 200,000 MW in 2014, which means a yearly increase of 10,000 MW or an average yearly increase of 8.3% matching their GDP growth. Today India’s energy mix is 65% thermal, of which 50% is coal-based, whereas 22% is hydro, 3% nuclear and 10% renewable. Their present energy strategy is to expand in hydro, nuclear and renewable and move out of thermal/coal-based power plants.

    Pakistan’s installed power growth in the last few years has been insignificant and energy mix much flawed. Pakistan has a hydro power generation potential of at least 50,000 MW but only 8000 MW has been taped so far. The energy mix is 31% hydro, whereas 65% is substantially oil-based thermal power.

    For Pakistan regional electricity grid is of significant value. It can tap hydropower availability from this source while it continues to build its own hydropower plants as a priority. Presently, we have around 30,000 MW of hydro power projects in different stages of progress. With our own hydro power and that taped from the regional grid we are all set for the next ten years and more to provide clean and affordable power to the people of Pakistan.

    Additionally, with the implementation of Central Asia South Asia Electricity Transmission and Trade Project (CASA-1000) Pakistan can also become a seller in the market once the massive power surpluses of central Asia is available to Pakistan. CASA-1000 is to create the conditions for sustainable electricity trade between the Central Asian countries of Tajikistan and Kyrgyz Republic and the south Asian countries of Afghanistan and Pakistan. Kyrgyz and Tajikistan both have abundant clean hydropower resources with surplus power. This US $1 billion project will be largely funded by the World Bank and was approved by World Bank and IMF in March 2014. In October 2014, IDB has agreed to finance the gap left by the World Bank.

    Efficient transmission of power over long distances is no longer an issue. The 1200-km CASA-1000 transmission line to carry over 1000 MW of electricity is based on high voltage direct current technology (HVDC) with power transmitted at 1000 kv. Same technology will be applicable at Saarc Regional Grid. But, all this good and game changer for the people of the region is not an easy one. For over two years, a proposal of 500 MW power transmission line between Lahore and Amritsar is awaiting bilateral approval. Its fate is still unclear.

    The regional grid agreement was signed off last week after much time lost and cumbersome trade offs between Pakistan and India. More of feet dragging is expected. The access of the regional grid to Pakistan is through India. India reportedly pulled out of India-Pakistan-Iran gas pipeline on the pretext that it is not comfortable with the line passing through Pakistan. How comfortable will Pakistan be with the regional grid passing through India is a question mark.

    It is indeed a great challenge to get the regional grid project on the planning board soon and its financing, route alignment, tariffs and similar issues sorted out. Whereas, for CASA-1000 it looks more promising with financing all tied up and backing of the WB, the IMF and IDB assured for its completion by June 2020. The real good to the people of our region will come with a deregulated and open electricity market where the market dynamics of supply and demand determine the price and quality of electricity to the consumers. Statistics prove that in the market-driven utility system prices came down and quality improved.

    The case of European Union (EU) is a good example to follow. In 1999 under the directive of EU the European electricity market started to open up. This announced the end of state monopolies in this area. The EU directives were based on three main objectives: (1) the opening to competition in three steps with 26.5 % in 99 of each national market, 30% in 2000 and so on, (2) the possibility for anyone to build a power plant and to have access to the transmission and distribution networks, (3) the neutral and independent electric network. The prices of electricity came down and quality improved. And now after 15 years of successful operation the network is moving towards investment in new technology and more of renewable energy on the EU grid resulting in more affordable and environment-friendly power to the consumers. There are six major groups of interconnections in Europe supplementing each other.

    The people of our region have suffered too much and too long. Pakistan, India and Bangladesh put together have the world’s largest population below poverty line and struggling to survive at below 1 US $ a day with no access to clean water, education and health care. Not much has changed for this majority in the last six decades. Many opportunities to improve their lot got wasted due to lack of statesmanship and vision of the political leaders of the region. The Saarc regional electric grid is another great opportunity for the region and must be implemented on fast track in the best interest of the people of the region.

    For Pakistan, the availability of more of hydro power from Saarc grid and CASA-1000 and the exploitation of its own hydropower potential all put gather is a great opportunity and promises a great future for Pakistan. This must not be allowed to slip out of our hands

    (The writer is Chairman Avant Ventures and former President OICCI & ABB-Asea Brown Boverie)

    Source :  Business Recorder, 2014