India, Bangladesh to ready contours of SAARC electricity market

| Updated on: Jan 26, 2011
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India and Bangladesh have been entrusted with the task of giving a final shape to the proposed South-Asia electricity grid.

Participation in the SAARC Market for Electricity (SAME) — envisaging electricity trading across member states — is likely to happen on the electricity market windows that are already in place in India. The windows, including the two operational power exchanges here, as well as through short-term and long-term contracts, can be expanded to allow participants from the other South Asian countries to come on board for cross-country exchanges, according to the action plan decided on by a SAARC Expert Group on Electricity meeting last week.

The participation in the market, as is being envisaged, will be on a voluntary basis, unlike compulsory pooling of power as required in similar platforms operating in other parts of the world.

Lead role for India

According to officials involved in the exercise, India has a lead role in preparing the concept papers on developing the framework for planning cross-border transmission links, including the methodology for implementing the cross-border transmission infrastructure. Also, India has been asked to ready a paper on the operation of stable and secure SAARC electricity grids, including coordinated scheduling and settlements proceeds for long-term and short-term cross-border electricity trade. Bangladesh is to prepare a note on the structures and the institutional mechanisms needed for regulatory issues on cross-border electricity trade. The papers are to be readied by July 2011.

While a transmission link with Bhutan is already in place, there are plans to spruce up the existing line to enable up to 5,000 MW of electricity imports into India by 2020. In Nepal, Indian firms including the GMR Group and State-owned Satluj Jal Vidyut Nigam are setting up hydroelectric stations, while power trading major PTC India Ltd has signed pacts to wheel power from two other projects.

With Sri Lanka, plans are already under way for setting up a $450-million undersea power transmission link. The 200-km submarine cable is likely to be set up with a capacity to wheel around 1,000 MW of electricity and State-owned Power Grid Corporation is slated to execute the project. In Bangladesh, state-owned power major NTPC Ltd has signed a preliminary pact to set up a 1,320 MW coal-based power plant subject to techno-economic viability, while a cross-border transmission link is also in the works.

The ADB had earlier sponsored a SAARC Regional Energy Trade Study, which recommended an Energy Charter Treaty. Under this, SAARC members were required to open up their energy sectors for foreign investments and also comply with the WTO framework with regard to the duty structure on power equipment. These conditions were not acceptable to members, which led to the proposal getting a quiet burial.

Published on January 27, 2011

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