Power play in South Asia to energise India's hold among Saarc countries

Written by Noor Mohammad | Noor Mohammad | Huma Siddiqui | New Delhi | Updated: Oct 9 2013, 17:10pm hrs
After finding favour with energy resource-rich countries such as Nepal and Bhutan, India's proposal for a common power market in South Asia is now gaining traction with power-deficit countries of the region like Bangladesh, Sri Lanka and Pakistan.

While Indian power companies have a strong footprint in the hydropower sectors of Bhutan and Nepal, estimated to have generation potential of 30,000 mw 40,000 mw respectively, they have now found toeholds in Sri Lanka and Bangladesh. Pakistan, too, has solicited Indian investment in its power sector.

On Monday, the NTPC signed agreements with Sri Lankan utility Ceylon Electricity Board to build a 500-mw coal-fired power plant in Tricomalee.

Foreign minister Salman Khurshid was present on this occasion to supervise the signing ceremony from the Indian side. A smooth take-off of NTPC project is expected to give an impetus to Powergrid's plan to lay an under-sea power transmission line between India and Sri Lanka, according to industry experts.

The Indian PSU is already in the process of setting up an even larger power plant of 1,320 mw capacity in Khulna, Bangladesh. It has just started long-term power supply to Bangladesh from its generating stations in India through a specially built 500 kv link transmission line between the two countries.

Meanwhile, NTPC sources confirmed that the PSU has been asked by the MEA to examine the possibility of setting up a power plant in Pakistan.

The proposal remains very much on the table, though it would not be feasible to implement unless Indo-Pak hostilities thaw, a senior NTPC official said.

Rajesh K Mediratta, director, business development, Indian Energy Exchange, India's leading power exchange, is quite bullish on the prospect of cross-border power trading between Saarc countries.

Once transmission connectivity is in place, power trading between Saarc countries should be undertaken through Exchanges, Mediratta said.

A power grid linking South Asian Association for Regional Cooperation (Saarc) countries including India, Bangladesh, Nepal, Pakistan and Sri Lanka has the potential to create 1,00,000 MW capacity in the region and help bridge the energy deficit faced by South Asian nations.

According to senior MEA officials, Geopolity works in favour of cross-border power trading between Saarc nations. As per an estimate, a Saarc power grid linking Bangladesh, India, Nepal, Pakistan and Sri Lanka has the potential to install at least 1,00,000 mw capacity in the region for cross-border power trading.

Saarc power grid, would also help in improving overall relations between member countries. Other SAARC countries are Bhutan, Nepal and Afghanistan. In India, despite having an installed capacity of over 172,000 MW, the shortages have been in the range of 10% during peak hours.

However, long-standing political tension between India and Pakistan over Kashmir, war-like conditions in Afghanistan, internal armed conflicts in Sri Lanka and Nepal and the political turmoil in Bangladesh are examples of how political factors inhibit the development of regional cooperation and trade.

According to a recent PWC study, "There exists a severe lack of trust among Saarc member states, which can be perceived in almost all aspects of regional negotiations at the Saarc level.

The Saarc Energy working Group, which in theory serves as a platform to facilitate regional cooperation, has shown rather slow progress over the years. As per a high-level study on regional energy trade carried out by ADB in 2008, energy trade has not been high on Saarc's list of priorities."

"With faster economic growth, the demand for energy among the Saarc countries is also envisaged to shoot up. The increased demand is likely to be distributed across various sources of energy such as crude oil/petroleum products, coal and natural gas, "the study added.