Industry representatives FE spoke to said the 2016 guidelines allowed cross border trade only through the 'term ahead' market and did not allow trading in the more attractive 'day-ahead' market.
The government has removed restrictive riders which discouraged neighbouring countries to buy power from India’s spot power markets. Also, it barred plants with Coal India fuel linkage or captive mines from selling power outside India, a move that could help imported coal-based units in the private sector to have a larger pie of the markets in neighbouring countries.
Industry representatives FE spoke to said the 2016 guidelines allowed cross border trade only through the ‘term ahead’ market and did not allow trading in the more attractive ‘day-ahead’ market. The latest guidelines for cross-border electricity trade issued by the power ministry, reviewed by FE, have removed such conditions. However, foreign entities would be required to participate in power exchanges only through Indian power trading entities.
“The new guidelines are far more industry friendly and allow a wider set of generators, using commercial or renewable resource, to export more freely,” said Kameswara Rao, leader, power, PwC India. “It enables larger investments with combined power generation and evacuation facilities, which can lower costs for importing nations.” As reported by FE earlier, independent power producers had asked the power ministry to clarify if fuel sourced from Coal India linkage or captive mines can be used to export power. The clarity was sought after NTPC Vidyut Vyapar Nigam, a wholly owned arm of NTPC, had emerged as the successful bidder in the auction for power supply to Bangladesh.
The Association of Power Producers had said that exporting power using domestic coal would be “hampering domestic consumer interest”. NVVN had won contracts for supply of 300 MW power to Bangladesh till May 2033 from power stations of the DVC. Experts FE spoke to could not immediately clarify if the new guideline would prevent NVVN from supplying electricity to Bangladesh. Notwithstanding anything done for import/export of electricity with neighbouring country(ies) “shall be deemed to have been done or taken under provisions of the latest guidelines and shall continue to be in place till the expiry of the existing contracts,” the document stated.
As much as 7,203 million units (MU) were supplied to Nepal, Bangladesh and Myanmar in FY18. Bangladesh is the largest buyer of Indian power. Adani Power has signed a 25-year power purchase agreement with the Bangladesh Power Development Board to supply a net capacity of 1,496 MW to the neighbouring country from the firm’s upcoming 1,600 MW imported coal-based plant in Godda, Jharkhand. Sembcorp Gayatri Power, which runs a 1,320 MW imported coal-based power plant in Andhra Pradesh, had received letters of intent from the BPDB to supply 250 MW to the neighbouring nation for 15 years.