THE SAARC ELECTRICITY GRID : A CRACKLING PROPOSAL WAITING FOR TAKEOFF – ANALYSIS


THE SAARC ELECTRICITY GRID : A CRACKLING PROPOSAL WAITING FOR TAKEOFF – ANALYSIS

saarc-logo1h1sbMONISH GULATI

The fifth meeting of the energy ministers of SAARC countries which was held after a gap of three years in New Delhi last month finalized the SAARC framework agreement on energy cooperation, pending since past four years.

The agreement will facilitate development of a South Asian Association for Regional Cooperation Market of Electricity (SAME) and now awaits ratification by respective governments. Concurrently the required financials and technical specifications regarding the grid will be worked out. At present within SAARC, India is importing around 1,500 Megawatt (MW) of power from Bhutan while exporting around 500 MW to Bangladesh and 150 MW to Nepal.

In October 2014, as a follow-up to Prime Minister Narendra Modi’s visit to Nepal in August, the two countries inked a Power Trade Agreement (PTA) that reportedly allows for the exchange of electricity and the opening up of new areas of cooperation in the hydropower sector. This article looks at some of the issues related to the SAARC electricity grid.

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SAME

The economic sustainability of the SAARC region demands energy security as it imports 30 percent of its energy requirements even when the household per capita consumption of electricity within SAARC is a mere 128 units (global average is 3,045 units). A common electricity grid to share power can be a part of the solution to the issue. During the 15th SAARC Summit held in Colombo Aug 2-3, 2008, the SAARC leaders had stressed the need to develop the regional hydroelectricity potential, grid connectivity and gas pipelines. Thereafter the Working Group on Energy in its meeting held at Thimphu, Bhutan, in 2009 rephrased this proposal as ‘Regional Inter-Governmental Framework Agreement’ and included other thermal energy sources within the ambit of energy sources.

Subsequently, India circulated a Draft Framework Agreement at a SAARC workshop held at Udaipur on Jan 19, 2011. The Working Group on Energy, in its seventh meeting held in Sri Lanka in March 2013, called upon the SAARC Secretariat to give the Draft Agreement a legal shape, which was then discussed during the third meeting of the Expert Group on Electricity held in New Delhi on Dec 19, 2013.

GFThe cross-border power exchange trade would offer, besides enhanced energy security, numerous benefits to the stakeholders such as enabling hydro-thermal mix in generation, lesser dependence on fossil fuels, reduction in carbon emissions and carbon intensity, more grid efficiency, optimization of electricity resources on a large scale and greater economic benefits to the SAARC nations. For the grid operation, each country while treating electricity as a tradable commodity in real time, would provide necessary infrastructure for seamless flow of electricity from one grid to another and lay down procedures for electricity exchange and legal basis for inter-governmental framework agreements.

India-Bangladesh

Bangladesh is considered as one of the most energy-deficient nations, with one of the lowest per capita electricity consumption rates in the world. The country is often able to produce only a part of its 11,500 MW generation capacity. In addition to the on-going export of 500MW of electricity from India to Bangladesh, the two countries are discussing import of additional 500MW of electricity by Bangladesh through the Bheramara-Baharampur grid. The progress of importing of 100MW of electricity from Palatana (Phase-1), ONGC’s biggest ever 726 MW capacity commercial power project at Palatana (60km south of Agartala) in southern Tripura, is also being reviewed. Discussions are also on to assess the progress of the second grid inter-connector between Bangladesh and India (Rangia/Rowta-Jamalpur-Barapukuria-North Region/West Region India) and import of electricity by Bangladesh from the northeastern states of India through this grid inter-connector.

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Nepal

Nepal is a country with an enormous hydropower potential of 43,000 MW; yet the installed power generation capacity is just 762 MW – insufficient to meet even domestic needs of Nepal, necessitating electricity import from India. Indo-Nepal, cooperation, at present, has been restricted to four micro projects of just 51 MW. However, at least three projects with a total capacity of 2,400 MW are being jointly developed. SJVN Limited, a joint venture of the Government of India and Himachal Pradesh, is developing the Arun-III 900 MW project in Nepal. The private sector GMR Energy and GMR Infra Limited together with Nepal Electricity Authority (NEA) and a third partner, had signed an agreement in 2008 to develop the 900 MW Upper Karnali hydropower project. The GMR Group has also acquired 82% stake in the 600 MW Marsyangdi 2 power project which is expected to be complete by 2021.

Bilateral exchange of power between India and Nepal started in 1971 with exchange of about 5 MW of power aimed to cater to the power needs of isolated local areas on both sides of the border. The power exchange takes place between NEA and Indian utilities namely Bihar State Electricity Board (BSEB), Uttar Pradesh Power Corporation Limited (UPPCL) and Uttaranchal Power Corporation Ltd. (UPCL).System requirements for additional supply of 75 MW in the short term have been reportedly finalized, system strengthening works for additional power supply of 125 MW to in the medium term have been firmed up and power sale agreement (PSA) between NEA and PTC (Power Trading Corporation) has been signed for import of 150 MW power from India for 25 years.

Bhutan

Hydropower is one of the main pillars of bilateral cooperation between India and Bhutan. The ongoing cooperation in the hydropower sector is covered under the 2006 agreement between the two countries and the protocol to the 2006 agreement signed in March, 2009. Under the protocol, India has agreed to develop 10,000 MW of hydropower in Bhutan for export of surplus power to India by 2020.The associated cross-border transmission systems for evacuation and transfer of power from these hydro-electric projects is operated in synchronism with the Indian grid. Power from these projects will be pooled at Alipurduar in India, for further transmission within India.

Three hydroelectric power projects totalling 1,416 MW (336 MW Chukha, the 60 MW Kurichu, and the 1,020 MW Tala) are already operational in Bhutan and supplying electricity to India. Three more HEPs totalling 2,940 MW, i.e., the 1,200 MW Punatsangchu-I, the 1,020 MW Punatsangchu-II and the 720 MW Mangdehchu, are under construction, and are scheduled to be commissioned by 2018.

Further, a framework inter-governmental agreement between Bhutan and India concerning development of joint venture HEPs through the public sector undertakings (PSUs) of the two governments was signed on April 22, 2014 in Thimphu for implementation of four HEPs totalling 2,120 MW, subject to completion of the due process of appraisal of their detailed project reports, including techno-economic viability, on a joint venture-model between PSUs of the two countries.

Sri Lanka

There is a proposal to link-up Anuradhapura in Sri Lanka with Madurai in India which is under study. Under this proposal, feasibility of establishing a high-voltage, direct current (HVDC) transmission system of 1,000 MW capacity using overhead lines and undersea cables is being evaluated.

Pakistan

Conspicuous by its absence at the fifth meeting of the energy ministers of SAARC countries was Pakistan. One of the likely reasons is that Pakistan feels its power requirements would be best met by CASA-1000 or the Central Asia South Asia Electricity Transmission and Trade Project.

A transit agreement for Central Asia South Asia Regional Electricity Market (CASAREM) 1000 project between the government of Pakistan and Afghanistan was signed on Oct 11, 2014 at a ceremony in Washington which was attended by World Bank President Jim Yong Kim and US Special Representative for Afghanistan and Pakistan Dan Feldman. The government of Pakistan and Afghanistan agreed to a 1.25 cent per kWh transit fee for supply of electricity to Pakistan through Afghan territory. The US welcomed the agreement as it marked an important step in bilateral relations between Afghanistan and Pakistan, and one of the first foreign policy achievements of the new national unity government in Kabul.

When completed, CASA-1000 will enable the Kyrgyz Republic and Tajikistan to sell 1,300 MW of excess summer-time hydropower to Afghanistan and Pakistan. Initially, the Kyrgyz Republic and Tajikistan will export 1,300MW, of which Pakistan will get 1,000MW of power while Afghanistan will receive the remaining 300MW.

The Casa-1000 electricity transmission project comprising of 477 km line from Kyrgyz Republic to Tajikistan and another 750 km line from Tajikistan to Pakistan, can reach up to 4,000MW. Discussions are also underway to lay another line from Tajikistan to Pakistan for more power supply. CASA-1000 like the SAME forms an essential element of a regional energy market that connects suppliers with customers as a means to promote economic growth.

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Sharing of Electricity

Nepal imported 1,072 million kilowatt-hours (kWh) of electricity from India in the last fiscal year, as against an export of only 3.32 million kWh to India. Nepal imports up to 200 MW of power from India during the dry season. Similarly Bhutan the major exporter of electricity, is looking to up its import of electricity from India during the winter months.

Hence electricity is a dynamic tradable commodity, with seasonal variations in trade flows within the region. SAME would serve as a vibrant mechanism of power sharing.

Yet, as the recent nationwide blackout in Bangladesh, country’s worst since 2007 which affected more than 150 million people for which Bangladesh initially blamed the grid connectivity with India, has indicated, trust amongst trading partners would be a fundamental requirement for an initiative such as SAME to realise its complete potential.

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Monish Gulati is a Senior Research Fellow with the Society for Policy Studies.
NOVEMBER 28, 2014

EURASIANREVIEW2

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This entry was posted in CHALLENGES, CURRENT ISSUES, ENERGY - NATURAL RESOURCES, FOREIGN RELATIONS & POLICY, REGIONAL COOPERATION, Regional Policy, SAARC. Bookmark the permalink.

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