A senior Indian official calls for shedding off old mindsets to realize and accelerate the trading of power between Nepal and India

By SANJAYA DHAKAL

Experts have debated the issue of power trading between Nepal and India for years. However, every time the issue has failed to take off despite the growing energy demand in India and high hydro potential in Nepal.

“The trade of power is possible if there is a change in mindset. Lets sit down together, understand each others’ viewpoint with appreciation and move ahead,” said Tantra Narayan Thakur, Chairman and Managing Director of PTC India Limited – formerly known as Power Trade Corporation.

Power grid : Short-supply

Thakur, who is in Kathmandu to hold talks with officials and experts, said that if the old mindset where politics dominates the economic issues and where trend of dragging misplaced issues of national interests to hold up any progress in power trading continues, there cannot be forward movement.

At a talk program organized by the Independent Power Producers’ Association of Nepal (IPPAN) on November 21, Thakur also clearly outlined physical deficiencies in materializing the power trading between Nepal and India. “The exchange is not taking place because we are not able to create interconnections between the two countries. And we could not create the interconnections because we must first need to assess what volume of power Nepal wishes to export to India and vice versa in the short, medium and long term. Once these assessments are made, we can go ahead,” he said.

At present, Nepal and India do exchange a very modest volume (just over 30 MW) of power through low and medium voltage transmission lines.

Indian government created PTC with the objective of “encouraging and catalyzing cross-border trade of power”, among others. India is already importing power from Bhutan. At present, Bhutan exports around 300 MW of power to India, which will soon increase to 1200 MW within 2006. “PTC not only trades power but also provides total solution to any interested developer,” Thakur said.

An Australian company called Snowy Mountain Engineering Corporation (SMEC) has signed Power Purchase Agreement (PPA) with PTC to develop the 700 MW-strong West Seti power, which is located in far western Nepal.

India currently has the installed capacity of 115,000 MW and it aims to add additional 100,000 MW between 2002 to 2012. It currently has peak demand shortage of 12% and energy shortage of over 7%. The Northern Region (which borders Nepal) is one of the most energy-starved regions in India. “In fact, selling power to northern region would get you better price because of the high demand there,” Thakur said.

Nepal currently has the installed capacity of 615 MW and only 40% of its population have access to electricity. It has the hydro potential of 40,000 MW. But till now, neither this potential has been harnessed to provide power to domestic population nor to export it to neighboring countries like India.

According to Dr. Sandip Shah, president of IPPAN, a recent study by IPPAN and Confederation of Indian Industries (CII) has come up with a number of key outlines that were hindering the power trading between the two countries. “Lack of political will; lack of infrastructure (high voltage transmission lines, access roads etc); lack of funds; lack of power market; lack of enabling legal/regulatory framework; and lack of attitude to treat power as a commodity by de-linking it with issues of security, water and geopolitics are the key factors hindering the efforts to trade power,” Dr. Shah said.

Former president of IPPAN Prabhakar SJB Rana, too, thinks that until and unless power is treated as just another trading commodity, there will be no progress.