India needs to reconsider the regulation as per the Power Trade Agreement signed between Nepal and India in 2014
Nepal has high hopes of exporting surplus electricity to its big southern neighbor, India. But these appear to have been dashed after India introduced a tough regulation on cross-border electricity trade. Nepal had signed the Power Trade Agreement (PTA) with India in 2014 but this regulation would make it very difficult for Nepal to export electricity to India. The regulation has strict requirements for the private sectors intent on exporting electricity to India. Nepal’s Ministry of Energy has expressed its reservations to its counterpart in India through diplomatic channels. The Guidelines on Cross Border Trade of Electricity issued by India’s Ministry of Power in December last year do not seem to keep up with the spirit of the PTA reached between the two friendly countries. The PTA provides for an easy market to export electricity to India and other countries like Bangladesh too.
According to the regulation, only the companies that are owned by the governments of the respective countries and Indian public and private companies with 51 per cent equity investments would be permitted to export electricity to the Indian market. This would be done after acquiring approval of the designated Indian authority. The regulation meanwhile provides for electricity generators not meeting the criteria set to participate in the trade of electricity that would also be permitted by looking at the various cases one by one. The regulation came into force in December last year. The regulation is seen as providing preferential treatment to the projects which have Indian investment and also government investment in the respective countries. In effect, it also rules out Indian import of electricity generated in Nepal by third countries or companies of third countries. At present the Indian government has issued a uniform regulation for Nepal, Bangladesh, Bhutan and Myanmar. As such, it would help if these neighbouring countries worked together so that they can have a more congenial access to the Indian market with benefits to all the concerned countries.
Nepal, which has rather limited items of exports, has perennially been suffering from trade deficits with India, which is Nepal’s single largest trading partner. Exporting surplus energy to India could go some way in helping Nepal reduce the trade deficit with India but Nepal needs to have hassle free access to the Indian markets. At present, Nepal is importing electricity from India to meet its requirement to deal with the chronic power outage. It appears that the only way for Nepal to deal with the disturbing trade deficit would be to export electricity to India. The private electricity developers should be allowed an easy access to the Indian market under the PTA. It is expected that the energy needs of India will soar in the coming years to keep up with the pace of development. As per the regulation, only hydel projects which are able to generate 50 megawatts and more would be provided with the grid connectivity in order to export electricity to India. India’s Central Electricity Regulatory Commission for Nepal, Bangladesh, Bhutan and Myanmar is seeking as much as INR. 10 million per megawatt of electricity as a bank guarantee so as to enable them to use the Indian transmission network. India needs to reconsider the regulation in as per the PTA signed in 2014.
From The Himalayan Times