Jul. 29, 2010 (The Hindu Business Line) --
Our Bureau
New Delhi, July 29
The Commerce Ministry has, on Wednesday, called for greater trade and investment in electricity in South Asia.
Addressing a seminar organised by the Asian Development Bank and the Delhi-based think-tank ICRIER, Mr Arvind Mehta, Joint Secretary, Ministry of Commerce, said there is more potential for trade in energy, especially in hydropower, than in goods.
Mr Mehta said for instance, Nepal has an installed hydropower capacity of just 636 MW against the potential of anywhere between 43,000 MW and 200,000 MW, he said, adding that even India has a hydropower capacity of only 36,900 MW against the potential of 125,000 MW.
“There is a lot of ignorance about the hydropower sector. The general perception is that it has environmental effects. But run-of-the-river projects don't have any environmental issues as shown by Satluj Jal Vidyut Nigam (SJVN) and Nathpa Jhakri hydroelectric power plant. Besides, they have very good return on investments. But investors have not seriously looked at this so far,” he said.
If run-of-the-river projects were undertaken effectively in the Himalayan region, all the States there could have benefited, he said, adding that South Asian countries such as Nepal, Bhutan, Pakistan and India have great hydroelectric potential.
Untapped potential
However, Mr Mehta said there are hardly any academic papers or literature about the potential of hydropower trading in South Asia. “Not utilising the region's hydroelectric potential is like watching oil flowing into the sea and not doing anything about it,” he said.
Pointing to ADB's work in this field in Himachal Pradesh, Mr Mehta said it is time to get more help from multilateral agencies and also attract huge foreign direct investments to the sector by organising road-shows across India and the region.
Mr Mehta said trade in goods in South Asia was not picking up due to the general lack of purchasing power and the near absence of comparative advantages.
Last month, the Commerce Ministry had said that it is firming up plans for an over $1 billion sovereign-backed fund to boost trade and investment by domestic power utilities in South Asia.
It had asked the Export-Import Bank of India and the Export Credit Guarantee Corporation of India to work out the contours of the fund. The fund is aimed at developing a South Asian regional energy grid, with focus on renewable sectors such as hydro, solar and wind.
Projects planned
India has plans to set up a pan-South Asia electricity ring that envisages interconnection with Bhutan entailing possible investment of $850 million (3,000 MW), a 400-kv transmission line at $50 million with Nepal, a 1,000-MW HVDC link with Sri Lanka costing $415 million and a 1,000-MW HVDC back-to-back link with Bangladesh at $220 million.
In Bhutan, there are plans to develop two more projects, besides sprucing up the existing power link. India had recently inked a pact to jointly set up a 1,320-MW coal-fired power project in Bangladesh and build a cross-border transmission link.
Plans are already under way for setting up an undersea link with Sri Lanka. In Nepal, GMR and SJVN are setting up hydroelectric stations, while power trader PTC (NASDAQ:PMTC) India Ltd has signed pacts to wheel power from two other projects.
