An electricity trade deal between India and an energy-starved Pakistan appears to be far from reality as the former''s pre-condition of establishing High Voltage Direct Current (HVDC) system at the border requires three years and a $100 million investment, well informed sources told Business Recorder.
Prime Minister Nawaz Sharif has approved, in principle, a summary of Water and Power Ministry on initiation of talks with India on the installation of a transmission line to connect with India. India has expressed willingness to export up to 1000 MW electricity to Pakistan but pre-conditions by New Delhi can lead to cause at least a three-year delay in completion of project.
An Indian delegation led by Joint Secretary Rita Acharya visited Pakistan in June wherein different options on electricity trade came under discussion. The officials of both countries discussed broad contours of the proposed arrangement and explored proposals which can be used to hook-up to the grid in Pakistan through HVDC line.
"If we set up HVDC system on the demand of India, it will take three years besides Pakistan will be required to invest $100 million. We hope by that time Pakistan will be able to generate sufficient power domestically," the sources continued. According to sources, the Pakistani government has also offered to buy Indian electricity on an "industrial island" to be set up near Lahore so that they can sell it to one destination only. This proposal, however, has not attracted a positive response from India. "We need quick solutions not in years. Import of electricity from India in years'' is not feasible," said an official on condition of anonymity.
The sources said that India maintained that Pakistan should go for spot buying from the electricity market, "which is a good option but experts have to work on its economic and technical aspects." Indian Energy Exchange (IEX) offers a national-level platform for trading electricity in India leading to a vibrant power market. IEX offers a broader choice to generators and distribution licencees at the national-level so that they can trade in smaller quantities and smaller number of hours without additional overheads.
IEX stands in as the counter-party for all trades so participants need not be concerned about the risk-profile of other party. Minimal transaction overheads/ charges: All charges are displayed on the IEX trading terminals so there is no room for negotiation. The cost of transactions through IEX is much less than for any other mode of transaction. IEX enables participants to precisely adjust their portfolio as a function of consumption or generation. Participants, especially distribution licensees, are enabled to precisely manage their consumption and generation patterns.
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