India clarifies on guidelines on cross border trade of energy

Kathmandu, December 12

The government of India has clarified on the provisions of the ‘Guidelines on Cross Border Trade of Electricity’ that was launched last week by the Ministry of Power, India in a bid to regularise electricity trade with its neighbours Nepal, Bangladesh, Bhutan and Myanmar.

Issuing a statement today, the Embassy of India (EoI) in Kathmandu has said that though the guidelines have provisioned preferential treatment for the entities (generation projects, power trading companies) located outside India that have majority equity investment of Indian public and private sector to export power to India, it has not barred other companies from participating in the trade of electricity.

The Ministry of Power has developed the consolidated guidelines for cross border electricity with aforementioned countries, reportedly, to promote the transparency in cross border trade of electricity. “India has simplified the process for all the government-owned companies of the neighbouring countries under ease of doing business,” the statement reads.

The guidelines issued on December 5 has said the companies fully owned by the government of concerned countries and those having 51 per cent equity investment of Indian public and private companies can export power to the Indian market after obtaining one-time approval from the designated authority in India.

While the guidelines simplified electricity export to India from such entities, other independent power producers and potential foreign investors (except Indian) eyeing Indian market to export electricity will be dealt with on case-by-case basis as per the provision of the guidelines, which disappointed independent power producers and potential foreign investors in Nepal.

The statement issued today from the EoI, Kathmandu has tried to clarify that other companies can also participate in the trade of electricity to the Indian market. “India has taken lead in promoting trade of electricity among neighbouring countries through Indian Power Exchanges. The modalities and products of such power trade through the exchanges will be as per the extant power market regulations,” reads the statement.

The guidelines also facilitate determination of tariff for such trade of electricity. Stating the guidelines has given broad contours on cross border trade of electricity, the statement further says that the detailed process and procedure will be made more transparency through the regulations, which will be issued shortly by Central Electricity Regulatory Commission (CERC).

With the issuance of this guidelines, the government of India has expected that the hydropower potential of the neighbouring countries, which has not been harnessed over the years, will be developed on fast track as the stakeholders including financiers would have transparency in the utilisation of such power projects, according to the statement.

Stating that the guidelines are based broadly on the experience gained over the years, the statement further says, “Presently, the trade of electricity has increased many folds with our neighbouring countries. Around two billion units of electricity have been supplied to Nepal during last two years. Many more cross border inter-connections have been planned and would be implemented in shortest possible time with a view to enhancing power trade.”