US$ 400 m India-SL energy transaction in the pipeline

By Cheranka Mendis in Kathmandu

A 400kv electricity integration project between Sri Lanka and India at an approximate investment of US$ 400 million is now at the final stage of discussion and is expected to commence work in the near future.

To be financed by the Asian Development Bank (ADB), the project will transmit electricity between Madurai and Anuradhapura and has been on the drawing board for a number of years.

Nepal Electricity Authority Director of Power Trade Department Sher Singh Bhat yesterday addressing the media at the Electricity Transmission Substation in Kathmandu stated that all designs were now in place and the only hold up was on getting the finance in place.

According to Bhat, the country will need 5,000MW more to meet the demands of energy by 2020. As at now the demand and supply for Sri Lanka is at a balanced state along with Maldives among the eight SAARC nations.

South Asia being the only region that does not work on a strategic regional integration model for energy in the world currently has two partnerships going – India and Bhutan on a synchronised interconnection of approximately 5.5 billion unit transaction and India and Nepal on an asynchronous 14 unit transaction of approximately 500 million.

Regional big brother India is often the key issue maker of the bottlenecks for the region. “India needs to be open for regional power trading. Market accessibility in the Indian market is also at a lowest on the subject matter, creating issues.”

With the majority of the countries located bordering India, for trade between countries, India’s cooperation is essential. “The ultimate market is India. If Indian market is not accessible, then trade does not happen successfully. The Indian Government should be more open-minded. Otherwise things will move at a much slower pace than expected.”

He noted that key issues of the region regarding energy is the dominance of single fuel generation, high dependence on traditional fuel, limited utilisation of power, lack of energy infrastructure and funds, absence of a competitive market and lack of harmonious framework within the countries.

“By integrating the systems, gains could be achieved on system operations, economic and financial and social front,” he said. “In particular gains could be realised on industrial productivity and revenue and GDP.”