It is a special privilege for me to be here in Kathmandu this morning for the third such annual power summit. At least, we can derive some satisfaction from attending summits even if we ordinary mortals can’t climb and scale them! We in India have watched with genuine admiration how the people of Nepal have brought about a profound political transformation and given themselves a whole new future. This momentous change provides new opportunities of bringing our two countries even closer together even as Nepal seeks to gain advantage for itself from economic partnerships with other countries.
Cooperation in the management of water resources is one such opportunity that has, in fact, been long talked about. The recent Kosi catastrophe in north Bihar has once again underscored how critical this cooperation is to us in India. Flood control apart, the Honourable Prime Minister of Nepal, in his recent visit to India, has unveiled his vision of Nepal developing 10,000 Mw of its hydel power potential over the next ten years, up from the existing installed capacity of less than 600 Mw. Demand for power in Nepal itself is expected to touch 3,000 Mw by the year 2025. Thus, there will be need for new markets to be developed for the export of the power generated in Nepal, and clearly India is one such market.
Export of power will undoubtedly earn for Nepal substantial revenues. Nepal’s electricity potential could also be used to attract Indian investments in electricity-intensive industries, exports of which to India could help bridge the trade deficit that Nepal has been concerned in relation to India—a legitimate concern, I might add, since we too are worried about our growing trade deficit with China. I would also like to state straightaway that we recognise Nepal’s sensitivities and therefore fully appreciate that our interactions have to be at a pace and in a manner with which Nepal is comfortable.
In the past, the bilateral agenda in the power sector has focussed on mega-projects like Karnali, Pancheshwar and Sapta Koshi. It is not surprising that we have not been able to make much headway. But of late, the environment appears to have changed. Four relatively smaller hydel projects involving Indian companies are on the anvil. The GMR Group is developing the 302 Mw Upper Karnali and the 250 Mw Upper Myarsangdi projects. The Sutlej Jal Vidyut Nigam has won the contract for the 402 Mw Arun-III project while IL&FS and Power Trading Corporation are participating in the 750 Mw West Seti project. Indeed, the West Seti project is a most interesting example of globalisation — a project in Nepal being developed by an Australian company with a Chinese EPC contractor for sale of power to India. These four projects make up a total of around 1,700 Mw which is a substantial quantum to give concrete shape to the perspective put forward by the Prime Minister of Nepal.
You are all aware of how India is helping develop the hydel resources of Bhutan. 1,400 Mw of generating capacity has already been established and another 1,100 Mw or thereabouts is under implementation. Last year (that is, March 31, 2007 to April 1, 2008), India purchased about 5.2 billion kwhs from Bhutan which was just about 0.7 per cent of our own generation but that earned for Bhutan about $230 million. Bhutan and India are now working together to develop 10,000 Mw of capacity in Bhutan by 2020 for sale of electricity to India.
In addition, India has just signed an MoU with Myanmar for developing hydel projects in the Chindwin Basin, of which the most immediate is the 1,200 Mw Tamanthi project. Just to complete this regional round-up, India is working with Sri Lanka on grid interconnection and to set up a 500 Mw thermal plant in Trincomallee. Technical studies were also done last year on the interconnection of our respective grids with a view to transfer around 9 billion kwhs per year from India to Bangladesh.
This is, of course, in addition to the hydel capacity that is being added within India itself particularly with a view to meet the growing peaking shortages and also to improve the hydel:thermal mix from the present undesirable 25:75 to a more acceptable 40:60 proportion over the next two-and-a-half decades. Presently, India has about 35,000 Mw of installed hydel power capacity and our long-term plan is to harness another 50,000 Mw by 2025, of which 50 per cent will be in Arunachal Pradesh alone. Other states that will see substantial new hydel projects are Sikkim, Himachal Pradesh, Uttarakhand and Jammu and Kashmir.
Thus, it is clear from a capacity and even energy point of view that imports from neighbouring countries will form a small proportion of capacity addition and energy generation from sources within India itself. For us, electricity imports (and exports) are an important instrument of regional integration, an essential adjunct to trade in goods, services and investment. And, as I said earlier, trade in electricity will bring considerable financial benefits to our neighbours which is in our long-term strategic interest as well. It is this that I would like my friends here to keep in mind. Contrary to what is feared, electricity sales to India by Nepal are a win-win proposition for both countries.
(Excerpts from the speech of Jairam Ramesh, minister of state for power and commerce, at Power Summit 2008, organised by the Independent Power Producers’ Association of Nepal, Nepal-India Chamber of Commerce and Industry and PTC India in Kathmandu, on September 23, 2008)
