1. The 15th Regulators &
Policymakers Retreat 2014
Transnational Trade of Electricity
A N M Obaidullah
Former Research Fellow (Energy Trade)
SAARC Energy Centre
Goa, India
1st August, 2014
4. Regional Analysis
4
Strength
Sizable Population – still relatively young
and with a growing middle class;
Good track record in economic growth;
Collective growth;
Abundant natural resources, biodiversity,
wide range of productive capabilities in
agriculture, manufacturing & services;
Opportunity
Strategic location;
Strong historical & cultural links;
Potential to increase energy, water &
food production and to play pro-active
role in responding to supply crises;
Potential to develop regional economic
hub;
Weakness
Huge gap & pronounced disparities in
rule of law and governance;
Absence of an effective regional grid;
Large unskilled workforce;
Lack of harmonized policies;
Absence of regional strategy;
Threat
Lack of internal cohesion to formulate a
long-term regional development
strategy;
Unresolved intra and extra regional
territorial disputes and ethnic conflicts;
Inability to collectively manage climate
change, energy security & regional
disasters;
5. Estimated Primary Energy Demand of SMS (mtoe)
Cou
ntry
2014 2015 2016 2017 2018 2019 2020
Dmd Un
specifi
ed
Dmd Un
specifi
ed
Dmd Un
specifi
ed
Dmd Un
specif
ied
Dmd Un
specifi
ed
Dmd Un
specifi
ed
Dmd Un
specifie
d
Afg 0.81 0.54 0.85 0.59 0.91 0.65 0.96 0.72 1.02 0.80 1.08 0.88 1.14 1.00
Bgd 30.02 0.38 31.90 0.41 33.89 0.44 36.00 0.47 38.25 0.48 40.64 0.49 43.17 0.49
Bhu 0.50 0.35 0.53 0.37 0.57 0.40 0.60 0.42 0.64 0.45 0.68 0.48 0.73 0.51
Ind 539.44 35.01 563.18 36.40 587.9
8
37.84 613.90 39.35 640.99 40.92 669.29 42.55 698.87 44.25
Mal 0.64 0 0.67 0 0.71 0 0.76 0 0.80 0 0.84 0 0.91 0
Nep 12.12 9.55 12.45 9.70 12.79 9.83 13.14 9.94 13.50 10.04 13.87 10.10 14.24 10.14
Pak 66.51 2.90 68.99 2.72 71.55 2.49 74.22 2.19 76.98 1.83 79.84 1.39 82.81 0.87
Slk 12.86 3.68 13.29 3.25 13.72 2.82 14.17 2.39 14.63 1.93 15.11 1.43 15.60 0.90
5
8%
Source : IEPSA: VISION 2020, Obaid
8. Energy Trading of SMS
Country Coal Pipeline
Gas/LPG
Oil & Petroleum
Products
Electricity
Imp. Exp. Imp. Exp. Imp. Exp. Imp. Exp.
Afghanistan N N Y N Y N Y N
Bangladesh Y N Y N Y N Y N
Bhutan Y Y Y N Y N Y Y
India Y Y Y Y Y Y Y Y
Maldives N N Y N Y N N N
Nepal Y N Y N Y N Y Y
Pakistan Y N N N Y N Y N
Sri Lanka N N Y N Y N N N
8
9. Bilateral Electricity Interconnection in SMS
9
- Upto 150 MW
from India
- Over 16 links of
132/33/11KV
- Upto 1400 MW to
India
- 9 links of
400/220/321KV
- Upto 500 MW
from India
- 1 link of 400KV
11. Declaration of 15th SAARC Summit and …
● The Heads of State Governments of
SAARC in its 15th SAARC Summit held
in Colombo in 2008 recognized the
need to expeditiously develop regional
and sub-regional energy resources in
an integrated manner and the trade in
energy.
● The Summit also stressed the urgent
need to develop the regional hydro
potential, grid connectivity and gas
pipelines.
● SAARC Energy Ministers and Expert
Group on Energy also highlighted the
importance of regional electricity
trade.
12. Proposed SAARC Energy Ring
Legend
EAST : Myanmar; West : Iran; CA : Central Asia (Tajikistan, Kyrgyz Republic, Uzbekistan)
Smallest width represents : Electricity Transmission Interconnection
Medium width represents : Gas Pipeline Interconnection
Larger width represents : Oil Pipeline/mari-time Interconnection
Dotted line represents :Technology, Knowledge, Energy Service Sharing 12
18. Major Governing Frameworks of SMS
Country Governing Frameworks
Afghanistan ■ Electricity Law of Afghanistan ■ Electricity Sector Policy
Bangladesh ■ Electricity Act 1910 ■ Bangladesh Energy Regulatory Commission Act
■ National Energy Policy ■ Private Sector Generation Policy
■ Policy Guidelines for Private Participation in Power Sector
Bhutan ■ Electricity Act 2001 ■ Bhutan Hydropower Policy 2008
India ■ Electricity Act 2003 ■ Tariff Policy
■ National Electricity Policy
Maldives ■ Energy Policy of Maldives
Nepal ■ Electricity Act 1992 ■ Water Resources Act 1992
■ Hydro Power Development Policy 2001
■ Water Resources Strategy 2002
Pakistan ■ Electricity Act 1910 ■ Electric Power Act 1997
■ National Electric Power Regulatory Act ■ Policy for Generation Projects
Sri Lanka ■ Sri Lanka Electricity Act 2009
■ Public Utilities Commission of Sri Lanka Act 2009
■ National Energy Policy and Strategies of Sri Lanka
18
20. Licensing
● License is required for electricity generation, transmission
and trading in all the SMS, with some exceptions;
● Terms and conditions for getting license and rules and
regulations for licensees are different for different SMS;
● Harmonized rules and regulations need to be developed for
issuing license for generation, transmission and trading
business under SAARC electricity trade agreement;
20
21. Critical Issues for Harmonized Licensing
● Identification (if not) of nodal regulator or executing agency for issuing
license for regional electricity generation, transmission and trading for all
SMS;
● Regulatory authority/executing agency may, make regulations for giving
exemption to the utilities to be involved in SAARC regional electricity trade
business, if it complies with the technical standards relating to electricity
generation, transmission and trading business and fulfill the specified
conditions, which a licensee shall have to observe under the license, or the
Act, or the regulation of the respective SMS;
● All utilities of SMS, already having license from their respective authorities,
shall be deemed to be a generation/transmission/trading licensee for
SAARC regional electricity trade;
21
22. Transmission and Load Dispatch
● Implementation of electricity transmission and load dispatch
activities are different for different SMS;
● In some countries, these are handled by separate organizations
and in some countries these are handled by integrated
organization;
Country Transmission Load Dispatch
Afghanistan DABS DABS
Bangladesh PGCB NLDC
Bhutan BPC BPC
India PGCI NLDC, RLDC
Maldives STELCO STELCO
Nepal NEA NEA
Pakistan NTDC NTDC
Sri Lanka CEB CEB
Consumpti
on
Generation
22
23. Critical Issues for Harmonized Load Dispatch
● Identification of nodal agency for electricity transmission and load
dispatch;
● Separation of Load Dispatch and Transmission Business from Power Trade
Business;
● Management of Load dispatch for regional electricity trade by a
government company/organization;
● Open access to transmission services to all participating utilities in a non-discriminatory
and transparent manner;
● Views of government owned transmission utility of SMS for issuing license
to private transmission companies;
● Procedure and guidelines of SAARC Grid Code for electricity grid
interconnections and load dispatch;
23
24. Electricity Trade
Except India, none of the SMS have nodal agency for electricity trade.
Country Authority Utility
Afghanistan MEW/AERA DBAS
Bangladesh PD, MPEMR* BPDB*
Bhutan BEA BPC
India MEA/CERC PTC
Maldives - -
Nepal MWR NEA
Pakistan MWP WAPDA, NTDC
Sri Lanka - -
24
25. Critical Issues of Electricity Trade
Except India, none of the SMS have nodal agency for electricity trade. To
promote SAARC regional electricity trade, following issues may be considered:
● Each SMS would identify nodal agency for SAARC regional electricity
trade;
● SAARC Independent System Operator (SISO) may be established as a
common platform to provide real time information on supply, demand
and transmission constraints;
● Forum of SAARC Electricity Regulatory Commission of SMS would
promote development of SAARC regional electricity market including
trading;
● Forum of SAARC Electricity Regulatory Commission of SMS would regulate
electricity trading;
25
26. Electricity Tariff
● Tariff setting is the most difficult part of the SMS and is subsidized all over
the region;
● Cross-border tariff may be developed based on transparent process of
competitive bidding as per SAARC Electricity Trade Code;
● Transmission tariff/wheeling charge may be based on transmission capacity,
average marginal costs plus losses as per SAARC Electricity Trade Code;
26
27. Dispute Resolution
● Dispute resolution procedures and its authority are different for
different SMS;
● Except India, none of the SMS have separate authority for dispute
resolution in electricity sector. To have a common platform for dispute
resolution, following issues may be considered:
► The SMS may establish a SAARC Appellate Tribunal for Electricity to
hear appeals against the orders of the FSERC;
► The Appellate Tribunal shall be guided by the principles of natural
justice and the Appellate Tribunal shall have powers to regulate its
own procedure;
► The Appellate Tribunal may transmit any order made by it to a civil
court of SMS having local jurisdiction and such civil court shall
execute the order as if it were a decree made by that court.
27
28. Electricity Regulatory Commission
Structure of electricity regulatory commission is different
for different SMS.
Country Regulator Function
Afghanistan MEW/AERA Electricity
Bangladesh BERC Electricity and Gas
Bhutan BEA Electricity
India CERC/SERC Electricity
Maldives MEEW/MEA Electricity
Nepal MWR Electricity
Pakistan NEPRA Electricity
Sri Lanka PUC Electricity ++ ....
To regulate SAARC electricity trade,
a Forum of SAARC Electricity Regulatory Commission (FSERC)
may be established; 28
29. Key Functions of FSERC
● Issue formal license to the utilities subject to having license
from the respective SMS;
● Facilitate regional transmission and wheeling of electricity;
● Determine wheeling charges & trading margin;
● Regulate electricity sale, purchase and trading process;
● Approve SAARC Electricity Grid Code, Trade Code;
● Adjudicate upon the disputes and to refer for arbitration;
29
32. 32
Cost of Security
VS
Cost Advantage of Trade
33. Concluding Remarks ...
33
In the globalized world, regional cooperation
is no longer a dream but reality.
In spite of being one of the richest regions
both in terms of natural and human
resources, South Asia has the highest number
of poor, illiterate, malnourished and
unemployed people in the world.
Comparative advantages of regional
resources should be utilized in a win-win
manner where regional cooperation can
flourish.
Effective and modern electricity market will promote energy
security & economic stability to the benefit of all SAARC countries.
Teeming millions in South Asia are looking for their better future
through regional cooperation, particularly in Electricity.