GoI has formed a review team to revise the guidelines on cross border trade of electricity

The memorandum of understanding for the 1125MW Kuri-I or Dorjilung project would be signed at an occasion when leaders of all three countries – Bhutan, Bangladesh and India would meet, the economic affairs minister Lekey Dorji said.

The three countries are yet to work on identifying such an occasion to sign the document for the first hydropower project that would be built through a trilateral cooperation.

During the meet-the-press session yesterday, Lyonpo Lekey Dorji said that talks are still under consideration by the three countries. “To this effect, the draft MoU that provides broad framework for trilateral cooperation stands shared among the three countries and still being reviewed by respective authorities in finalising it,” he said.

The draft MoU provides for establishing a steering committee to work out the implementation modalities for approval by the three Governments.

But because of the cross border trade of electricity (CBTE) that the Indian government had issued on December 5, the project’s future was questioned.

However, Lyonpo said that the government of India has formed a review team headed by the power secretary and that the team is currently working on revising the guidelines. This is to address the Bhutanese concern, he said.

Lyonpo said the ministry formally received correspondence from the government of India seeking views and comments from Bhutan on the CBTE through the Indian embassy.

“We have shared our concerns regarding the provisions of the guideline that would impact Bhutan, and considering that Bhutan is the only net exporter of electricity. The government of India has taken our concerns and views positively,” he said. “We have been reassured that the government of India would address our concerns, bearing in mind the special relations between two countries and the importance of hydropower cooperation.”

While the CBTE is to facilitate cross border trading of electricity between India and the neighboring countries by promoting transparency, consistency and predictability in regulatory approaches across jurisdictions and to minimise the perception of regulatory risks, some of the provisions have affected the development of some projects.

The concession agreement for Kholongchhu project is still on hold because of the issues with guidelines.

The guideline states that companies fully owned by the government of concerned countries, those that are funded by India and those having 51 percent equity investment of Indian public and private companies could export power to the Indian market after obtaining a one-time approval from the designated authority in India.

This is for projects that are built or being built on inter-governmental modality, where import or export of electricity is agreed between the GoI and the government.  The tariff for such transaction is also determined through government-to-government negotiations, and the guidelines states that appropriate authorities in India also must adhere to such transactions.

However, any other participating entity shall be eligible to participate in cross border trade of electricity after obtaining approval of the designated authority on a case-to-case basis. This is applicable for JVs and PPP projects because Indian Public sector companies are not likely to hold 51 percent of the shares.

However, Lyonpo Lekey Dorji said that the priority at the moment is to complete and commission the ongoing five hydropower projects.

Tshering Dorji