Indian power exchanges expect volume to grow due to SAARC energy co-operation deal

Agreement facilitates buying and selling entities to engage in cross- border electricity trading

India’s two power exchanges — Indian Energy Exchange (IEX) and Power Exchange India Ltd (PXIL) —expect that the energy deal signed by the South Asian Association for Regional Cooperation (Saarc) on energy cooperation would be a big boost to the sector.

These exchanges engaged in day-ahead transactions hope that India will get more power, especially from hydro power-rich Nepal and Bhutan. On the other hand, Pakistan can expect cheaper power from India through exchanges as power is generated in the northwestern neighbouring country on costly fuel like oil and Low Sulphur Heavy Stock (LSHS). According to the Saarc Framework Agreement for Energy Cooperation, the members will — for the purpose of electricity trade — enable non-discriminatory access to the their respective transmission grid as per the applicable laws, rules, regulations and  inter-governmental bilateral trade agreements. The member states will facilitate buying and selling entities to engage in crossborder electricity trading.

IEX director Rajesh Mediratta told the Business Standard, “IEX aspires to be a regional exchange facilitating transactions across the Saarc countries. Inter connection with Bangladesh and Bhutan have already been established and the same with Nepal it is expected to be in place in a year. We see transactions happening through the exchange.”

PXIL said deal is a win-win situation for all eight countries. “PXIL welcomes the energy agreement which is a forward-looking initiative. Transactions in power exchanges are done in the most transparent, neutral and efficient manner. PXIL is prepared to facilitate such trading,” said PXIL managing director and CEO M G Raoot.