A change in India’s power export rules

Source: This post is based on the article “A change in India’s power export rules”, published in “The Hindu” on 20^th August 2024.

UPSC Syllabus: GS paper 3 – Indian Economy – Infrastructure and Energy

Context: India’s power export rules have been amended. It will resolve the challenges faced by Indian power exporters supplying electricity to neighbouring countries.

This amendment allows Indian power exporters to reroute their output to Indian grids if there is a delay in payments from partner countries.

What is Godda project?

The Godda project is India’s first transnational power project that supplies all the power generated to another nation, specifically Bangladesh.

This Power Purchase Agreement (PPA) was signed with the Bangladesh Power Development Board (BPDB) in November 2017 for a duration of 25 years.

The power generated is from an ultra-supercritical thermal power plant located in Godda, Jharkhand, with a capacity of 1,496 MW.

The project aims to provide a stable power supply to Bangladesh, replacing more expensive liquid fuel-based power, thereby reducing the overall cost of power in Bangladesh.

What are the issues highlighted associated with the project?

The project has faced criticism due to the high cost of coal imported from Australia to India for the power generation. It is making the power more expensive in Bangladesh.

Additionally, the high capacity and maintenance charges regardless of actual electricity generation have been criticized as being too high by industry standards.

Underutilization of Domestic Capacity: Despite progress in expanding electricity access, Bangladesh faces fuel and gas supply constraints that lead to underutilization of its power plants.

What is the significance of amendment?

1) The new regulatory change grants Indian power exporters more flexibility by allowing them to reroute power to domestic grids if payment issues arise with partner countries.

2) Furthermore, they have been granted access to the domestic market.

3) This reduces dependency on external markets and mitigates risks associated with economic and political instability in neighboring countries.