COMMENTARY
INTERVIEWS
SPECIALS
CHAT
ARCHIVES

Moves afoot to clinch power deal with Pakistan

George Iype in New Delhi

In an effort to step up his peace and diplomatic initiative with Pakistan, Prime Minister Atal Bihari Vajpayee is sending a team of top officials to Islamabad to negotiate and finalise a power purchase deal.

Officials at the Prime Minister's Office disclosed that a high-level team led by Special Secretary Pradip Baijal and top Power Grid Corporation officials will negotiate a historic electricity sharing agreement with Pakistani officials soon.

Pakistan Prime Minister Nawaz Sharief had offered to sell nearly 2,000 MW of electricity to the power-starved north Indian states in September when he met Vajpayee in New York.

Following this, Pakistan sent a detailed documentation about the deal to the Indian government. Vajpayee last week set up a high-level committee to finalise the power purchase deal with Pakistan.

Sources said the prime minister wants to speed up the power agreement with Pakistan as early as possible as he believes it can considerably rev up the ongoing foreign secretary-level talks between the countries. "If the strategic power purchase deal succeeds, it would be the first major triumph of Vajpayee's diplomatic offensive through the commercial route," a power ministry official told Rediff On The NeT.

"Although what matters in the relations between the two countries is the border dispute in Kashmir, Vajpayee feels that trade and commercial agreements can be conduits to peace," the official commented.

According to details of the agreement being worked out by the power ministry, the first link with Pakistan's power grid could be between the neighbouring cities of Lahore in Pakistan and Amritsar in India, which are barely 40 kilometres apart.

India and Pakistan, which fought three full-scale wars, have signed no trade and commerce treaties in the last 50 years, except for a treaty on sharing water from the Indus River.

Despite five years of reforms in the power sector, India's northern states have a shortfall of 4,000 MW. Pakistan's private power policy, on the contrary, has been quite successful in the last five years. It has now 1,000 MW of surplus power-generating capacity. This is expected to increase to between 2,000 MW and 3,000 MW by December 1998.

Two years ago, the Pakistan government, backed by its profit-making private power producers, raised the idea of selling electricity to the Power Grid Corporation of India.

But diplomatic shadow-boxing, political skirmishes and the proxy war in Kashmir stalled the power deal for many months. Last year, then Indian prime minister Inder Kumar Gujral and Sharief entrusted their foreign secretaries to work out the electricity agreement.

But the foreign secretaries could not draft a memorandum of understanding as the political climate in both countries over Kashmir became volatile.

Indian officials said now pricing is the only hitch in the deal. India wants the price of power from Pakistan to be lower than it is within India. But Pakistan's private power companies disagree, and insist that India should produce counter-guarantees to underwrite such deals as electricity boards in many north Indian states are in a financial mess.

Power ministry officials say if the India-Pakistan power agreement succeeds, it will significantly boost the creation of a South Asian power grid.

The power ministry and power organisations in other countries have been discussing the idea of a South Asian power grid for sharing power among Bangladesh, India, Nepal and Pakistan. The grid is meant not just to make up for power shortages, but to better manage peak demand in all countries.