MoP Amends Electricity Act For Power Trade With Neighbors

On August 12, the Ministry of Power (MoP) has amended the Import and Export of Electricity Act 2018 through an Office Memorandum, enabling the export and import of electricity to and from India. Under the revised guidelines, the government modified Clause 5.2 9(a) and Clause 8.9 to permit generating companies and distribution companies to export electricity generated from renewable energy, as well as other sources like coal and hydropower, to entities in neighboring countries.

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MoP introduced these guidelines to support cross-border electricity trade with neighboring countries under bilateral Memorandums of Understanding (MoUs) and Power Trade Agreements (PTAs). The regulation aims to facilitate and promote cross-border electricity trade with greater transparency, consistency, and predictability in regulatory approaches across jurisdictions while minimizing the perception of regulatory risks. India primarily trades electricity with Bhutan, Nepal and of course, Bangladesh.

The latest regulation states, “They can export this electricity directly or indirectly through trade licensing in India after receiving approval from the designated authority (DA).”

Additionally, based on the government’s decision to permit the connection of such generating stations, the Indian Grid (Inter-State or Intra-State) can facilitate the sale of power within India in cases of sustained non-scheduling of full or part capacity or a default notice issued by the generator for any default, including delayed payment under the PPA. Interestingly, this comes at a time when Adani Power, which has a dedicated deal with Bangladesh for electricity sales from its Godda plant, is yet to received over 4 months billed  outstandings till date.

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The new guidelines allow Indian generating stations, which supply electricity exclusively to neighboring countries, to build dedicated transmission lines that connect to the neighboring country’s transmission system. This decision will be based on strategic and technical considerations.

The policy states that the construction of such transmission lines is subject to the approval of the designated authority under the Electricity Amendment Act 2003, with the cost to be included in the contract agreement between the Indian entity and the neighboring states.