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Future looks dark for NTPC-Iran 6,000MW project

Future looks dark for NTPC-Iran 6,000MW project
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First Published: Tue, Feb 02 2010. 01 40 AM IST

Urging caution: Union power secretary H.S. Brahma. PIB
Urging caution: Union power secretary H.S. Brahma. PIB
Updated: Tue, Feb 02 2010. 01 40 AM IST
New Delhi: India’s ambitious $10 billion (Rs46,300 crore) plan to set up a 6,000MW power plant in Iran and transmit some of that electricity back home has floundered for the same reason as a long-standing proposal for a gas pipeline linking the two nations—Pakistan comes in between.
According to the initial project plans, state-owned NTPC Ltd, the country’s largest power generation utility, was to set up the power project in an equal joint venture with Iran. Another state entity, Power Grid Corp. of India Ltd (PGCIL), was given the task of constructing the transmission link.
Urging caution: Union power secretary H.S. Brahma. PIB
“There are problems with the project,” H.S. Brahma, Union power secretary, told Mint.
“We can only build the project if power transmission to India is feasible,” said R.S. Sharma, chairman and managing director of NTPC.
There were two options of getting the power to India—an under-sea link or an overhead transmission system across Pakistani territory. The marine route, about 1,000km-long, was discarded on account of the high cost.
A high-voltage, direct-current Rs12,500 crore transmission link was considered from Iran to the Zerda grid substation in Gujarat that was to pass through Pakistan via Karachi and Baluchistan. To ensure smooth project operations, it was also planned to allocate 1,000MW to Pakistan.
“The option is to bring power through Pakistan, which looks very difficult, given the situation there. It is a very difficult project to execute,” said a top PGCIL executive on condition of anonymity. “We have already submitted our report on power evacuation to the power ministry around four months back. We are yet to hear anything on the project.”
The project was an attempt by the country to engage Iran, which has accused India of siding with the US in the ongoing spat between those two nations over Iran’s nuclear programme.
“The entire project has now become uncertain,” said a senior NTPC executive, who did not want to be identified.
Iran has said that India was delaying decisions with respect to Iran because of “pressure” from the US. The $7.4 billion Iran-Pakistan-India pipeline project has been mired in problems over transportation and pricing issues. Iran and Pakistan have decided to go ahead with the project without India and have even extended a partnership offer to China.
Questions emailed to the Iranian embassy in New Delhi remained unanswered at press time.
The development comes as Iran faces more economic sanctions by the US and its allies over the nuclear programme, which Washington suspects is aimed at developing weapons and Tehran says is designed to produce energy. India and the US reached a historic civilian nuclear deal in 2008.
The geopolitics is stacked against the project, said a former diplomat.
“From an economic point of view, an under-sea link is not feasible. I would regard it as lunacy to build a transmission link through Pakistan,” said G. Parthasarathy, India’s former high commissioner to Pakistan and an expert on foreign affairs. “One should go for it if only uninterrupted power supply was guaranteed. When you couldn’t get it in the case of the pipeline, how will you get it here?”
While Iran has the world’s second largest oil and natural gas reserves, India’s domestic supply is enough to meet just half the natural gas demand.
The transmission project recommended by PGCIL involved setting up two 1,500km links of 600kV each from the generation point in Iran to Zerda in Gujarat for the transmission of power to India and a 500kV 400km direct current link from Zerda to Karachi for the transfer of 1,000MW to Pakistan.
The government plans to dilute 5% of its share in NTPC through a follow-on public issue that will run from 3-5 February, bringing down its stake to 84.5% and raising an expected Rs12,000 crore.
utpal.b@livemint.com
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First Published: Tue, Feb 02 2010. 01 40 AM IST