NTPC Ltd's trading arm has been given the mandate to carry out cross border electricity trade between India and Bangladesh.

NTPC Vidyut Vypar Nigam Ltd. (NVVN), the state-owned power major's trading arm, will sign a power purchase agreement with the Bangladesh Power Development Board (BPDB) shortly, official sources said.

This will mark NTPC's entry into the area of cross country electricity trading, where the market leader in the country's power trading business, PTC India Ltd, already has a head start.

The transmission lines between India and Bangladesh are being set up under a pact signed between Power Grid Corporation of India Ltd and BPDB in July last year. The links are expected to be in place by early 2013 and are being executed at a cost of $192 million (around Rs 907 crore), with a capacity to wheel around 500 MW.

Once the links are in place, Bangladesh, which is facing acute power deficits, will be allocated 250 MW by the Indian Government. For procurement of additional power in excess of 250 MW by Bangladesh from the Indian electricity market, NVVN has been earmarked as the nodal agency by the Indian side.

The arrangement will broadly be on the same lines as the mandate bagged by power trading major PTC India, which is the nodal agency for the purchase and sale of surplus power from Bhutan. PTC has power pacts with distribution utilities in India to sell the power offered from three hydro stations in the Himalayan kingdom.

The interconnection between India and Bangladesh is being established through a 500-MW HVDC (high voltage direct current) link between India's eastern region and the western grid of Bangladesh.

“Bangladesh is a power deficit country and it would initially import 250 MW from India through the proposed HVDC link and subsequently, based on the power supply position of the two countries, the quantum of power exchange will be bilaterally determined. The pricing would be done on a commercial basis under the bilateral agreement,” an official on the Indian team said.

The Indian portion of the link, scheduled to be completed by September 2012, includes an 85-km 400 kV line while the Bangladesh portion, which includes a 40-km link, is slated to be through by March 2013.

The Indian portion, entailing investments of Rs 169.86 crore, is to be executed by PGCIL and funded through domestic loans and Power Grid's internal resources.

The Bangladesh portion, entailing a cost of Rs 736.84 crore, will be executed by the Power Grid Company of Bangladesh Ltd under funding through ADB loan.

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