Iran keen to step up India engagement beyond oil

India is looking at the possibility of extending economic engagement with Iran

Pressure from the US notwithstanding,India is looking at the possibility of extending economic engagement with Iran beyond petroleum to the electricity sector. The two governments are building on initial discussions on a proposal forwarded by Iran to export electricity to India.

The discussions are at a preliminary stage. Viability of the proposal on evacuation of electricity to India is still to be fully studied, a government official involved in the exercise said. Indias power sector is severely starved for fuel both coal and gas.

The entire proposal focussed on transforming natural gas into electricity would largely hinge on getting transmission linkages in place to enable flow of power to India.

Irans oil ministry in February this year had inked the first gas-to-wire contract for converting natural gas to electricity and exporting power to neighboring countries.

According to the details of the contract,the Iranians would first develop the offshore Forouz B gas field in the Persian Gulf,with the natural gas from this field to be then used to generate power.

A 3.8-billion buyback contract was reportedly signed between the state-owned Iran Power Plant Projects Management Company MAPNA Co and the National Iranian Offshore Oil Company,an affiliate of the National Iranian Oil Company,to generate around 3,000 MW of electricity from the field,which is largely to be exported. Iran is currently reported to be exchanging electricity with Afghanistan,Armenia,Azerbaijan,Iraq,Pakistan,Turkey and Turkmenistan.

The development on the electricity business comes after the much-touted tri-nation gas pipeline project with New Delhi has failed to make headway.

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The Iranian side has conveyed to India that a new power plant is under construction on Irans border with Pakistan,from where power can be routed to the subcontinent.

India is already engaged with Pakistan to develop grid linkages spanning the border,with a proposal aimed at setting up transmission infrastructure on a joint-ownership basis to facilitate the wheeling of around 500 MW of electricity via Amritsar under active consideration.

The nearest grid on the Indian side of Punjab is Patti,located very near to Lahore Ring,which makes the prospect of grid interconnection quite feasible in pure economic terms,according to officials involved in the discussions.