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LOC firing, Kashmir push Indo-Pak power deal into the cold

The frequent and heavy exchange of fire between Indian and Pakistani troops along the Line of Control in Jammu and Kashmir has virtually stalled a major electricity sharing agreement between the two neighbours.

In May, the Indian government had, in a formal proposal, asked Pakistan to sell its surplus electricity to the power-deficient north Indian states.

The Pakistan government -- backed by its profit-earning private power producers who were the first to suggest selling electricity to the Power Grid Corporation of India -- agreed to sign the historic deal with India which many believed would considerably contribute towards peace between the two nations.

Prime Ministers Inder Kumar Gujral and Nawaz Sharief, who met in Male, the Maldives, for the South Asian Association for Regional Cooperation conference in May, had entrusted their foreign secretaries to work out the deal. In turn, the foreign secretaries, who held a high-level meeting in Islamabad in June, also decided that both governments would prepare a memorandum of understanding on the power agreement before their next meeting in September.

But on the eve of the next round of foreign secretary-level talks, both countries have not chalked out any strategic details of the deal, leave alone a memorandum of understanding.

What is more, a top Power Grid Corporation of India official told Rediff On The NeT, Pakistan has shown "its disinclination towards the deal," reasoning that "selling electricity to India is not feasible when the political climate in both countries towards the Kashmir issue is volatile."

He said if India and Pakistan back out of the proposal, it will be "a blow to the creation of a South Asian power grid."

PGCI and similar power organisations in other countries have been evolving the idea of a South Asian power grid for trading of power among India, Pakistan, Nepal and Bangladesh. The grid was not just to make up for power shortages, but to manage better peak demand in all the countries.

But the PGCI official said commercial negotiations between India and Pakistan have virtually broken down on two grounds. Firstly, Indian power officials demanded that the sale price of power from Pakistan must be lower than it is within India. But Pakistan's private power companies disagreed and insisted that India should produce counter-guarantees to underwrite such deals as electricity boards in many north Indian states are in financially poor conditions.

Secondly, the army and the Inter-Service Intelligence in Pakistan are said to have strongly opposed the idea, saying that a power sharing agreement is not possible when the two countries are locked in a proxy war over Kashmir.

Pakistan's private power policy has been fairly successful in the last five years. It has now 1,000 megawatts of surplus power-generating capacity. This is expected to increase to between 2,000 mw and 3,000 mw by 1998. On the other hand, north Indian states have a shortfall of 4,000 mw despite five years of reforms in the power sector.

Power consultants and diplomatic analysts believe that a possible agreement on power between India and Pakistan could herald an unprecedented thaw in the bitter relations between the two neighbours.

"Pakistan selling electricity to India is a technically feasible idea," T U Rajan, an international power consultant, told Rediff On The NeT.

According to Rajan, 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.

"But sadly, what matters more in the relations between the countries is the border dispute in Kashmir and not trade and electricity agreements," he said.

Though the two countries have a combined population of more than a billion, trade between the two annually is less than US $ 500 million, thanks to the proxy war over Kashmir.

India and Pakistan, which fought three full-scale wars, have signed no trade treaties in the last 50 years save one on sharing water from the Indus river.

Against the backdrop of heavy artillery firing by Pakistani troops along the Line of Control and the counter-offensive from India, it is unlikely that the power sharing deal will find any mention in next fortnight's Indo-Pak peace talks.

EARLIER REPORT:Pak agrees to sell power to India