What has given a fresh impetus to this is the Indian government’s diplomatic push for connectivity and energy outreach which is likely to reshape the region’s economic profile, write Saroj Mohanty for South Asia Monitor
By Saroj Mohanty
"Paani Manga, Electricity Mila (We asked for water, got electricity instead)," said Bangladesh Prime Minister Sheikh Hasina in a lighter vein at an event in New Delhi during her visit to India in April this year. The reference was to the Teesta water-sharing agreement the two countries failed to sign and the West Bengal Chief Minister Mamata Banerjee's offer to provide electricity from her state instead of water. The Indian government also assured her that another 100 MW of electricity would be provided to Bangladesh.
The Bangladesh Prime Minister’s words also highlighted another heartening development in the region -- how electricity is becoming a vital component of bilateral partnerships and warming India's ties with its immediate neigbours. The reason for this is not far to seek.
All the countries in the region, as part of their development processes, are experiencing a growing demand for power and also its deficit. Also, given the various sources of power, their generation and the demand patterns, they have come to realise that joint efforts to generate electricity and exchange and trade it across borders, as is done in many other parts of the world, can lead to effective use of natural resources, savings in capital expenditure and operating costs.
More importantly, this would ensure supply availability. What has given a fresh impetus to this is the Indian government’s diplomatic push for connectivity and energy outreach, which is likely to reshape the region’s economic profile. South Asia is thus now seeing an increasing exchange and trading of electricity, which has mostly been a result of bilateral negotiations.
What has really helped to facilitate the process further is India's own experience in reforming its power sector since 2003 and its policy initiatives like the cross-border electricity trade (CBET), unveiled last December, which have expanded bilateral cooperation in the energy space and raised the possibilities for increasing power trading in the region, and creating market opportunities for countries like Bangladesh, Bhutan and Nepal.
India's power ministry has proposed joint ventures among member countries of the Bangladesh-Bhutan-India-Nepal (BBIN) group. Power is now traded on exchanges in India, which includes Indian Energy Exchange and Power Exchange India, transparently.
India is extending the market for energy produced in future inter-connection and trade projects. According to some estimates, trade in power can help countries in the region save over $9 billion annually and reduce carbon emission by 8%. A World Bank study holds that regional trade in electricity can spare India from investing in 35,000 MW of coal fired capabilities in the next 25 years. India has been steadily constructing cross-border electrical lines for better trade with neighbouring countries on the back of a rising power generation capability at home.
Joint ventures to generate and cross-border transmission and trading of electricity are becoming important factors in sub-regional cooperation. A crucial part of the partnership is joint ventures in the sector. One such example is the project set up by NTPC Ltd and the Bangladesh Power Development Board. Bangladesh is meeting nearly half its peak electricity shortage of 1500 MW from India.
Energy cooperation, in investment and trade since the 1980s, has led to power flow of 1,450 MW from Bhutan to India, according to the Central Electricity Regulatory Commission (CERC). Data shows that Bhutan has been benefiting from power export to India and its per capita income in power purchasing parity has increased from $475 in 1980 to $7,860 in 2015.
Although India and Nepal have been in talks for joint ventures and power trading for many years, the discussions had not succeeded due to political instability in the Himalayan nation. It was only in 2014 the two countries signed a Framework Agreement for Energy Co-operation which opened the scope for bilateral power flows and enabled Nepali developers to access the Indian power market. Electricity export to Nepal increased significantly in 2016 with the commissioning ofthe Muzaffarpur– Dhalkhebar 400kV line in 2016. In February 2017, the two sides agreed to the 400 KV Burtwal-Gorakhpur cross-border transmission line. Both sides have set up a Joint Working Group to plan and identify cross-border interconnection. Nepal buys 300 MW from India and is reported to have increased imports from India by 30%. A study by the New Delhi-based Integrated Research and Action for Development says Nepal's revenue from export of electricity to India would have a significant macro-economic impact by raising its gross domestic product and the ability to invest more to develop its economy.
With Sri Lanka, India has a long standing proposal to inter-connect the two power grids and for cross-border electricity trade. Experts from both the countries have discussed technical details of such a system through undersea cables. Things are likely to move faster on this front after the recent two-way prime ministerial visits and signing of the economic cooperation agreement.
Energy connectivity and energy trade prospects would be enhanced with Myanmar joining in the South Asia Sub-regional Economic Cooperation (SASEC) that has a time-bound programme (2016-25) to build hard and soft infrastructure for electricity sharing and trading
According to the Central Electricity Authority of India, dealing in cross-border electricity trade, India exported around 5,798 million units to Bangladesh, Nepal and Myanmar in 2016-17. At the same time, the country imported around 5,585 million units from Bhutan, which is 213 million units less than it exports. India’s exports to Bangladesh and Nepal increased to 2.8 and 2.5 times, respectively, in last three years. The power ministry estimates greater possibilities of trade by 2036, with India importing more from Bhutan and Nepal and exporting around 2,000MW to Bangladesh and 1,000MW to Sri Lanka.
(The author is a veteran journalist and a commentator on international relations. Comments and suggestions on this article can be sent to email@example.com)