Benefits of regional energy trade

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    SaarcThe SAARC (South Asian Association of Regional Cooperation) states are planning to set up an energy ring in order to connect all member countries. In fact, an earlier meeting of the SAARC energy ministers in New Delhi discussed the project in details and vowed to work towards improving the scenario in order to begin energy trade between the member countries.

    The energy experts are, however, upbeat about the planned creation of the SAARC Energy Centre, which is expected to act as a catalyst for economic growth and development in the region. It is likely to concentrate on the sharing of information, technological expertise and hardware.

    All members identified facilitating and promoting trade in energy in South Asia as one of the key areas for co-operation. India has already grid interconnections with Nepal and Bhutan. Technical studies are being carried out to explore the feasibility of similar transmission links with Sri Lanka and Bangladesh.

    Once the ring is created, all member countries would benefit from Nepal’s efforts at fuel conservation, like battery powered rickshaws and solar water heaters as well as Bangladesh’s promotion of rural cooperatives for electricity generation and distribution.

    Nepal and Bhutan generate 40,000 megawatts (mw) of hydro-electricity which can be exported to other member nations through common grid stations. India is currently benefiting from the hydroelectricity generated by Nepal and Bhutan under bilateral agreements and wants to maintain this privilege.

    The SAARC is expected to form an electric power regulatory body to deal with the energy trade in the region. A group of experts will work out sector-wise options, benefits and constraints of energy trade among eight member-countries.

    Energy demands in South Asia are growing at over 6.0 per cent a year — a pace that is far in excess of the region’s capacity to meet. The fact that a sizeable section of the population does not have access to electricity makes energy security a daunting challenge among the countries of this region.

    Recent reports in the media suggest that India, Pakistan, Bangladesh, Nepal and Bhutan import anything between 75 per cent and 100 per cent of their petroleum needs.  The region is otherwise rich in other sources of energy which are not evenly distributed and to a large extent untapped. India, Pakistan and Bangladesh have large reserves of gas and coal.

    The entire region has the world’s highest potential for hydel power, with Nepal and Bhutan in the lead. There exists a high potential for renewable energy, with India showing the way in solar and wind energy. Sri Lanka is looking to leverage hydel and biomass resources for its energy needs.

    The much sought-after energy ring is expected to realise the common benefits of cross-border electricity exchange and trade among the regional states leading to optimal utilisation of regional electricity generating resources. There will be provision of allowing unrestricted cross-border trade of electricity on voluntary basis subject to regulations of the respective member countries.

    The agreement would allow the SAARC nations buying and selling entities to negotiate the terms, conditions, payment security mechanism and tenure of their power purchase agreements as normal commercial agreements.

    The proponents of the energy ring expect that the deal would also open up the opportunity of exempting cross-border trade and exchange of electricity from levy. It would also help the member states share and update technical and commercial data and information on electricity as per the agreed template.

    It would also allow transmission of planning agencies of the member states to jointly plan cross-border grid based on needs of the trade in the foreseeable future through conducting joint studies.

    The energy ring will also allow the national grid operators to jointly develop coordinated procedures for secure and reliable operation of the inter-connected grids of the member states and prepare scheduling, dispatch, energy accounting and settlement procedures for cross boarder trade.

    Analysts see a huge potential for energy trade, especially hydro electricity, among SAARC countries. As such, all countries in the region want to introduce energy trade. In 1998, South Asian Regional Initiatives (SARI), a forum of Bangladesh, Bhutan, Nepal and India, had proposed creation of an 80,000 mw power reserve to ensure a dependable supply of electricity to member-nations.

    Incidentally, it failed to implement as India wanted to do it through bilateral agreements with other countries. Bangladesh is contemplating holding talks with India on interconnecting the national power grid of Bangladesh with the north-eastern power grid in India. It could bring 200mw of electricity from Tripura or Assam, where India has hydroelectric plants.

    The benefits of country-wise and regional policies in the energy sector are manifold. Bringing electricity to the millions of poor people in the region will alleviate people from untold miseries. It will give people access to better education, health, water, sanitation services and technologies that will open up communication, information sharing, storage of food grains and several other societal benefits.

    By : Shahiduzzaman Khan