Saarc energy cooperation

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    SaarcThe 5th Saarc Energy Ministers Meeting has finalised the Saarc Framework Agreement for Energy Cooperation. Although Pakistan was missing from the meet, seven out of eight Saarc member countries have now come on board on sharing energy resource across borders. This is undoubtedly a very welcome step in the right direction given that it paves the way for member countries to buy and sell electricity as per individual country’s needs. Signing of the framework is due to take place in the coming Saarc Summit that is to be held in Kathmandu in November. Should the framework be implemented it would open the way for the construction of a grid to facilitate electricity transfer among nations.

    The agreement had been pending since 2010, and its signing will be a fundamental step forward towards bringing to fruition a Saarc Market for Electricity (SAME). It opens up a lot of opportunities for Bangladesh, which has suffered significant and chronic shortage of electricity over the years. The agreement could pave the way for import of hydroelectric power generated, for instance, in North-East India to Bangladesh. The primary focus now should be the setting up of the grid within the next four to five years. The experts’ panel will also have to work out the regulatory issues on how energy is to be traded amongst member countries. For Bangladesh, the sooner the grid is operational the better. With no significant new gas finds since 1996, the country has suffered a chronic shortage of 500 million cubic feet of gas per day. It has forced policymakers to play a juggling game between which productive sectors to keep operational and which ones to shut down. During irrigation season, major power is diverted to agricultural belts. Despite the oil-fired power plants that now significantly complement electricity production, we have witnessed the regular shutting down of fertiliser plants.

    Although the government has initiated development of a coal-fire based power plant plan to generate electricity, it is still 4-5 years away. In the meantime, required power continues to suffer deficit and it is here that SAME could play the crucial role of filling in the void by importing readymade electricity from an electricity-surplus country in the Saarc region. The bilateral agreement between India and Bangladesh has so far facilitated the purchase of 500 megawatts of electricity. Though a request has been made to increase this cross-border supply to 1,000 megawatts, there is need to upgrade transmission lines. And one cannot forget the fact that India suffers from its own share of energy deficit. Thus, the requirement for a regional power market becomes all the more imperative.

    Bangladesh and India have started power trading and expect to expand its volume. In principle, there are no differences between the parties to increase the volume of power trade and with expanded grid facilities in place; some more electricity may be imported over the next few years. India and Bangladesh are actively progressing on negotiations to build high voltage grid lines to transmit power from the potentially surplus eastern Indian states through Bangladesh to Bihar and West Bengal. If such initiatives bear fruit, Bangladesh may expect more electricity from the grid. In 2030 Bangladesh expects to import 4,000 MW power to support its demands. Part of the electric power may also be imported from Nepal and Bhutan provided the interconnected power grids are built and sufficient investment is made in the hydropower potential sources in Nepal and Bhutan.

    What remains to be seen is whether the political will is backed up by steps on the ground that will propel countries like Bangladesh, India, Nepal and Bhutan to take the relationship for power trading forward, and if further projects are initiated in this spirit. Initiatives taken till date have significantly helped development of SAME. In the meantime, China has been increasingly showing interest for cooperation in the regional infrastructure network development. The BCIM (Bangladesh-China-India-Myanmar) forum also actively supports initiatives for road and energy sector development which intends to help improve the living standards for the people of the region. Power grid connectivity within Saarc will not only support the development of the 8-nation country forum but will also create opportunities to expand the cooperation with BCIM forum.

    As pointed out by the Indian power minister in the recently concluded 2-day summit, the “impact of electricity on human lives is profound, ranging from healthcare to education to employment opportunities. The household per capita consumption of electricity within Saarc is mere 128 units versus global average of 3,045 units.” That there is potential for growth, given access to electricity made available through stable infrastructure and workable price mechanisms, is obvious. It will be interesting to watch what outcome will come from the meeting due to be held in Bangladesh in December, where apparently all the four expert groups have finalised their Terms of Reference and Work Plans.

    Source : The Star / Syed Mansur Hashim