Energy demands in South Asia are growing at rate of 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 for 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 respective domestic requirements for petroleum. 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 among the world's highest potential for hydro-electric 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 hydro-electricity and biomass resources for its energy needs.
In order to promote cooperation among the regional countries for getting optimum share of the energy, ministers of the South Asian Association of Regional Cooperation (SAARC) nations decided recently to finalize the SAARC Inter-Governmental Framework Agreement (IFA) for Energy Cooperation by June this year. A SAARC energy ring will be created through adoption of this framework agreement.
This 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 resources for electricity generation. There will be provision for allowing unrestricted cross-border trade of electricity on a voluntary basis, subject to regulations of the respective member-countries. The agreement would allow the SAARC nations to buy and sell 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 are hoping that the deal would also open up the opportunity for 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. Furthermore, it would facilitate cooperation among the 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 the secure and reliable operation of the inter-connected grids of the member-states and to prepare scheduling, dispatch, energy accounting and settlement procedures for cross boarder trade. In addition, this would help promote the transfer of technology related to the power generation, transmission and distribution among the SAARC member-states.
Against the backdrop of persistent power crisis across Bangladesh, it is a good piece of news that an energy ring is being set up to connect all SAARC member-countries to minimise the acute power shortage being faced by them. In fact, a previous meeting of the SAARC energy ministers in New Delhi discussed the project threadbare and decided to work towards improving the scenario to begin energy trading between the member-countries.
The energy experts are 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 expected 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 SAARC countries 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.
Experts see a large potential for energy trade, especially hydro electricity, among the SAARC member 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. But 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. The nation 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 poor millions in the region will help redress untold miseries of the people and catalyse poverty alleviation efforts. It will give people access to better education, health, water and sanitation services, technologies that will open up never opportunities for communication links, information sharing, storage of food grains and several other societal benefits that will bring promote stability, peace and cohesion to these societies.
In order to help improve the investment environment and address the needs of the energy sector, the business communities in these countries will need to come together. With countries struggling to meet the rising import costs of fuel, it may well be an exercise in self-preservation for them to leverage regional cooperation to move towards greater energy security.
email@example.com Published by HT Syndication with permission from The Financial Express.
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