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Regional Energy Cooperation in Eastern South Asia. Nitya Nanda The Energy & Resources Institute (TERI). Eastern South Asia – A Perspective. It housed one of two most important industrial/growth centres in India (South Asia) Was an industrially developed sub-region
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Regional Energy Cooperation in Eastern South Asia Nitya Nanda The Energy & Resources Institute (TERI)
Eastern South Asia – A Perspective • It housed one of two most important industrial/growth centres in India (South Asia) • Was an industrially developed sub-region • Most important sub-region in terms of contribution to exports • Due to accident of history, a metropolitan centre lost its hinterland and the hinterland lost its metropolitan centre • Artificial barriers created • Existing transport linkages dismantled (was in operation till 1965) • Existing forward and backward linkages disrupted • Decline of the export-oriented commodity-based industries in general
Integration of Bangladesh with …Indian states, Nepal, Bhutan, Myanmar • It is likely that Bangladesh-India low volume of exports is more reflected in terms of Bangladesh and Eastern and North-eastern states of India these states have limited purchasing power • Prosperity of Bangladesh, Myanmar, Nepal, Bhutan and the Indian east and north-eastern states are inter-linked • Eastern South Asia is among the most fragmented sub-region and also among the poorest sub-region – a creation of history! • Integration of these countries/states will bring prosperity to all countries/states • Energy sector is an important area for cooperation and can become the driver à laEU
The Eastern South Asian Context • Among the lowest per capita incomes in the world • per capita energy consumption is also among the lowest in the world • poorly endowed with conventional energy sources • Huge energy gap and energy poverty • Energy demand likely to grow by three times in the next two decades • Given this context, energy governance both at national and regional levels is extremely important • “Sustainable energy for all” has been identified as one of the SDGs
Any Trade in Natural Gas? • Except India nobody engages in NG trade as there is no infrastructure • Major international gas pipeline plans: IPI, TAPI, MBI – India was most keen on MBI but could not make any progress due to bilateral differences • Will a regional approach help? What about Nepal and Bhutan’s needs for natural gas? • Bangladesh has internal network of pipelines but it is not connected to any other country • Eastern part of India including the north-eastern states and Nepal and Bhutan are not linked
Bilateral : Bhutan-India • India-Bhutan: A success story – Significant impact on Bhutan’s GDP, Export, Revenue and Human Development – • Chukha Hydropower Plant started in 1978 and fully commissioned in 1988 • Hydropower projects in Bhutan were built mainly with Indian financial assistance with a significant grant component and technical assistance as well • Bhutan has plans to increase up to 10000MW with Indian guarantee of purchase of half of it • Can it be replicated? Will India fund projects in other countries with similar terms? If yes, how much • So far Bhutan story is more about political and diplomatic success (not market based)
Bilateral : India-Nepal • India-Nepal: Existing linkage is minimal. Several projects are in pipelines. Not much progress • Long history of cooperation (?) – some unfulfilled expectations – once Nepal was keen but India was not, then India changed its position but situation changed in Nepal • Political differences/opposition from CSOs • Private companies (Sutlej/GMR) are interested but govt. is slow • Stiff opposition in Nepal due to potential environmental and social implications • Cost of non-cooperation in Nepal • Severe power shortage – lowest energy access in South Asia • Import of electricity, diesel, kerosene and BoP issues/indebtedness • Excessive use of diesel and kerosene and the related environmental/social implications • Excessive use of woods – social and environmental implications including massive deforestation, soil erosion and land degradation • Does Bhutan care less about the social and environmental issues? • Bhutan is carbon neutral country • Protection forests • Significant improvement in health and education indicators
Bilateral :Bangladesh-India • India-Bangladesh: 250MW of electricity is flowing through Berhampore-Bheramara transmission line • Price agreed is not market based, but more electricity would be accessed by Bangladesh from Indian market • Bagerhat JV on coal-based power generation • India has agreed in principle for power transmission from Nepal and Bhutan through Indian territory – Nepal has no electricity to offer • Bhutan can offer from additional capacity created – transmission link needed • Indian north-east to Bangladesh power flow potentially possible
Myanmar-Bangladesh-India Gas Corridor – A missed opportunity! • Natural gas is the main export item of Myanmar and it was keen to sell it to India • India was not able to seize the opportunity • India proposed MBI pipelines but Bangladesh agreed (2005) but demanded three things in return • Duty free access • Better transit facilities to Nepal and Bhutan • Access to power from Nepal and Bhutan • India did not agree to discuss these issues together though they energy minister was keen – today India has agreed to all!!! But no pipelines in place • Bangladesh also faces severe shortage of gas (Recognised by 2007) • Bangladesh could have asked for a share of gas instead of bargaining hard linking other issues
Energy Cooperation in SE Asia (1/2) • 1st Phase of energy cooperation: Mid-1970s to Mid-1980s - Focus on oil and power grid cooperation • ASEAN Council for Petroleum (ASCOPE) in 1976 – active collaboration and mutual assistance in the development of petroleum resources • ASEAN Petroleum Security Agreement (APSA) – mutual supply of oil six countries in sudden shortfalls in supplies – ASEAN had a different context • Power grid cooperation started outside what was then ASEAN • Beginning was made in 1966 when Thailand and Laos concluded a power exchange agreement (Similar to Bhutan-India cooperation) • Similar agreements were signed between Thailand-Malaysia and Malaysia-Singapore in 1978 • ASEAN level cooperation started in 1981
Energy Cooperation in SE Asia (2/2) • 2nd Phase of energy cooperation: Mid 1980s onwards – Cooperation became comprehensive to promote four A’s of energy security: • Availability, Accessibility, Affordability, Acceptability • ASEAN Energy Cooperation Agreement (1986) • 1991: Programme of Action for Enhancement of Cooperation in Energy (PAECE) • 1995: Plan of Action on Energy Cooperation (PAEC 1995-1999) • Oil and gas, coal, new and renewable sources, energy efficiency and conservation with coordination bodies for each of the five areas • 1997: ASEAN Vision 2020 • ASEAN-wide Interconnection arrangement for electricity, natural gas and water
Southern African Power Pool (1995) • Geared at increasing cross-border electricity trade and ensuring secure and reliable supply to its members with the objectives: • To provide a forum for the development of a world class, robust, safe, efficient, reliable and stable interconnected electrical system in the southern African region • Coordinate and enforce common regional standards of quality of supply, measurement and monitoring of systems performance • Facilitate the development of regional expertise through training programmes and research • Increase power accessibility in rural communities (not achieved). • Implement strategies in support of sustainable development priorities (53% coal, 17% gas and 27% hydro and 3% other renewables) • Few countries engage in trade, trading arrangements are bilateral and prices and quantities are negotiated as DAM not deep • Huge experience and capacity gap – SA (80% capacity and 78% consumption) – Just like South Asia!
Energy Governance at National Level • Market development is incomplete in national level • Energy governance entails balancing between energy security and other socio-economic and environmental concerns – reaching consensus is difficult • In most countries, electricity and other energy products and services are subsidized • In India, there is significant power trading, and to that extent, price is market-based in the wholesale market • In the absence of reference price international trade in electricty becomes difficult - Bangladesh perceived Indian offer price to be too high!! • In future, neighbouring countries can participate in Indian market with competitive terms (no need to negotiate price)
Regional Governance- Some Pointers • Some complexity – even Nepal wants electricity from Bhutan, Bangladesh wants from Nepal and Bhutan and opposes Indian project in Tipaimukh • Offer of electricity to Bangladesh can change the equations on transit of gas and goods • India has agreed in principle for transit of electricity • India’s achievements in Renewable energy (solar, wind and biomass) – India can provide technology and finance? • India’s quest for energy cooperation with SEA countries through BIMSTEC and ASEAN-India cooperation framework
Regional Cooperation: Ways forward • Regional energy cooperation can have two broad purposes: • Guaranteeing security of energy supply • Minimizing the environmental impacts of energy production, transport and consumption • Following are the usual modes of engagement: • Trade in Energy Commodities • Natural Gas pipelines • Renewable Energy • Investment Flows in Energy Sector (including energy infrastructure) • A number of measures can be taken, including infrastructure development, financial mechanisms, regulatory frameworks, R&D, information sharing and capacity building • Experience of ASEAN shows bilateral initiatives can be the building blocks of regional cooperation
