This is part two of the series on BBIN cooperation on power-related issues. Read part one here.
Only extended cooperation can turn the BBIN region into a ‘powerhouse’.
The power sector of the BBIN countries has been dominated by the public sector, which is often subsidised and inefficient. However, in recent years, the private sector has begun to play a greater role in increasing power production and efficiency in the sub-region.
Reports say in 2019, Indian private firms contributed 46% of the country’s total power production. The share of the private sector in the installed capacity has increased to 48.10% in October 2021 and 51.10% in July 2023. During 2019-22, Bangladesh’s private sector accounted for around 47% of the country’s total power generation capacity.
Bhutan’s state-owned enterprises with Indian investment contribute the largest part of the Himalayan kingdom’s total power generation capacity, while the Nepalese private industries produce more than half of the country’s power. Reports say the private sector’s share in Nepal’s total power installed capacity as of March 2023 was about 53%. The growing role of the private industries is a major transformation in the BBIN countries’ power sector creating a new window of opportunity to increase CBET.
India has stepped up efforts to broaden multilateral renewable energy (RE) trade and cooperation in South Asia. The February 2019 study titled “Energising Connectivity between Northeast India and its Neighbours” by the Economic Research Institute for ASEAN and East Asia (ERIA) argues that CBET could be 100% RE, providing a green alternative to carbon-heavy growth being pursued by countries under the China-led Belt and Road Initiative (BRI).
In recent years, China has replaced India as the predominant investor in Bangladesh’s power sector. However, Bangladesh’s analysts reason that a significant part of China’s investments is in coal-based power plants in a country with no coal reserves and battling sea-level rise and other climate change effects. The ERIA study has noted that carbon emissions could fall to 9% by developing a green energy grid. India’s Green Energy Corridor Project is a major effort in that direction.
In its bids to counter China’s growing footprints in the region’s power infrastructure building, India has taken the initiative to build South Asia-focused energy security architecture.
In January 2021, a high-level group named South Asia Group for Energy (SAGE) was set up by the Ministry of External Affairs (MEA)-run think tank Research and Information System for Developing Countries (RIS) to ensure South Asia’s energy security. According to the Government of India document, the objective of the SAGE is to “achieve a balanced and optimal development of energy infrastructure through mutual understanding and cooperation. SAGE will promote, initiate and facilitate effective dialogue and capacity building on a bilateral, sub-regional and regional basis for energy and related issues, among South Asian countries”.
The expansion of cross-border energy trade and cooperation is an integral part of India’s “Neighbourhood First” policy. India intends to create a regional power grid and market, which includes Bhutan, Bangladesh, Nepal, and Sri Lanka. and Myanmar, and has already undertaken concrete measures for the purpose. India’s engagements with the neighbouring countries on the power sector front among others include CBET and building of cross-border power connectivity.
The government has underscored the need and opportunities for enhancing per capita consumption of energy, especially electricity in South Asia for its all-round development.
It is well recognised that hydropower is the most suitable source of energy in terms of cost-effectiveness and environmental safety. It is likely that green energy will play a key role in ensuring energy security as well as stimulating socio-economic growth and prosperity in the BBIN region through regional integration of the power grid. The combined hydropower potential of Nepal and Bhutan is around 1, 13,000 MW, while India’s North East is about 58,000 MW. If these resources are properly harnessed, the BBIN sub-region could emerge as the largest provider of hydropower to the countries adjoining the sub-region.
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The CUET International’s study titled “Energy cooperation in the BBIN region” has emphasised the need for proper policy and infrastructure initiatives for developing a regional power grid and market which will not only ensure power availability across the region but also effective use of all transmission infrastructures, further reducing costs.
The study has further noted that intra-regional electricity trade in the BBIN region can be promoted by expanding the scope of the existing bilateral power trade agreements between the countries, into a multilateral trade arrangement within a regional framework. In order to make such a market functional, the BBIN countries need to harmonise and coordinate their legal-regulatory frameworks, and technical and institutional procedures. To realise this, a BBIN regional framework agreement on power trading may be initiated.
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