Regional Experts for Integration of Energy Systems

Energy & Power, September 01, 2014

By Mollah Amzad Hossain

Energy experts from South Asian countries have urged the governments to ensure that political goodwill and economic cooperation go hand-in-hand and complement each other to promote energy trade and regional integrity.

This is one of the key 8-point recommendations they took home from a two-day regional conference titled “Regional Cooperation For Energy Security in South Asia” held in Kolkata on August 7-8.

CUTS International with support from Friedrich-Ebert-Stiftung (FES India) organized the conference to create a platform for dialogue among stakeholders to achieve greater cooperation, coordination and integration of energy systems.

The platform allowed discussion among relevant issues, such as __ natural gas pipelines, electricity, energy efficiency, renewable energy, technology transfer, energy policy and knowledge sharing __ the potential, challenges involved and possibilities to overcome, among relevant stakeholders.

The conference was attended and had close to 50 participants from various nationalities (Nepal, Bhutan, Bangladesh and India) and profile i.e. government institutions, non-government organizations, academic institutions, industry representatives, media etc.

Other Suggestions of the Conference:
  • Improved domestic sector performance is a key part of reaping full gains from regional cooperation and trade.
  • Younger generation should actively take part in research and advocacy both nationally and regionally.
  • Regional grid is a must for attaining better energy cooperation. However, building and improving domestic infrastructure should be first priority among the SA countries.
  • Trade and cooperation on both conventional and non-conventional energy resources should be initiated and facilitated by the governments in power, civil society organizations and NGOs.
  • Bilateral and multi-lateral dialogues involving international funding agencies such as the Asian Development Bank, the World Bank etc, needs to be initiated. Formal treaties may be signed as and when necessary.
  • Awareness generation is a vital component of the whole process. A responsible media has to take up a crucial role in this regard.
  • Consumers are one of the key sufferers of non-cooperation within the region, as it directly affects the consumer welfare cost.

The deliberation summarized that regional integration and energy trade in South Asia region lags significantly behind most of the world. The energy sector in the region has not been able to keep pace with the growth and has been continuously experiencing chronic problems of supply and poor quality of service due to several social, political and economic differences. This also caused an adverse impact on economic and social development.

The potential of power trade within the South Asia has been discussed for many years, especially due to their vast potential in widespread underexploited energy sources. Several successful examples of such cooperation can be found in the different parts of the world, like cross border energy trade in Europe. Such cooperation helps countries to strengthen their national energy security, reduce the costs of energy supplies and provide electricity to all.

From the regional cooperation and energy trade perspective, an important characteristic of the region is the variation in the energy demand and supply situation. Variation in resource endowment and disparity in energy consumption pattern across the region along with the cost of non-cooperation in terms of consumer welfare gains made a strong case for the energy cooperation.

The conference stressed the need for strong and robust political and social mandate to achieve regional cooperation. It also emphasized on an urgent need to put in place related mechanism that would not only facilitate but also encourage energy trade among the South Asia region.

The conference was told that in the past the Asian region was disintegrated in parts and now it is again in the process of getting re-integrated. Therefore, a critical role is to be played by different institutions representing respective countries.

Welcoming the participants at the opening session, Pradeep S. Mehta, Secretary General, CUTS International said though resource endowment varies across the region, there is no dearth of energy resources in South Asia. “However regional cooperation is not quite visible that may help countries to strengthen their national energy security, reduce the costs of energy supplies and provide electricity to all.”

He said India’s foreign policy has changed in the positive direction in the recent past under the leadership of Narendra Modi, the Indian Prime Minister.

In his concluding remarks, Mehta emphasized that unless “we address the question that how much is the lack of energy costing our economy and cost of non-cooperation, until then it will be difficult to generate the political will, which is the key ingredient to ensure energy trade to take place.”

Mike Toman, Lead Economist, the World Bank, delivered a presentation on an on-going initiative by the WB.

He said there will be major increases in hydro (30GW with full regional cooperation) resulting in displacing significant additions to coal capacity and significant additional investments in interconnection would be required, which will allow more short-term capacity sharing as well as transmission capacity for major new hydro capacity.

Toman highlighted that direct gains from trade are moderate in present value terms – US$20B over 2015-2040, discounted at 8% (real rate – fairly high) and about 80 percent of this can be achieved with cooperation just among Bangladesh, Bhutan, India and Nepal.

Toman concluded his presentation and flagged three important points:
  • Increased regional power cooperation and trade can provide a valuable addition to broader efforts to improve sector performance
  • Experience suggests agreement on (sub) regional power cooperation and trade is institutionally feasible for SAR, and can build incrementally.
  • The efficiency of domestic power systems/markets will have substantial influence on size and distribution of benefits from cooperation and trade – as well as being important in its own right Mohammed Omar Farooq, First Secretary, Deputy High Commission of Bangladesh, Kolkata, said since countries like Bangladesh largely rely on the import of hydro and carbon fuel from its neighboring countries, it adversely affects their balance of payment position. “There should be more emphasis on exploring the renewable energy potential of the region, higher energy efficiency and energy conservation,” he said.

Dasho Namgyal, Consul General, Royal Bhutanese Consulate, said there have been a number of hydro power projects in Bhutan in joint collaboration with the government of India.

He said further diversification of the power market is required but quite often public institutions face limitations in executing the required task. “Therefore, private players should get involved with the public institutions and public private partnership model would be able to attract better and bigger investments in the energy sector. “

Anoop Singh, Associate Professor, IIT Kanpur, India emphasized on the need to undertake an assessment of the position in terms of market reforms in respective countries.

“No top down approach has ever been followed in this regard in India. It is high time that we make a competitive framework to initiate the process of cooperation. Different regions/institutions have different requirements, expectations and need. Therefore, bridging the gaps and developing synergy is quite challenging.”

He also stressed on looking out for reasons beyond the political disputes that prevent the neighboring countries from ensuring the smooth working of the regional grid.

Molla Amzad Hossain, Editor, the Energy and Power, said there has been a recent shift in overall energy production in Bangladesh. “Production at six out of seven fertilizer factories has been shut down due to the limited and interrupted supply of natural gas.”

He emphasized on lack of effective connectivity to ensure access to the cheaper power available across the border in the South Asian region.

He mentioned that earlier Bangladesh electricity was highly subsidized. “But the tariff was increased after it was imported from India to address the shortage of domestic supply.”

“There is a lot of political turmoil over the recent “Trination pipeline” which was supposed to go through India, Bangladesh and Myanmar. There is a very strong possibility of the creation of a sub-regional gas grid, if the Trination-pipeline comes into existence,” he said.

Monali Hazra, Regional Coordinator, SARI, USAID, said regional cooperation on energy generation, supply and regulation is a must to ensure access to clean energy resources. A regional grid has the capacity to address the energy issues of the given region.

Renewable Energy expert and innovator S. P. Gon Chaudhuri, President, NB Institute for Rural Technology, Kolkata, India stressed that regional cooperation on RE should also be considered as a way forward to solve energy scarcity.

Mahendra P Lama, Pro Vice Chancellor, Indira Gandhi National Open University, New Delhi, India stated that the central question in the entire regional cooperation for energy trading system is that of the border. “Borders are interpreted in a very orthodox national security dynamics in South Asia and intend to loose other nuisances of border like trade, cooperation, economic activities etc.”

“In the recent times, few countries and organizations are looking beyond national security, as security is only one of the issues among the several other issues like economic and social development. In correspondence, comes the question of trust building among the neighbors.”

Pramod Deo, Former Chairperson, Central Electricity Regulatory Commission, New Delhi, India, said the political, economic, technical and regulatory reforms are required to enhance the scope of energy trade and barriers to improving industry investments and way forward to increase their involvement. “Everybody expects private players to involve and play a vital role in regional integration instead of bilateral trade between the governments.”

Taking it forward from Professor Lama’s point, Prabir Neogi, Chief Executive, the Calcutta Electricity Supply Corporation, mentioned that before borderless states, “we need to ensure borderless organizations. Convergence of institutions within the nations is more challenging.”

Mashfique Ibne Akbar, Research Associate, Centre for Policy Dialogue, Dhaka, Bangladesh posed questions related to the challenges and plan of integrated grid in the South Asia region. He noted that inspite of robust GDP growth the energy consumption of the region is quite low as compare to other regions.

During the floor discussion, speakers pointed out that in order to enable private players to play a vital role in energy security “we need to set the house right before hand. We also need to strike the balance between demand and supply to keep us the pace with developing economy. There is also need to de-politicize the deals between the countries.”

Professor Lama noted that three major deals between India and Bangladesh have shown great maturity on the part of both the states and had very substantial commercial and professional elements.

“The leaders of both the countries have shown great political will and taken non-traditional bold steps in finalizing the deal and recognized border as opportunity. Further, this was the first time when in a bilateral deal several multilateral players like ADB, World Bank, etc, have been involved. This indicates the vision and interest of the countries and importance of cooperation for energy security within the region.”

Fouzul Kabir Khan, Chairman & CEO, Keystone Business Support Company Ltd., Dhaka, wondered that if inter-state and inter-regional energy trade flourished in the USA and the European region, what keeps off the same trade from flourishing in South Asia.

He suggested that “we need to first try to meet the energy demand and then try to trade the excess power generated. He provided an example of the Indian National Grid (in India all the grids, viz, East-North East-West-North-South are interconnected, thereby having a single grid across the nation) and stressed on the importance of having the same across the region.

In conclusion, all the panelists were of the hope that technically it is feasible to lay a single regional grid and trade the surplus power (generated from a country). All the possible primary sources of energy need to be exploited to yield the maximum benefits.

The benefit of energy sharing should be enjoyed by all the residents of the participant countries and it should be the primary objective to supply power to all. A master plan should be developed and work should be executed accordingly. All this will be possible through harmony between the countries of the region. There should be political willingness and good governance which can surely make this happen on a larger scale. This is where a close network, comprising of representatives from the various governments, NGOs and other stake holders, multilateral agencies and reputed educational institutes, can help in attaining the energy security of the South Asian region.

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