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egional energy trade key to resolving South Asia’s power woes

Most South Asian states, including Pakistan, India, Bangladesh and Nepal are facing severe energy deficits in recent years, which are going to further deepen in the next five to eight years till 2020.

There has been growing recognition of the fact that regional integration in energy trade is among the viable options to find a solution to end the load shedding that is negatively impacting growth as well as human beings, especially in seasons when the temperatures are severe.

Pakistan is making plans to import 500 megawatt (MW) electricity from India. The World Bank has been asked to prepare a feasibility study to give shape to the project to make it a reality.

The World Bank (WB) arranged a workshop for journalists titled “Regional Cooperation in South Asia” in Nepal from June 12 to 14. During this workshop, a special visit of an electricity transmission station was arranged, where electricity was linked between India and Nepal. During this visit, it was stated that Nepal had been importing electricity from India since 1965 and the average tariff for electricity from India was around Nepali rupee Rs 6.50 per unit. This was not bringing any relief to consumers as the electricity was imported in bulk and then added to the system.

On the issue of load shedding, it was stated that this transmission station was fully aware of the areas which faced load shedding through installed computers. So, too, in the case of Pakistan, it could easily be monitored in terms of load management.

However, experts of the energy sector, both in the South Asian states as well as in the multilateral donors’ agencies, believe that the dream of achieving integration in the energy sector by ensuring connectivity through grid stations could not be achieved without New Delhi’s initiative to come out from its restrictive regime in the import of electricity.

Currently, electricity is classified as a “restrictive item,” in accordance with India’s import policy as it requires a certification from the Ministry of Foreign Affairs, the Ministry of Commerce and the Power sector, which indicates clearly that effectively New Delhi has imposed a ban on importing electricity from all SAARC states for practical purposes.

Without India’s participation, no country in South Asia could interconnect its electricity with other countries; hence New Delhi would have to relax its restricted regime if the dream of regional integration is to materialize in the next few years.

At the moment, India, Bhutan is trading electricity, in which India is the net importer, while in the case of Nepal, India, Katmandu is the net importer.

The data shows that the energy deficit would be doubled in the next 10 years till 2020 in the SAARC region as projected demand would go up to 2,920,693 Gig watt hour (GWh) per year, till 2010 compared to 1,273,668 GWh per year demand in 2010 in all the SAARC region. The demand in Bangladesh would go up to 71990 GWh, Bhutan 3703 GWh, India 2,550, 000 GWh, Maldives 2447 GWh, Pakistan 26, 1523 GWh, Nepal 8990 GWh and Sri Lanka 22040 GWh till 2020.

The peak demand in the South Asian countries is projected to increase manifold in the next eight years as in the case of Pakistan it would go up to 46,000 Megawatt (MW), India 280,000 MW, Bangladesh 14,000 MW, Nepal 5000 MW in case of high growth, and Sri Lanka 5000 MW till 2020.

Most SAARC member states are facing a severe peak and energy deficit, which would further deepen and in case of an aggravated situation, it would have a serious impact on economic growth and ultimately poverty.

There are enough reserves in the region which, if harnessed, should solve the regional problem. Hence there was no option but for SAARC member states to join hands to interconnect their grids, trade electricity and harness their reserves for their own and common benefit.

In the historical perspective of ensuring energy trade, the fifteenth SAARC Summit held in Colombo 2-3 August 2008, stressed the need to develop regional hydro-potential, grid connectivity and gas pipelines. The possibility of evolving an appropriate regional intergovernmental framework was also noted. The third meeting of the SAARC Energy ministers in Colombo in January 2009 decided to form Expert Groups for different commodities and services.

The fifth meeting of the SWGE (Thimpu 29-30 April 2009) recommended the carrying out of a review/study on the prevailing laws and regulatory framework by the SAARC Energy Center (SEC) with financial assistance from SAARC-Japan Special Fund(SJSF).

The first meeting of the “Taskforce to evolve a common template on the technical and commercial aspects of the electricity grid interconnections among SMS” was held on Dec 4, 2008 whereby three sets of questionnaires were circulated amongst the SMS.

The second meeting of the Task Force was held on the 25-26th June 2009 in Shimla (India), where the deadline for the responses was given as the end of Sept 2009. The responses received by the due date were appended as Common Template. Appended responses were presented as Draft Common Template in the SAARC Working Group on the Energy meeting in Goa in December 2009.

The Roadmap for Development of the “SAARC Market for Electricity (SAME)” had been prepared and discussed in the Second Expert Group meeting in Udaipur in January 19 and 20, 2011.

A study has been initiated by the ADB, with its technical assistance, to establish a Regional Power Exchange in South Asia.

The possible roadmap includes first interconnections at the bilateral level, energy transactions at the bilateral level, to practice bilateral trading, many bilateral interconnections will facilitate multilateral transactions, development of exchange, market rules and regulatory framework for regional, multiple trading.

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