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Power Trading in South Asia : Geo-politics and Opportunities Prof Mahendra P Lama School of International Studies Jawaharlal Nehru University New Delhi.

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Presentation on theme: "Power Trading in South Asia : Geo-politics and Opportunities Prof Mahendra P Lama School of International Studies Jawaharlal Nehru University New Delhi."— Presentation transcript:

1 Power Trading in South Asia : Geo-politics and Opportunities Prof Mahendra P Lama School of International Studies Jawaharlal Nehru University New Delhi & Founding Vice Chancellor Central University of Sikkim 11 December 2012

2 Energy Security : Dual Dimensions South Asian countries : two crucial perspectives i) sustainable development ii) security-militaristic angle. Sustainable development : energy security impinges upon : economic, environmental and social developments. South Asia : very nature and direction of sources of energy supplies, demand, consumption and distribution and related geo-politics call for a regional approach to energy security Macro depiction : energy resources distribution and use.

3 Oil and Gas Resources of South Asian Countries Item BangladeshBhutanIndiaMaldivesNepalPakistan Sri Lanka Oil (MTOE) Resource Potential Proved Resources Used so far Available Resources Current Production/Yr Resource/ Production Ratio Gas (BCM) Resource Potential *** Proved Resources , Used so far Available Resources Current Production/Yr Resource/ Production Ratio

4 Coal and Hydro Resources of South Asian Countries ItemBangladesh*BhutanIndiaMaldivesNepalPakistan Sri Lanka Coal (MT) Resource potential , **185, Proved Resources Used so far0.0 NA0.00.1~ Available Resources7240, Current production/Yr. 10.0l~ Resource/ Proved Ratio ~ Hydro Potential (MW) Resource potential77550,000301, ,91540, Utilized Resources Used so far *

5 Macro depiction : energy resources distribution and use. Sources : Skewedly distributed. Therefore - no individual nation in South Asia could ensure and endure energy security alone. Interdependence and sustained cross border exchanges : the only way out Geo-politics Dimensions Energy security : entangled in the geo-politics of the region. India’s centrality : size and its exclusive geographical location Shares common border with all No other two countries have common borders. 17 provincial states (out of 28) have international land borders. Borders - represent the galore of opportunities

6 Area and Population in the Border Regions No. of States17 No. of Districts94 No. of Blocks350 No. of Villages19488 Population37.72 million Area2,40, sq. kms. Length of Border15,106.7 kms. India has Km of land border running through 94 districts in 17 States. These States in the country have one or more international borders and can be regarded as frontline States from the point of view of border management.

7 Various cooperation / integration ventures (various energy related ideas, projects and linkages) hindered in the past by narrow politico-strategic interpretations of these borders. Cooperation implies : sharing of resources, geographical locations and even physical and social infrastructures This also means sharing of national control over them. Abandoning of national control : imply loss of national sovereignty. Bangladesh (gas) and Nepal (hydel resources). Brings an element of reluctance and introduces withdrawal syndrome from regional cooperation process.

8 Examples : gas from Bangladesh Hydel power projects like Karnali, Pancheswar and Rapti in Nepal. Tackling of this perception about losing national sovereignty is a major issue Equally true of India : Tripartite Agreement between India-Myanmar-Bangladesh to import pipeline gas from Myanmar via Bangladesh – Jan 2005 India : a major policy shift : i) Bilateral to trilateral ii) Given the negotiation to Ministry of Petroleum Ministry of External Affairs will be consulted

9 India did not agree to Bangladeshi conditions : i) Trade corridor to Nepal and Bhutan, ii) Direct power import from Bhutan and management of trade deficit These are reasonable demands in context of steady liberalization and economic integration initiatives in the region India has to now bear a very heavy cost of diverting gas pipeline through its own territory alone in Assam Or forget the pipeline. In the process it has forgone opportunity to make substantive geo-strategic and socio-economic gains in the long run.

10 Including : Access to gas in Bangladesh, Transit corridor to North East India through Bangladesh And Cross border movement of people in search of better livelihood. For India, reduce a huge transaction/transport costs in its development supplies to NE region. Core content of Look East Policy Will also open up other vistas of cooperation : use of Bangladeshi ports, industrial cooperation based on exchange of local raw materials from across the border and the possibility of gas trading.

11 Electrification of Households in South Asia Country Population (Millions) % of Rural Population Total No. of Households (Millions) % of Electrified Households Afghanistan Bangladesh Bhutan India m56.0 Maldives Nepal Pakistan Sri Lanka Security- militaristic plane : energy insecurity could bring large-scale instability in South Asia

12 Import Dependence of Energy Sector in South Asia Region CountriesImport Dependence with respect to Total Energy Import Dependence With respect to commercial Energy Afghanistan360 Bangladesh1330 Bhutan924 India2229 Maldives59100 Nepal1187 Pakistan1826 Sri Lanka4178 External front : predominantly dependent on external sources Supply and price risks : inject insecurity and Increase economic vulnerabilities

13 Therefore from both conceptual perspectives of i) sustainable development ii) security-militaristic angle essentiality of rational management of natural resources in the South Asian countries aimed at optimizing socio-economic benefit and minimizing the security-militaristic instabilities are very germane and critical. Directly implies : choice is singularly limited to cooperation and integration

14 Scope for Cross Border Energy Trade Two primary hypotheses : i) Cross border Energy trade with a comprehensive regional grid and pipeline network will act as a major confidence building project in making the process of economic integration in SAARC a reality ii)Cross border energy trade could ultimately be a panacea for many of the development ills in this region particularly for the 5 LDCs.

15 Basic Premise Cross border energy trade can lead to : # Bridging of seasonality gaps #Reduced cost per unit of energy supplied and losses in the systems # Accelerated availability of supplies to meet suppressed demand. # Improved system reliability and quality of supply # Integrated transmission and distribution systems that could reduce energy supply costs

16 Equally vital : generation of chain of stakeholders Confidence Building : New and sturdy agents and stakeholders : power producers, distributors, traders, transmission and grid operators, pipeline builders, credit donors, technology exporters, managerial and users like industries, households, transports and agriculture. They have tremendous absorptive capacity of shocks emanating from any major political actions, apprehensions and dislocations. They prevent conflictual precipitations.

17 Positive Stake holding as a CBM Most glaring aspect in contemporary South Asia non-existence of peace and cooperation constituency Therefore CBMs used in the past in South Asia need to be re-evaluated, re-designed and re-built. So far India and Pakistan extensively depended on military and political CBMs. Last 50 years no political and military CBMs have sustained..

18 Or even if they have sustained they have remained totally emasculated CBMs were addressed to only those who had serious stake holding in perpetuating conflict and keeping conflict alive. This meant that the stakeholders thrived on the adverse situations They are in microscopic minority, they have somehow been able to closely align with the power echelons and marginalize overwhelming majority.

19 So, Non-Military CBMs are very critical This makes us ponder over vital question of designing new CBMs like Gas Pipeline and Cross Border Power Inter-connections As there are stake holders in keeping the conflict alive, there are stake holders for building the peace. We have not adequately addressed ourselves to the latter. Need of the day : Emphasis on Economic & Commercial CBMs Stakeholders outside the government – state conglomeration are emerging to be vital and decisive.

20 However in the same South Asia, the CBMs built by the economic stakeholders have mostly sustained. India’s relations with the smaller neighbours including Nepal, Bhutan, Bangladesh and Sri Lanka have several examples to offer. There have been serious geo-political crises these countries have faced vis-à-vis India but they have been remarkably momentary and have showed urgent recovery mainly because of large scale economic stake holding on both sides of the border.

21 Contrastingly striking : India-Pakistan relations : there has been no such stake holding in economic-commercial sector Whatever stake holding they have, they are unfortunately all on the side of keeping the conflict alive. For example, the arms purchase lobby, smuggling syndicates and the Dubai based traders. So, higher the possibility of conflict between India & Pakistan, the better and wider are opportunities & avenues for these negative stake holders, to maximise their gains. This is despite close physical proximity, cost effectiveness, product complementarities, socio-cultural bonds and availability of basic infrastructure developed during the pre-independence period.

22 Gas pipeline and power inter-connections will bring positive stakeholding into prominence. It will be a win-win situation for the region and the world. There will be conscious and constant efforts to thwart and abort this process. We can infact see this happening in Iran-Pakistan-India Gas pipeline project. However, the changing nature of economic actors and their increasing support base in the civil society are rather forcing policy designers on both sides of the border to procreate modalities for such positive stakeholding.

23 Increasing Demand-Supply Gaps in energy sector Likely to deepen further Tremendous Domestic pressures Borders as Opportunities : Fast Emerging New Actors are emerging Federal Units are becoming more vocal and powerful

24 Bangladesh “ Energy crisis puts economy at risk”, “Bangladesh PM Orders 1hr Outage Every Alternate Hour”, The Daily Star, Dhaka, April 6 and 8, 2010 Nepal “Power cut back to 12 hours”, REPUBLICA, KATHMANDU, April 3, 2010 Pakistan “ Power crisis : Punjab government decides to cease Commercial activities after sunset,” The Business Recorder, Thursday, April 22, 2010

25 SAARC Power Exchange Three Options : 1Bilateral 2 Third Country Option : Import from Bhutan, Nepal and other non-SAARC countries 3Regional Power Pool Options

26 1 Bilateral Options : Success Stories India - Bhutan Energy Exchange: Long term PPAs with Department of Energy, Bhutan Chhukha HEP (336 MW); Kurichu HEP (60 MW) Tala HEP (1020 MW) Run-of –the River Projects : 4 Hrs peaking Electricity export – over 84% of total generation [ 1,494 MW] Internal consumption ~ 1152 MU (Peak load 187.5MW) Annual export ~ 5922 MU Electricity Sale revenue US $ 203 million per annum [47% of national revenue]. A number of hydro projects under development in Bhutan 10,000 MW by year 2020

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28 India - Nepal Energy Exchange MW power ( Total export-import annual volume MU) Arrangements/ tariff agreed under bilateral Power Exchange Committee Bi-lateral energy trade ( export to Nepal) based on commercial terms : 15 MU : 50 MU Limited exchange due to inter-connection limitations 400kV Transmission Inter-connection under development Hydro-electric projects for export under development in Nepal

29 Nepal - Lost Opportunities Avg. annual runoff: 225 billion m 3 Theoretical hydro potential 83,000 MW - about 2.6% of world’s hydro power capacity Economically viable : 43,000 MW So far harnessed : Total Iinstalled capacities in Nepal is 687 MW. Nepal : Added hardly 6 MW per annum Bhutan – 2011 : Added 34 MW per annum

30 2 Third Country Option Afghanistan signed a MOU to provide ‘TRANSIT’ electricity as part of the Central Asia South Asia Regional Electricity Market [CASAREM] Afghanistan will benefit from the CASAREM transmission line and will be able to meet its future needs as steep growth is expected (especially for Kabul and vicinity)

31 Existing Transmission Lines Tajikistan to Kundoz 110kV Operating at 20kV Turkmenistan To Andkoh & other Border towns 110kV Turkmenistan to Herat 220kV Operating at 110kV Iran to Herat 132kV + 20kV Border towns Iran to Zaranj 20kV Uzbekistan to Mazar-i Sharif 110kV

32 India-China Border Exactly fits into “develop-the-west” campaign launched in China in 2000 and generation of surplus power in Indian Himalayan States in Sikkim, Arunachal Pradesh, Uttaranchal and Himachal Pradesh China’s western region covers 2/3 rd of the nation’s territory, Population 23 percent of the national total. Nine provinces : Gansu, Guizhou, Ningxia, Qinghai, Shaanxi, Sichuan, Tibet, Xinjiang and Yunnan. Plenty of land and natural resources Eastern China’s km long coastlines brought fortunes to China in the last two decades, Now : western China with 3500 km land frontier lines that will become second golden area of reopening. Huge demand for power

33 LHASA (4000m.57km.) CHUSUL (4200m., 3.5km.) NAKARTSE (4410m.,28km.) GANGTOK (1800m., 0km.) YATUNG (1600m., 31km.) GYANTSE (3990m.,10km.) KANGMAR (4600m.,26km.) GALA (4400m.,33km.) SHIGATSE (3860m.) PANAM DZONG (3800m.) · B H U T A N C H I N A T I B E T I N D I A S I K K I M N E P A L Map Not To Scale Gangtok-Lhasa Trade Route NATHU LA (4350m.54km.) W E S T B E N G A L SEVO KkkKK K RANGP O SILIGURI(136m.,128k m.) To Guwahati Sikkim Tibet Highway TSANGPO BRIDGE (4000m., 17km.) KHAMBA LA (4794m., 30km.) YASIK (4390m., 19km.) KARO LA(4960m., 41km.) SIMI LA (4400m., 15km.) NENYING (4400m., 13km.) SAPUGANG (4300m., 24km.) PHARI DZONG (5000m., 38km.) TANG LA (5060m., 13km.) TUNA (4800m., 19km.) Friendship Highway Friendshi p Highwa y TRADE ROUTE LA (PASS) BRIDG E LEGEN D

34 3Regional Power Pool Options Some Successful Power Pools based examples of energy exchange

35 Regional Arrangement Member Countries Union for the Coordination of Transmission of Electricity (UTCE) Spain, Portugal, France, Belgium, Italy, Netherlands, Luxemburg, Austria, Germany, Switzerland and now extended to Poland, Czech Republic, Slovak Republic, Hungary, Slovenia and Croatia. Nord PoolNorway, Sweden, Finland & Denmark North American Electric Reliability Council (NERC) United States and Canada. Southern African Power Pool (SAPP), South Africa, Lesotho, Mozambique, Namibia, Malawi, Zimbabwe, Zambia, Botswana, Angola, Swaziland & Tanzania The Commission of Regional Power Integration (CIER) Jordan, Bahrain, Tunisia, Algeria, Saudi Arabia, Syria, Libya, Egypt, Morocco, Mauritania, Yemen, Iraq, Lebanon, Palestine, Dubai and Qatar South America, power trading Argentina, Paraguay & Uruguay. Central America

36 SOUTHERN AFRICAN GRID

37 South East Asia : Greater Mekong Sub-region 5 countries Cambodia, Lao People's Democratic Republic, Myanmar, Thailand and Vietnam + 2 provinces in PRC Yunnan and Guangxi Zhuang Autonomous Region Area 2.6 mn km 2 Population >313 mn (~5% of world population)

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39 Hydropower Resources, GW Total: 334 GW

40 Generation in Laos, Thailand and Viet Nam (315 MW + 1,931 MW) Transmission and distribution in Cambodia, Laos, PRC and Viet Nam Present Power Trade Bilateral agreements Hydropower export/import (150 MW Nam Ngum 1, 40 MW Xeset) Hydropower exports from Laos to Thailand (e.g. 210 MW Theun Hinboun, 150 MW Houay Ho) Various border power trade between countries (e.g. Malaysia-Thailand, Thailand-Laos, Laos-Viet Nam)

41 3,000 MW 5,000 MW 2,000 MW Planned power exports

42 GMS- Cross Border Power InterconnectionsGMS- Cross Border Power Interconnections 500 kV DC Interconnection (PRC – Lao PDR – Thailand)500 kV DC Interconnection (PRC – Lao PDR – Thailand) 500 kV GMS Power Interconnection (Thailand – Lao PDR – Viet Nam)500 kV GMS Power Interconnection (Thailand – Lao PDR – Viet Nam) 115 kV Line (Southern Lao PDR to Cambodia):115 kV Line (Southern Lao PDR to Cambodia): GMS Power Transmission Project (Cambodia): ongoing ADB funded project (target completion: 2008)GMS Power Transmission Project (Cambodia): ongoing ADB funded project (target completion: 2008) 115 kV Line (Viet Nam to Cambodia):115 kV Line (Viet Nam to Cambodia):

43 GMS- Developing the Grid Interconnection Infrastructure Focus: Essential physical power interconnection until 2020 Harmonization of transmission planning, design, and operational practices (performance standards) Power infrastructure database design and implementation Regional Indicative Master Plan on Power Interconnection (2002) Regional Master Plan to be developed as agreed by GMS members in January 2006

44 Several Bilateral Options in South Asia Exchange of power between India and Bangladesh on both sides: techno-economically viable.

45 India's proposed Power Import from Pakistan 1998 Pakistan’s offer to India to sale surplus power Discussions : Power Grid Corporation of India Limited (PGCIL) and WAPDA led various independent power producers (IPPs) in Pakistan 2nd Draft of the Interconnection and Operating Agreement was discussed on 1 February 1999 Tariff : major stumbling block WAPDA offered : US 7.2 cents/KWH While Indian side offered : US 2.25 cents Negotiations broke off

46 Transmission Arrangement Pakistan KV primary transmission system Extending from Jamshoro in the south to Tarbela and Peshawar in the north. Lines run very much near to the adjoining borders of India May not require complex transmission extensions : Designated substations Dinanath (Lahore) in Pakistan and Patti (Punjab) in India.

47 "There is a complete network on our side and of course on their (India) side as well. What we need are the connections, which would take only a couple of weeks". Statement by the Power Minister of Pakistan Gohar Ayub Khan,

48 Location of Power Generation Facilities in Bangladesh along India-Bangladesh Border Location(MW) Approx distance Near Mizoram Borders Kms Kaptai Hydro Electric180 Raujan Steam Turbine420 Sikal Baha ST60 Sikal Bawa GT56 Near Tripura Borders Kms Shahjibazar GT96 Shajibazar GT70 Ashuganj ST128 Ashuganj ST450 Ashuganj combined cycle90 Ashuanj GT56

49 Location Power Generation Facilities in India along India-Bangladesh Border LocationCapacity (MW) Approx distance West Bengal – 30 Kms Farakka thermal Station ST 2000 Assam24060 – 70 Kms Bongaigaon ST240 Tripura11610 – 20 Kms Rokhia GT32 Agartala GT84

50 Large Number of Grid Substations at /132 KV levels on both side of the border. Some of these substations are so close : could be interconnected at a very nominal cost and within a very brief time span to facilitate power exchange/trading. Cities/town, such as Agartala, Rokhia and Farakka on the Indian side of the border, located on the border itself or extremely close to it. These existing substations supplying power in their own territory could serve the neighboring towns in Bangladesh as well.

51 List of Substations Located very near to the Border Sub-Station on Bangladesh Side Sub-Station on Indian Side Approx. Distance Approx. Cost INRs Million 230/132 KV Hathazari (3*150 MVA)NA Comilla (N) (3*75 MVA)Rokhia3060 Ashuganj (2* 150 MVA)Agartala50100 Ishurdi (9 * 75 MVA)Gokarna /33 KV s/s Hathazari (2*63MVA)/Chandroghona NA Dohazari (2*40 MVA)NA Cox’s Bazar (2*40 MVA)NA Comilla (N) (1*40 MVA)Rokhia Trip.3036 Comilla (S) (4*41 MVA)Rokhia Trip. (Assam) 3036 Fenchuganj (2*20 MVA)Badarpur

52 Trading/Exchange of Small quantities of Power between India and Bangladesh Large number of points exist along India-Bangladesh border where distance of interconnections between the two sides may be well within 20 to 60 kms. 21 grid substations combining both sides at 230/132 KV levels where distance from the border is less than 20kms. Grid interconnections on two sides would permit larger power flows and would integrate the two Grid systems to bring them to same frequencies.

53 Post - Manmohan Singh - Sheikh Hasina Meeting, Jan 2010 MOU signing is done A high level Steering Committee set up. Joint Interconnection Study (Ishurdi, Bangladesh- Bahrampur, India) is being done Potential Bilateral Energy Cooperation under consideration Power Import of at least 500 MW from Western Interconnection (Bangladesh- West Bengal) Power Import of at least MW from Eastern Interconnection (Bangladesh- Tripura) Regional Grid construction for power trade Human Resource Development of Utility professionals Joint Venture Power Generation Projects, especially large coal power projects

54 Singh-Hasina Dhaka Meeting – Sept 2011 MoU for cooperation in the Renewable Energy sector between the two countries : supplement the conventional sources. Urged expeditious conclusion of Power Purchase Agreement between BPDB and NTPC for purchase of 250MW power from India by Bangladesh. It would also procure additional 250MW of power from the open market in India utilizing the full capacity of power Transmission line being established through inter-grid Connectivity at Bheramara and Behrampur.

55 Noted that BPDB and NTPC Joint Venture Agreement for setting up of 1320MW coal based power plant in Bagerhat. Conducting of feasibility reports for setting up of a similar 1320MW coal based power plant at a suitable location in Chittagong.

56 TP-HVDC MP- HVDC MA-HVDC MA-HVDC/BB

57 South Asia Energy Ring Central Asia Afghanistan Nepal Pakistan Iran Bhutan Technology Transfer/ Cooperation India Myanmar Bangladesh South East Asia Electricity Gas Technology Transfer/ Cooperation Maldives Sri Lanka

58 SAARC SUMMIT Declarations Islamabad Declaration 2004 : Concept of Energy Ring. Dhaka Declaration 2005 Establishment of the SAARC Energy Centre to promote development of energy resources and energy trade in the region; Colombo Summit Concept of Regional Inter-governmental Framework Colombo Meeting of Energy Ministers Pursuing Energy Ring and Formation of Sectoral Expert Groups (e.g. gas, electricity, renewable energy etc.) Thimphu Summit- April 2010 Authorized the SAARC Energy Centre in Islamabad to prepare an Action Plan on Energy Conservation Noted India’s proposal to prepare a Roadmap for developing SAARC Market for Electricity (SAME) on a regional basis.

59 South Asia - Cooperation Challenges Geo-political immunisation of energy sector cooperation De-politicisation and De-securitisation of deals though hard to practice, will also do away with unnecessary national prejudices. Just one Single Cross Border three country Project Goodwill and confidence building Integrate regional energy planning Arrange/meet large fund requirements-Private sector priority Linkages, physical infrastructure ( Transmission, gas pipe) Graduate from bilateral to multi-lateral Create competitive regional power market Build institutional and HR capacity building

60 Thank You


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