Presentation on theme: "Power Trading in South Asia : Geo-politics and Opportunities"— Presentation transcript:
1Power Trading in South Asia : Geo-politics and Opportunities Prof Mahendra P LamaSchool of International StudiesJawaharlal Nehru UniversityNew Delhi&Founding Vice ChancellorCentral University of Sikkim11 December 2012
2Energy Security : Dual Dimensions South Asian countries : two crucial perspectivesi) sustainable developmentii) security-militaristic angle.Sustainable development : energy security impinges upon :economic, environmental and social developments.South Asia : very nature and direction ofsources of energy supplies,demand, consumption and distribution andrelated geo-politics call for a regional approach to energy securityMacro depiction : energy resources distribution and use.
3Oil and Gas Resources of South Asian Countries ItemBangladeshBhutanIndiaMaldivesNepalPakistanSri LankaOil (MTOE)Resource Potential0.960.055763600Proved Resources1570107Used so far0.1083068Available Resources0.8674039Current Production/Yr.33.03Resource/Production Ratio-22.413Gas (BCM)814.52328***7985578.313800,01284144.1460488434.292079511.93234362923
4Coal and Hydro Resources of South Asian Countries ItemBangladesh*BhutanIndiaMaldivesNepalPakistanSriLankaCoal (MT)Resource potential27150.0245,6905.0**185,000Proved Resources724916315.03300Used so farNA0.1~ 200Available Resources0,04.93100Current production/Yr.10.0l~ 4103.3Resource/ Proved Ratio49939Hydro Potential (MW)77550,000301,00042,91540,0002000Utilized Resources2304202950052765001250301.410.21.21662.5*
5Geo-politics Dimensions Macro depiction : energy resources distribution and use.Sources : Skewedly distributed.Therefore - no individual nation in South Asia could ensureand endure energy security alone.Interdependence and sustained cross border exchanges :the only way outGeo-politics DimensionsEnergy security : entangled in the geo-politics of the region.India’s centrality : size and its exclusive geographical locationShares common border with allNo other two countries have common borders.17 provincial states (out of 28) have international land borders.Borders - represent the galore of opportunities
6Area and Population in the Border Regions No. of States17No. of Districts94No. of Blocks350No. of Villages19488Population37.72 millionArea2,40, 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.
7Various cooperation / integration ventures (various energy related ideas, projects and linkages)hindered in the pastby narrow politico-strategic interpretations of these borders.Cooperation implies :sharing of resources, geographical locationsand even physical and social infrastructuresThis 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 andintroduces withdrawal syndromefrom regional cooperation process.
8Examples : gas from Bangladesh Hydel power projects like Karnali, Pancheswarand Rapti in Nepal.Tackling of this perception about losing national sovereigntyis a major issueEqually true of India :Tripartite Agreement betweenIndia-Myanmar-Bangladesh to importpipeline gas from Myanmar via Bangladesh – Jan 2005India : a major policy shift :i) Bilateral to trilateralii) Given the negotiation toMinistry of PetroleumMinistry of External Affairs will be consulted
9India did not agree to Bangladeshi conditions : i) Trade corridor to Nepal and Bhutan,ii) Direct power import from Bhutan andmanagement of trade deficitThese are reasonable demands in context of steady liberalizationand economic integration initiatives in the regionIndia has to now bear a very heavy costof diverting gas pipelinethrough its own territory alone in AssamOrforget the pipeline.In the process it has forgone opportunity tomake substantive geo-strategic andsocio-economic gains in the long run.
10Including : Access to gas in Bangladesh, Transit corridor to North East India through BangladeshAnd Cross border movement of peoplein search of better livelihood.For India, reduce a huge transaction/transportcosts in its development supplies to NE region.Core content of Look East PolicyWill also open up other vistas of cooperation :use of Bangladeshi ports,industrial cooperation based on exchangeof local raw materials from across the borderand the possibility of gas trading.
11Security- militaristic plane : energy insecurity could bring large-scale instability in South AsiaElectrification of Households in South AsiaCountryPopulation(Millions)% of Rural PopulationTotal No. of Households% of Electrified HouseholdsAfghanistan22.2804.46Bangladesh143.87828.7633Bhutan0.7790.1431India106472199.7m56.0Maldives0.34900.068Nepal23.15844.63Pakistan148.729.7450Sri Lanka19.33.8667
12predominantly dependent on external sources External front :predominantly dependent on external sourcesSupply and price risks : inject insecurity andIncrease economic vulnerabilitiesImport Dependence of Energy Sectorin South Asia RegionCountriesImport Dependencewith respect to Total EnergyWith respect to commercial EnergyAfghanistan360Bangladesh1330Bhutan924India2229Maldives59100Nepal1187Pakistan1826Sri Lanka4178
13Therefore from both conceptual perspectives of i) sustainable developmentii) security-militaristic angleessentiality of rational management of natural resourcesin the South Asian countries aimed at optimizingsocio-economic benefit andminimizing the security-militaristic instabilitiesare very germane and critical.Directly implies : choice is singularly limitedto cooperation and integration
14Scope for Cross Border Energy Trade Two primary hypotheses : i) Cross border Energy trade with a comprehensiveregional grid and pipeline network willact as a major confidencebuilding project in making the process of economicintegration in SAARC a realityCross border energy trade could ultimately bea panacea for many of the development ills in thisregion particularly for the 5 LDCs.
15Cross border energy trade can lead to : # Bridging of seasonality gaps Basic PremiseCross border energy trade can lead to :# Bridging of seasonality gaps# Reduced cost per unit of energy supplied andlosses in the systems# Accelerated availability of supplies to meetsuppressed demand.# Improved system reliability and quality of supply# Integrated transmission and distribution systemsthat could reduce energy supply costs
16Equally 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 likeindustries, households, transports and agriculture.They have tremendous absorptive capacityof shocks emanating from any majorpolitical actions, apprehensionsand dislocations. They prevent conflictual precipitations.
17Positive Stake holding as a CBM Most glaring aspect in contemporary South Asianon-existence of peace and cooperation constituencyTherefore CBMs used in the past in South Asianeed to be re-evaluated, re-designed and re-built.So far India and Pakistan extensively dependedon military and political CBMs.Last 50 years no political andmilitary CBMs have sustained..
18Or 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 situationsThey are in microscopic minority, they have somehow been able to closely align with the power echelonsand marginalize overwhelming majority.
19So, Non-Military CBMs are very critical This makes us ponder over vital question ofdesigning new CBMslike Gas Pipeline and Cross Border Power Inter-connectionsAs 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 CBMsStakeholders outside the government – state conglomerationare emerging to be vital and decisive.
20However in the same South Asia , the CBMs built by the economic stakeholders have mostly sustained.India’s relations with the smaller neighboursincluding Nepal, Bhutan,Bangladesh and Sri Lankahave several examples to offer .There have been serious geo-political crisesthese countries have faced vis-à-vis Indiabut they have been remarkably momentary andhave showed urgent recovery mainlybecause of large scaleeconomic stake holding on both sides of the border.
21Contrastingly striking : India-Pakistan relations : there has been no such stake holding in economic-commercial sectorWhatever stake holding they have, they are unfortunately allon the side of keeping the conflict alive.For example, the arms purchase lobby, smuggling syndicatesand the Dubai based traders.So, higher the possibility of conflict between India & Pakistan,the better and wider are opportunities & avenuesfor 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 infrastructuredeveloped during the pre-independence period.
22Gas 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 effortsto thwart and abort this process.We can infact see this happening inIran-Pakistan-India Gas pipeline project.However, the changing nature of economic actorsand their increasing support basein the civil society are rather forcing policy designerson both sides of the border to procreate modalitiesfor such positive stakeholding.
23Increasing Demand-Supply Gaps in energy sector Likely to deepen furtherTremendous Domestic pressuresBorders as Opportunities : Fast EmergingNew Actors are emergingFederal Units are becoming more vocal and powerful
24Bangladesh“ Energy crisis puts economy at risk”,“Bangladesh PM Orders 1hr Outage Every Alternate Hour”,The Daily Star, Dhaka, April 6 and 8, 2010Nepal“Power cut back to 12 hours”,REPUBLICA, KATHMANDU, April 3, 2010Pakistan“Power crisis : Punjab government decides to ceaseCommercial activities after sunset,”The Business Recorder, Thursday, April 22, 2010
25SAARC Power Exchange Three Options : 1 Bilateral 2 Third Country Option :Import from Bhutan, Nepal and other non-SAARC countries3 Regional Power Pool Options
26India - Bhutan Energy Exchange: 1 Bilateral Options : Success StoriesIndia - Bhutan Energy Exchange:Long term PPAs with Department of Energy, BhutanChhukha HEP (336 MW); Kurichu HEP (60 MW)Tala HEP (1020 MW)Run-of –the River Projects : 4 Hrs peakingElectricity export – over 84% of total generation [1,494 MW]Internal consumption ~ 1152 MU (Peak load 187.5MW)Annual export ~ 5922 MUElectricity Sale revenue US $ 203 million per annum[47% of national revenue].A number of hydro projects under developmentin Bhutan 10,000 MW by year 2020
28Arrangements/ tariff agreed under bilateral Power Exchange Committee India - Nepal Energy ExchangeMW power ( Total export-importannual volume MU)Arrangements/ tariff agreed under bilateralPower Exchange CommitteeBi-lateral energy trade ( export to Nepal) basedon commercial terms: 15 MU: 50 MULimited exchange due to inter-connection limitations400kV Transmission Inter-connection under developmentHydro-electric projects for export under development in Nepal
29Nepal- 1911- 2010 : Added hardly 6 MW per annum Nepal - Lost OpportunitiesAvg. annual runoff: 225 billion m3Theoretical hydro potential 83,000 MW- about 2.6% of world’s hydro power capacityEconomically viable : 43,000 MWSo far harnessed : Total Iinstalled capacitiesin Nepal is 687 MW.Nepal : Added hardly 6 MW per annumBhutan – 2011 : Added 34 MW per annum
30Third Country OptionAfghanistan 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)
31Existing Transmission Lines Uzbekistan to Mazar-i Sharif110kVTurkmenistanTo Andkoh & otherBorder towns110kVTajikistan to Kundoz110kVOperating at 20kVTurkmenistanto Herat220kVOperating at 110kVIran to Herat132kV+20kVBorder townsIran to Zaranj20kV
32India-China Border Exactly fits into “develop-the-west” campaign launched in China in 2000 and generation of surplus powerin Indian Himalayan States in Sikkim, Arunachal Pradesh,Uttaranchal and Himachal PradeshChina’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 resourcesEastern China’s km long coastlinesbrought fortunes to Chinain the last two decades,Now : western China with 3500 km land frontier linesthat will become second golden area of reopening.Huge demand for power
33Gangtok-Lhasa Trade Route (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 NC H I N AT I B E TI N D I AS I K K I MN E P A LMap Not To ScaleGangtok-Lhasa Trade RouteNATHU LA (4350m.54km.)W E S T B E N G A LSEVOKkkKKKRANGPOSILIGURI(136m.,128km.)To GuwahatiSikkim Tibet HighwayTSANGPO 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 HighwayFriendshipHighwayTRADE ROUTELA (PASS)BRIDGELEGEND
343 Regional Power Pool Options Some Successful Power Pools based examples of energy exchange
35Regional 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 & DenmarkNorth 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 & TanzaniaThe Commission of Regional Power Integration (CIER)Jordan, Bahrain, Tunisia, Algeria, Saudi Arabia, Syria, Libya, Egypt, Morocco, Mauritania, Yemen, Iraq, Lebanon, Palestine, Dubai and QatarSouth America, power tradingArgentina, Paraguay & Uruguay. Central America
36SOUTHERN AFRICAN GRID Dem Rep of the Congo Congo Gabon Luanda Windhoek LusakaHarareLilongweNairobiGaboronePretoriaJohannesburgCape TownMaputoMbabaneKinshasaBrazzavilleAngolaTanzaniaKenyaMozambiqueSouth AfricaSwazilandLesothoNamibiaZambiaBotswanaZimbabweMalawiRwandaBurundiHPTETNHydro stationPumped storage schemeThermal StationEskom thermal station
37Greater Mekong Sub-region South East Asia :Greater Mekong Sub-region5 countriesCambodia, Lao People's Democratic Republic, Myanmar, Thailand and Vietnam+ 2 provinces in PRCYunnan and Guangxi Zhuang Autonomous RegionArea 2.6 mn km2Population >313 mn (~5% of world population)
40Generation in Laos, Thailand and Viet Nam (315 MW + 1,931 MW) Transmission and distribution in Cambodia, Laos, PRC and Viet NamPresent Power TradeBilateral agreementsHydropower 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)
42GMS- Cross Border Power Interconnections 500 kV DC Interconnection (PRC – Lao PDR – Thailand)500 kV GMS Power Interconnection (Thailand – Lao PDR – Viet Nam)115 kV Line (Southern Lao PDR to Cambodia):GMS Power Transmission Project (Cambodia): ongoing ADB funded project (target completion: 2008)115 kV Line (Viet Nam to Cambodia):
43GMS- Developing the Grid Interconnection Infrastructure Focus:Essential physical power interconnection until 2020Harmonization of transmission planning, design, and operational practices (performance standards)Power infrastructure database design and implementationRegional Indicative Master Plan on Power Interconnection (2002)Regional Master Plan to be developed as agreed by GMS members in January 2006In addition to work on the policy framework of power trade, energy cooperation under the GMS Program focuses on: (i) the essential physical power interconnection in the GMS until 2020; and (ii) harmonization of transmission planning, design and operational practices. GMS members will therefore continue to plan for the building of essential power interconnections to enable power trade based on findings of the master plan study.The EPF and EGP supervised the conduct of the study on the Regional Indicative Master Plan on Power Interconnection, which identified essential physical power interconnections in the region up to 2020, recommended least- cost grid interconnection scenarios, and identified activities to coordinate technical issues needed to link national transmission systems. The study was endorsed in May 2002 during the seventh EGP meeting.The first Focal Group (FG-1) meeting of the RPTCC, held in Hanoi in January 2006, agreed to develop a Regional Master Plan. An update of the earlier indicative master plan, this will seek stronger GMS members’ ownership and commitment over efforts to harmonize generation and transmission plans of individual GMS members with eventual interconnection in mind.
44Exchange of power between on both sides: techno-economically viable. Several Bilateral Options in South AsiaExchange of power betweenIndia and Bangladeshon both sides: techno-economically viable.
45India's proposed Power Import from Pakistan 1998 Pakistan’s offer to India to salesurplus powerDiscussions : Power Grid Corporationof India Limited (PGCIL) and WAPDA led variousindependent power producers (IPPs) in Pakistan2nd Draft of the Interconnection and OperatingAgreement was discussed on 1 February 1999Tariff : major stumbling blockWAPDA offered : US 7.2 cents/KWHWhile Indian side offered : US 2.25 centsNegotiations broke off
46Transmission Arrangement Pakistan - 500 KV primary transmission system Extending from Jamshoro in the south to Tarbela andPeshawar in the north.Lines run very much near to the adjoining bordersof IndiaMay not require complex transmission extensions :Designated substationsDinanath (Lahore) in Pakistan andPatti (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,
48Location of Power Generation Facilities in Bangladesh along India-Bangladesh BorderLocation(MW)Approx distanceNear Mizoram Borders71630-70 KmsKaptai Hydro Electric180Raujan Steam Turbine420Sikal Baha ST60Sikal Bawa GT56Near Tripura Borders89030-50 KmsShahjibazar GT96Shajibazar GT70Ashuganj ST128450Ashuganj combined cycle90Ashuanj GT
49Location Power Generation Facilities in India along India-Bangladesh BorderLocationCapacity(MW)ApproxdistanceWest Bengal200020 – 30KmsFarakka thermal Station STAssam24060 – 70Bongaigaon STTripura11610 – 20Rokhia GT32Agartala GT84
50Large Number of Grid Substations at 220-230/132 KV levels on both side of the border.Some of these substations are so close :could be interconnected at a very nominal costand within a very brief time spanto facilitate power exchange/trading.Cities/town, such as Agartala, Rokhia and Farakkaon the Indian side of the border,located on the border itself or extremely close to it.These existing substations supplying powerin their own territorycould serve the neighboring towns in Bangladesh as well.
51List of Substations Located very near to the Border on Bangladesh Sideon Indian SideApprox.DistanceCost INRs Million230/132 KVHathazari (3*150 MVA)NAComilla (N) (3*75 MVA)Rokhia3060Ashuganj (2* 150 MVA)Agartala50100Ishurdi (9 * 75 MVA)Gokarna200132/33 KV s/sHathazari (2*63MVA)/ChandroghonaDohazari (2*40 MVA)Cox’s Bazar (2*40 MVA)Comilla (N) (1*40 MVA)Rokhia Trip.36Comilla (S) (4*41 MVA)(Assam)Fenchuganj (2*20 MVA)Badarpur 1328096
52Trading/Exchange of Small quantities of Power between India and BangladeshLarge number of points exist alongIndia-Bangladesh border where distanceof interconnectionsbetween the two sides may be wellwithin 20 to 60 kms.21 grid substations combining both sidesat 230/132 KV levels where distancefrom the border is less than 20kms.Grid interconnections on two sideswould permit larger power flows andwould integrate the two Grid systemsto bring them to same frequencies.
53Post - Manmohan Singh - Sheikh Hasina Meeting, Jan 2010 MOU signing is doneA high level Steering Committee set up.Joint Interconnection Study (Ishurdi, Bangladesh-Bahrampur, India) is being donePotential Bilateral Energy Cooperation under considerationPower 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 tradeHuman Resource Development of Utility professionalsJoint Venture Power Generation Projects, especially large coal power projects
54Singh-Hasina Dhaka Meeting – Sept 2011 MoU for cooperation in the Renewable Energysector between the two countries :supplement the conventional sources.Urged expeditious conclusion ofPower Purchase Agreement between BPDB and NTPCfor purchase of 250MW power from India byBangladesh.It would also procure additional 250MW of powerfrom the open market in India utilizing the fullcapacity of power Transmission line beingestablished through inter-gridConnectivity at Bheramara and Behrampur.
55Noted that BPDB and NTPC Joint Venture Agreement for setting upof 1320MW coal based power plant in Bagerhat.Conducting of feasibility reports for settingup of a similar 1320MW coal based powerplant at a suitable location inChittagong.
57South Asia Energy Ring India Myanmar Bangladesh Central Asia AfghanistanNepalPakistanIran Bhutan Technology Transfer/CooperationIndia MyanmarBangladeshSouth East AsiaElectricityGasTechnology Transfer/Sri LankaMaldives
58SAARC SUMMIT Declarations Islamabad Declaration 2004 : Concept of Energy Ring .Dhaka Declaration 2005Establishment of the SAARC Energy Centre to promote developmentof energy resources and energy trade in the region;Colombo Summit 2008- Concept of Regional Inter-governmental FrameworkColombo Meeting of Energy Ministers 2009Pursuing Energy Ring and Formation of Sectoral Expert Groups(e.g. gas, electricity, renewable energy etc.)Thimphu Summit- April 2010Authorized the SAARC Energy Centre in Islamabadto prepare an Action Plan on Energy ConservationNoted India’s proposal to prepare a Roadmap for developingSAARC Market for Electricity (SAME) on a regional basis.
59South Asia - Cooperation Challenges Geo-political immunisation of energy sector cooperationDe-politicisation and De-securitisation of dealsthough hard to practice, will also do away withunnecessary national prejudices.Just one Single Cross Border three country ProjectGoodwill and confidence buildingIntegrate regional energy planningArrange/meet large fund requirements-Private sector priorityLinkages, physical infrastructure ( Transmission, gas pipe)Graduate from bilateral to multi-lateralCreate competitive regional power marketBuild institutional and HR capacity building