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Power Trading in South Asia : Geo-politics and Opportunities

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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 Bangladesh Bhutan India Maldives Nepal Pakistan Sri Lanka Oil (MTOE) Resource Potential 0.96 0.0 5576 3600 Proved Resources 1570 107 Used so far 0.10 830 68 Available Resources 0.86 740 39 Current Production/Yr. 33.0 3 Resource/ Production Ratio - 22.4 13 Gas (BCM) 814.5 2328*** 7985 578.3 1380 0,0 1284 144.1 460 488 434.2 920 795 11.9 32 34 36 29 23

4 Coal and Hydro Resources of South Asian Countries
Item Bangladesh* Bhutan India Maldives Nepal Pakistan Sri Lanka Coal (MT) Resource potential 2715 0.0 245,690 5.0** 185,000 Proved Resources 724 91631 5.0 3300 Used so far NA 0.1 ~ 200 Available Resources 0,0 4.9 3100 Current production/Yr. 1 0.0l ~ 410 3.3 Resource/ Proved Ratio 49 939 Hydro Potential (MW) 775 50,000 301,000 42,915 40,000 2000 Utilized Resources 230 420 29500 527 6500 1250 30 1.4 10.2 1.2 16 62.5 *

5 Geo-politics Dimensions
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 States 17 No. of Districts 94 No. of Blocks 350 No. of Villages 19488 Population 37.72 million Area 2,40, sq. kms. Length of Border 15,106.7 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 Security- militaristic plane : energy insecurity could bring
large-scale instability in South Asia Electrification of Households in South Asia Country Population (Millions) % of Rural Population Total No. of Households % of Electrified Households Afghanistan 22.2 80 4.4 6 Bangladesh 143.8 78 28.76 33 Bhutan 0.7 79 0.14 31 India 1064 72 199.7m 56.0 Maldives 0.34 90 0.068 Nepal 23.15 84 4.63 Pakistan 148.7 29.74 50 Sri Lanka 19.3 3.86 67

12 predominantly dependent on external sources
External front : predominantly dependent on external sources Supply and price risks : inject insecurity and Increase economic vulnerabilities Import Dependence of Energy Sector in South Asia Region Countries Import Dependence with respect to Total Energy With respect to commercial Energy Afghanistan 3 60 Bangladesh 13 30 Bhutan 9 24 India 22 29 Maldives 59 100 Nepal 11 87 Pakistan 18 26 Sri Lanka 41 78

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 Cross border energy trade could ultimately be a panacea for many of the development ills in this region particularly for the 5 LDCs.

15 Cross border energy trade can lead to : # Bridging of seasonality gaps
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 : 1 Bilateral
2 Third Country Option : Import from Bhutan, Nepal and other non-SAARC countries 3 Regional Power Pool Options

26 India - Bhutan Energy Exchange:
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

27

28 Arrangements/ tariff agreed under bilateral Power Exchange Committee
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- 1911- 2010 : Added hardly 6 MW per annum
Nepal - Lost Opportunities Avg. annual runoff: 225 billion m3 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 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
Uzbekistan to Mazar-i Sharif 110kV Turkmenistan To Andkoh & other Border towns 110kV Tajikistan to Kundoz 110kV Operating at 20kV Turkmenistan to Herat 220kV Operating at 110kV Iran to Herat 132kV + 20kV Border towns Iran to Zaranj 20kV

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 Gangtok-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 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 SEVOKkkKKK RANGPO SILIGURI(136m.,128km.) 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 Friendship Highway TRADE ROUTE LA (PASS) BRIDGE LEGEND

34 3 Regional 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 Pool Norway, 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 Dem Rep of the Congo Congo Gabon Luanda Windhoek
Lusaka Harare Lilongwe Nairobi Gaborone Pretoria Johannesburg Cape Town Maputo Mbabane Kinshasa Brazzaville Angola Tanzania Kenya Mozambique South Africa Swaziland Lesotho Namibia Zambia Botswana Zimbabwe Malawi Rwanda Burundi H P T ET N Hydro station Pumped storage scheme Thermal Station Eskom thermal station

37 Greater Mekong Sub-region
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 km2 Population >313 mn (~5% of world population)

38

39 150 100 26 13 30 Hydropower Resources, GW Total: 334 GW 15

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

42 GMS- 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):

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 In 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.

44 Exchange of power between on both sides: techno-economically viable.
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 - 500 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 716 30-70 Kms Kaptai Hydro Electric 180 Raujan Steam Turbine 420 Sikal Baha ST 60 Sikal Bawa GT 56 Near Tripura Borders 890 30-50 Kms Shahjibazar GT 96 Shajibazar GT 70 Ashuganj ST 128 450 Ashuganj combined cycle 90 Ashuanj GT

49 Location Power Generation Facilities in India
along India-Bangladesh Border Location Capacity (MW) Approx distance West Bengal 2000 20 – 30 Kms Farakka thermal Station ST Assam 240 60 – 70 Bongaigaon ST Tripura 116 10 – 20 Rokhia GT 32 Agartala GT 84

50 Large 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 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
on Bangladesh Side on Indian Side Approx. Distance Cost INRs Million 230/132 KV Hathazari (3*150 MVA) NA Comilla (N) (3*75 MVA) Rokhia 30 60 Ashuganj (2* 150 MVA) Agartala 50 100 Ishurdi (9 * 75 MVA) Gokarna 200 132/33 KV s/s Hathazari (2*63MVA)/Chandroghona Dohazari (2*40 MVA) Cox’s Bazar (2*40 MVA) Comilla (N) (1*40 MVA) Rokhia Trip. 36 Comilla (S) (4*41 MVA) (Assam) Fenchuganj (2*20 MVA) Badarpur 132 80 96

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

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 2008 - Concept of Regional Inter-governmental Framework Colombo Meeting of Energy Ministers 2009 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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