Introduction: Factual overview of energy cooperation in South Asia

Currently, there are no multilateral energy projects in the region, and bilateral energy cooperation exists only between India and the smaller countries of Bangladesh, Bhutan and Nepal. The smaller countries of South Asia do not have any energy projects with each other. However, the signing of the SAARC Framework Agreement for Energy Cooperation (Electricity') in October 2014, gave impetus towards greater energy cooperation. The current state of bilateral energy cooperation and an overview of proposed multilateral energy projects are outlined below.


Before 2008, Bangladesh’s conflict-prone relationship with India greatly undermined the prospects of energy cooperation. India and Bangladesh’s cooperation on energy is a recent phenomenon and can largely be attributed to the bonhomie between the current ruling political parties in Dhaka and New Delhi.

The very first India-Bangladesh power project was a 500 MW cross- border transmission line between Bheramara and Baharampur, which came online in 2013. In 2016, a 100MW powerline from the Indian state of Tripura to Bangladesh was officially inaugurated. This was increased to 160MW in 2017. In 2018, the electricity trade through the Bheramara— Baharampur line was increased to 1000 MW, taking the total electricity trade between Bangladesh and India to 1,160 MW. In 2018, the India-Bangladesh Friendship Pipeline was inaugurated. This 130 km pipeline will transfer diesel from Siliguri in India to Parbatipur in Bangladesh from Numaligarh Refinery Limited. The Bangladesh—India Friendship Power Company (Pvt.) a 50—50 joint venture between Bangladesh Power Development Board and India’s National Thermal Power Corporation, is building a 1,320 MW coal-fired power plant near the Sundarbans, the world’s largest mangrove forest (Rasel 2016). Talks are also being undertaken on the construction of transmission lines between the Indian states of Assam and Bihar through Bangladesh. Dhaka has been offered a proportion of the electricity as a transit fee (Karim 2015). In April 2017, agreements for generation/supply/fmancing of more than 3,600 MW electricity were signed between Indian public/private companies and Bangladesh. Currently, several Indian public sector units, such as Indian Oil Corporation, Numaligarh Refinery Limited and Petronet LNG Ltd, are working with their Bangladeshi counterparts in the oil and gas sector of Bangladesh (SARI/EI 2018).


Despite the potential of trade in hydroelectricity, India’s cooperation with Nepal has been constrained by mistrust, conflict and a historical sense of injustice.

The history of Indo-Nepal cooperation on power dates back to the 1950s with the commissioning of the Kataiya Powerhouse on the Koshi Canal. Subsequently, Trisuli, Devighat and Phewa hydro projects were built in Nepal in the 1970s and 1980s with India’s assistance. Indo-Nepal Power Exchange began in 1971 with the exchange of about 5 MW of power, and by 2001—2002, the exchange of power had grown to 100—150MW (Obaidullah 2010b). Currently, 300 MW of electricity is being traded between the two countries. Projects being considered or planned include the 5,600MW Mahakali Pancheswar Project and four cross-border electricity transmission lines, namely the Butwal—Gorakhpur, Duhabi—Pumea, Dhalkebar—Muzaffarpur and Anarmani—Siliguri. In August 2014, the two countries signed a bilateral Power Trade Agreement as well as power development agreements for two hydroelectric projects, the Upper Kamali and Arun III, each with a generation capacity of 900 MW. The implementation of these energy projects has been delayed by a number of bureaucratic and other challenges. In 2019 a 69 km- long pipeline was inaugurated, which will carry two million metric tonnes of petroleum products from Motihari in India to Amlekhgunj in Nepal (SARI/ El 2018).


Bhutan’s energy cooperation with India is underpinned by the status of Thimphu as an unofficial protectorate of New Delhi. The Treaty of Friendship and Cooperation signed between the two countries required Bhutan to consult India on all matters related to foreign policy from 1949 to 2007. The Treaty has since been renegotiated, and Bhutan has expressed the desire for more control of its foreign policy (Baruah 2007). However, India still exerts considerable influence in Bhutan.

The export of electricity from Bhutan is presently limited to India. India and Bhutan’s cooperation on hydroelectricity commenced in 1961 with the 18,000 KW Jaldhaka project, which was followed by the 336 MW Chhukha project in 1974.

There are five major hydropower projects currently operational in Bhutan, all of which are run-of-river schemes: Tala (1,020 MW), Chhukha (336 MW), Dagacchu (126MW), Basochhu (6)4MW) and Kurichu (60MW). All the existing major hydropower projects, with the exception of Basochhu, were undertaken through assistance from India, with about 60 per cent of the cost through grant and the remaining as a soft loan. The pricing of electricity' has been based on various issues including the grant component of funding, the cost of operation and maintenance, and sustainability, rather than any market driven mechanism (Obaidullah 2010b) In 2018, Bhutan’s hydropower generation was 1,616 MW, of which approximately 80 per cent was exported to India. Bhutan’s energy export to India is likely to grow further in the near future. The two countries plan to develop ten hydropower dams to generate around 11,576MW by 2020 (IDSA 2010). At present, three of these projects, the 1,200MW Punatsangchu-I, 1.020MW Punatsangchu-II and 720MW Mangdechhu are under construction, while the rest are in various stages of evaluation and negotiation (SANDRP 2016; SARI/EI 2018).

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