According to Asian Development Bank (ADB), energy shortage in member states of the South Asian Association for Regional Cooperation (SAARC) is holding back the countries’ socioeconomic development.
Petroleum and natural gas are among the largest import items among the member states, resulting in foreign currency outflow.
The region has surplus availability of electricity supply, but a large percentage of population does not have access to electricity. Where available, power outages of 8–16 hours a day happen in some countries in the region.
People with access to electricity vary from 33 percent in Afghanistan to 100 percent in the Maldives.
Given that South Asia has a total population of nearly 1.8 billion, people without access to electricity number in millions. This, according to ADB, is not ideal from the perspectives of human and economic development. “This could be one of the reasons South Asia is one of the poorest regions in the world.”
According to ADB report on energy cooperation within the SAARC states, all SAARC member states are dependent on petroleum imports, some even up to 100 percent of the demand. “Given the limited possibilities for regional trade in petroleum, natural gas, and other hydrocarbon fuels, energy cooperation in South Asia has to primarily focus on cooperation in the electricity sector.”
A cross border electricity trading agreement among the member states was inked in 2014. However, besides a few bilateral arrangements in electricity trading, a full-fledged cooperation, wherein all member states are involved, could not materialise. ADB had found that domestic laws of member states need to be harmonised to facilitate cross border power trading.
Recognising the need for the establishment of a regional power exchange and electricity market in South Asia, the SAARC Secretariat, with ADB assistance, has undertaken a study to establish the South Asia Regional Power Exchange (SARPE).
It was recommended that the member states needed to expedite its establishment. “Until the time SARPE becomes operational, member states could designate one or more power exchanges already operational in some member countries as the regional power exchange to facilitate cross-border electricity trade, as a precursor to the establishment of SARPE, and then decide whether to continue with this arrangement or make SARPE the only power exchange to deal with cross-border electricity trade in the region.”
Knowledge sharing and joint research related to power generation, transmission, distribution, energy efficiency, reduction of transmission and distribution losses, and grid integration of renewable energy resources are among other recommendations.
One of the factors that delays power projects in the region, according to the report, is the multiple documents the member nations use at various stages of project planning to the stage of implementation. Harmonising tender documents, project award agreements, power purchase agreements, fuel supply agreements, transmission service agreements, and tolling and their use will make projects happen faster, saving time and money.
A review of the country’s existing legislations and rules found that Bhutan intends to develop its hydropower resources as a revenue earner for the economy and necessary provisions were made in the Bhutan Electricity Act 2002.
“The laws and regulations have clear provisions to promote cross-border electricity trade,” the report stated.
Since India is the biggest trading partner, the report stated that India’s regulation and policies have all the necessary provisions for the creation of a healthy electricity market. However, the Act, governing the rules and policies, is silent on cross-border electricity trade. “A redeeming feature of the Act is that India’s electricity market has been smoothly functioning under its provisions. If the SAARC member states so choose, the requisite provisions can be adopted with suitable modification, wherever necessary, for the creation of a regional electricity market.”
It was observed that India might need to extend the provisions of the Act to cover its cross-border electricity trade as well. “Small modifications may be required to fully harmonise the provisions of the Act with those of other countries in the region for the implementation of the framework agreement.”
Since Afghanistan is in the process of formulating its electricity laws and regulations, there is an opportunity to align its laws and policies with the requirements for the implementation of the framework agreement.
As for Bangladesh, it started electricity import in the recent past from India and so has made certain provisions in its energy policy and plans to meet a part of its electricity demand through imports from neighbouring countries.
Bhutan and Nepal have made elaborate provisions in their electricity laws and regulations to promote regional power trade.
The electricity laws and regulations of India and Pakistan are found to be exhaustive enough to govern sector operations within these countries. However, the scope of the laws has to be widened to cover cross-border trade as well.
Sri Lanka needs to remove the bottlenecks in the electricity laws and regulations in line with the needs of creating an electricity market and to participate in cross-border electricity trade. The Maldives may soon take necessary action on items of the framework agreement relevant to its participation. However, it is not possible to connect the country’s power system to any of the other systems in the foreseeable future due to its geographical location, extremely meagre demand for electricity, and technological limitations.
During the financial year 2013–2014, the total electricity generation of all SAARC countries put together added up to 1,116,229 GWh against the total demand of 935,540 GWh.