Energizing the India-Bangladesh Partnership

NE News, March 24, 2023
By Mihir Shekhar Bhonsale

Cooperation in the energy sector has emerged as a hallmark of cooperation between India and Bangladesh. At a time when the world is staring at an energy crisis given the supply chain disruptions caused by the Russia-Ukraine war, the synergythat Dhaka and India have shown in the energy sector is exemplary.

India pursuant to its Neighbourhood First Policy has stood by its neighbor in difficult times. Last week on March 18, Indian Prime Ministers Narendra Modi and Bangladesh Prime Minister Sheikh Hasina inaugurated the India-Bangladesh Friendship Pipeline(IBFP) making it the first cross-border energy pipeline transporting high-speed diesel.

The Friendship Pipeline is built at an estimated cost of INR 377 crore, largely borne by grants from India, connecting Siliguri in West Bengal to Parbatipur in Bangladesh. It has begun transporting high-speed diesel to seven districts in northern Bangladesh.

Assam’s’ Numaligarh Refinery Limited has been supplying petroleum products to Bangladesh since 2015 and Diesel was supplied to Bangladesh in railway carriages. The India-Bangladesh Friendship Pipeline has put in place a sustainable, reliable, cost-effective, and environment-friendly mode of transporting High-Speed Diesel.

A decade of energy cooperation

Energy cooperation between India and Bangladesh began in 2010 when the two countries agreed on a cross-border connection between Behrampur in West Bengal to Behremarain Bangladesh.

A MoU was signed between the two countries during PM Sheikh Hasina’s visit to India in 2010 laying down the terms for proposed cooperation in the power sector. Subsequently, the first cross-border connection was put into operation in 2013.

In the 2020 Virtual Joint Statement, India and Bangladesh also welcomed the signing of the Framework of Understanding on Cooperation in the Hydrocarbon Sector. Both countries also agreed in their statement to enhance cooperation in energy efficiency and clean energy, including biofuels.

This point on renewables was reiterated in the 2022 Joint Statement issued by the two countries during PM Sheikh Hasina’s visit to India, agreeing to cooperate in green energy.

During the India-Bangladesh Summit meeting held in 2022 Prime Minister Narendra Modi and Bangladesh Prime Minister Sheikh Hasina jointly unveiled the first unit of the 1320 MW Maitree project plant.

The Northeastern region of India has abundant natural resources, including vast reserves of coal, limestone, coal, oil, gas, and a variety of flora and fauna. The area is a thriving source of the river Brahmaputra and its tributaries, India’s largest perennial water system, which can be used for hydropower, agriculture, and transportation.

India already has regional power system integration with Bangladesh, Bhutan and Nepal. This includes short-term, medium-term and long-term trading arrangements for import and export of electricity with neighboring countries.

This would facilitate regional trade in power and help in meeting the requirement of power in the respective countries thereby moving towards greater energy security in the region.

Meeting the rising demand

The most common source of energy in the BBIN sub-region is fossil fuels. Bangladesh is mostly dependent on natural gas for power generation, whereas India is heavily dependent on coal. Although hydropower is the primary source of energy in Bhutan and Nepal, Nepal must import electricity to meet its needs.

Bangladesh currently imports 60,000 to 80,000 metric tonnes of diesel from India by rail. India is also exporting 1,160 MW of electricity to Bangladesh. Projects such as the India-Bangladesh Friendship Pipeline and the 1320 MW Mai tree Thermal Power Project are likely to push up the exports of fossil fuels and electricity considerably.

Meanwhile, both countries are looking to increase their share of renewable energy substantially. New Delhi has set an ambitious plan to generate 500 GW from non-fossil energy-based sources by 2030, meeting 50 percent of energy requirements from renewables.

Bangladesh wants to increase the share of renewable energy in the country’s power mix to around 40 percent by 2050 from less than three percent now.

Bangladesh is keen on tapping hydropower-based green energy and is keen on buying surplus hydroelectricity from Bhutan and Nepal via India. Thus, there is a prospect for consolidating grid connectivity as intra-regional energy trade is already taking place.

Being resource-rich and strategically located, India’s Northeast may serve as a gate way for Bangladesh’s enhanced access to India. North-East is land-locked and power evacuation will be comparatively cheaper when done through Bangladesh and the latter in turn can get its share of power at effective rates.

study by CUTS International has rightly suggested that a proper kind of policy and infrastructure measures are required for a regional power grid and market that ensures electricity available throughout the region as well as effective use of all transmission assets, further reducing costs.

The time is ripe for expanding the scope of the current bilateral energy trade agreements between the nations into a multilateral trade arrangement inside a regional framework, intraregional commerce in electricity in the BBIN region can be promoted in the medium future.

Nevertheless, for such a regional power market to operate, the region’s nations would have to harmonize and coordinate their institutional processes, technological frameworks, and legal and regulatory frameworks.

An efficient enabler for this is a regional framework agreement on electricity trading under the BBIN.

(The author is an Assistant Policy Analyst, CUTS International global public policy think- and action-tank on trade, regulation and governance).

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