WB offers help for reaching regional inter-party accords on energy trade
Sunday, 11 November 2007
FE Report
The World Bank (WB) has offered to help the South Asian countries, including Bangladesh, India and Bhutan, for reaching inter-country agreements on energy trade for their mutual benefits.
"The WB is uniquely placed to play the part of honest broker and facilitate the parties to reach the initial inter-country agreements articulating the specific interest of the parties, constituting high level decision making bodies and working groups to carry out and review further detailed analytical and technical work to arrive at key decisions," said a WB report released Friday.
There is a wide range of factors, which have hitherto inhibited the growth of intra regional and inter regional energy trade. The most important among them relates to the political and security situation prevailing in the region and its neighbours.
"The political instabilities and circumstances in Nepal, Sri Lanka and Bangladesh and Myanmar had not provided an environment conducive for the evolution of regional energy trade," the report said.
The report, however, has described the potential and identified the main opportunities for development of regional trade in electricity and gas. It has also identified the policies that the governments of the region should pursue to promote cross-border energy trade.
"South Asian Region is enjoying unprecedented economic growth. The growth, however, is becoming constrained by significant shortages in energy supply and unless corrective steps are urgently initiated and implemented it may be difficult to sustain this high growth rates. Key solutions to this problem involves fostering cross border energy investments and promotion of regional energy trade in order to take full advantage of the energy resources available within the region and its neighbourhood," the report added.
It said Bangladesh has been experiencing an annual power demand growth of about 9.0 per cent during the last decade and is expected to have a similar growth rate (8% to 9%) through FY 2020. Financial resource constraints (arising mostly from poor operational efficiency) slow down the pace of capacity additions in generation, transmission and distribution, resulting in a perpetual shortage situation.
Import of power from the Eastern and North Eastern regional grids of India had often been considered an option to meet the shortages in Bangladesh and bilateral discussions between the two countries during the last 15 years focused on interconnections from Jessore, Rangpur, and Sylhet, but did not result in any action, the report said.
In March 1999 Power Grid Corporation of India made a feasibility study for enabling an exchange of power between India and Bangladesh of the order of 150 megawatt (mw) proposing transmission links between Farakka (India) and Ishurdi (Bangladesh) and Kurnarghat (India) and Shahjibazar (Bangladesh).
It said subsequently, the focus shifted somewhat towards the possibility of exporting gas based power to India, while augmenting supplies in Bangladesh. A pre-feasibility study prepared for the government of Bangladesh under the USAID SARI-E programme in 2000 demonstrated that a gas fired combined cycle power plant of 500 mw to 1000 mw capacity located at Bheramara or Sirajganj and exporting a minimum of 400 mw to the eastern grid of India would be competitive in the Indian power market with a delivered power cost of about 4.4 to 4.7 cents/kWh and supporting a well head price of gas of $1.5 to $1.85 per million BTU. Similar power plants located at Sylhet or Fenchuganj exporting power to the northeastern grid of India would also be economic and competitive.
Since then several proposals have been made to the government for similar power plants in Bangladesh which will be primarily for export to India and partly for meeting local demand. In 2000, NTPC of India proposed to build a 1000 mw thermal power plant at Bheramara. The most recent and spectacular example is the proposal of the Tata Group of India.
However, the Bangladesh authorities have not been able to respond positively to any of these proposals. Natural gas is the only energy resource (apart from the recently developed coal resources) available to meet domestic energy demands and the government did not want to make any export commitment until it is sure of the true size of the recoverable reserves of gas in the country. Discovery of significant coal resources and its recent development for a coal fired power plant might have a (favourable) bearing on such decisions, the report added.
The World Bank (WB) has offered to help the South Asian countries, including Bangladesh, India and Bhutan, for reaching inter-country agreements on energy trade for their mutual benefits.
"The WB is uniquely placed to play the part of honest broker and facilitate the parties to reach the initial inter-country agreements articulating the specific interest of the parties, constituting high level decision making bodies and working groups to carry out and review further detailed analytical and technical work to arrive at key decisions," said a WB report released Friday.
There is a wide range of factors, which have hitherto inhibited the growth of intra regional and inter regional energy trade. The most important among them relates to the political and security situation prevailing in the region and its neighbours.
"The political instabilities and circumstances in Nepal, Sri Lanka and Bangladesh and Myanmar had not provided an environment conducive for the evolution of regional energy trade," the report said.
The report, however, has described the potential and identified the main opportunities for development of regional trade in electricity and gas. It has also identified the policies that the governments of the region should pursue to promote cross-border energy trade.
"South Asian Region is enjoying unprecedented economic growth. The growth, however, is becoming constrained by significant shortages in energy supply and unless corrective steps are urgently initiated and implemented it may be difficult to sustain this high growth rates. Key solutions to this problem involves fostering cross border energy investments and promotion of regional energy trade in order to take full advantage of the energy resources available within the region and its neighbourhood," the report added.
It said Bangladesh has been experiencing an annual power demand growth of about 9.0 per cent during the last decade and is expected to have a similar growth rate (8% to 9%) through FY 2020. Financial resource constraints (arising mostly from poor operational efficiency) slow down the pace of capacity additions in generation, transmission and distribution, resulting in a perpetual shortage situation.
Import of power from the Eastern and North Eastern regional grids of India had often been considered an option to meet the shortages in Bangladesh and bilateral discussions between the two countries during the last 15 years focused on interconnections from Jessore, Rangpur, and Sylhet, but did not result in any action, the report said.
In March 1999 Power Grid Corporation of India made a feasibility study for enabling an exchange of power between India and Bangladesh of the order of 150 megawatt (mw) proposing transmission links between Farakka (India) and Ishurdi (Bangladesh) and Kurnarghat (India) and Shahjibazar (Bangladesh).
It said subsequently, the focus shifted somewhat towards the possibility of exporting gas based power to India, while augmenting supplies in Bangladesh. A pre-feasibility study prepared for the government of Bangladesh under the USAID SARI-E programme in 2000 demonstrated that a gas fired combined cycle power plant of 500 mw to 1000 mw capacity located at Bheramara or Sirajganj and exporting a minimum of 400 mw to the eastern grid of India would be competitive in the Indian power market with a delivered power cost of about 4.4 to 4.7 cents/kWh and supporting a well head price of gas of $1.5 to $1.85 per million BTU. Similar power plants located at Sylhet or Fenchuganj exporting power to the northeastern grid of India would also be economic and competitive.
Since then several proposals have been made to the government for similar power plants in Bangladesh which will be primarily for export to India and partly for meeting local demand. In 2000, NTPC of India proposed to build a 1000 mw thermal power plant at Bheramara. The most recent and spectacular example is the proposal of the Tata Group of India.
However, the Bangladesh authorities have not been able to respond positively to any of these proposals. Natural gas is the only energy resource (apart from the recently developed coal resources) available to meet domestic energy demands and the government did not want to make any export commitment until it is sure of the true size of the recoverable reserves of gas in the country. Discovery of significant coal resources and its recent development for a coal fired power plant might have a (favourable) bearing on such decisions, the report added.