RCSS Policy Studies  13  Chapter 3

 [Chapter 1]  [Chapter 2]  [Chapter 3]  [Chapter 4]  [Chapter 5]

Road to Cooperation in the Energy Sector
It is clear from the discussions in the earlier chapters that, the South Asian sub region comprising Bangladesh, Bhutan, Northeastern and Eastern parts of India and Nepal, has several commonalities in terms of energy use. All these states have not only low level  per capita energy consumption, but also high load growth and shortage of power, in general, and have experienced high level transmission and distribution losses. It may be noted that, though these states have plenty of natural resources, they are facing acute shortage of power. This shortage can be referred to as the energy crisis of this subregion.

Against this backdrop, this study intends to review several initiatives that have been taken in this subregion to achieve cooperation in the energy sector in the last few years. These initiatives are of two types - bilateral and multilateral.  The bilateral power exchange programme has been operationalized between India and Bhutan in a large scale and between India and Nepal to a limited extent. Apart from exporting the excess power to India, these states also buy electricity from India in order to electrify some of their bordering areas, which are not connected with their National Grids.

Interconnection between India and Bhutan:
Since the commissioning of the Chukha Hydroelectric Power Project in Bhutan generating 336 MW of electricity everyday with the financial and technical assistance of India, both parties have witnessed the mutual beneficiality of power trade. Through the development of this project, Bhutan has also benefited in a big way in meeting its requirements through low cost power and earning through export of power to India. On an average, India imports power from this project to the tune of 1400 million Kwh per annum by which Bhutan earns a revenue of about Rs.140 crore.1 According to a report, in 1996, the Chukha power station generated 1906.874 million Kwh of electricity, which was the highest generation achieved since the CHPP was commissioned.  The export of power to India was also the highest annual export so far which was 1495.818 million Kwh for that year.2

The power sold to India by the CHPP is distributed among several neighbouring Indian states of Bhutan namely, West Bengal, Bihar, Orissa and Sikkim. It has already been highlighted that about 25% of the total power supplied to India from the CHPP goes to the Damodar Valley Project, and the balance part is distributed among the states of  Eastern India.

It is expected that the work on the Tala hydroelectric project, which will have an installed capacity of 1020 MW, would further boost the friendship and cooperation between India and Bhutan. For developing this power project, an interconnection with the Indian Grid, which can give the requisite market for power generated in Bhutan world be necssary. At present a 400 KV transmission line has already been planned to supply power from the Tala project to Birpara/Siliguri in West Bengal in the Indian Grid. For further transmission of power from Birpara/Siliguri  high capacity transmission networks are being considered in North Bengal.3 It may be remembered in this connection that an additional 132 KV link already exists between Bongaigaon of India and Gaylegphug of Bhutan.4

Interconnection between India and Nepal:
Similarly, the power exchange across the Nepal-India border started for the first time in early 1972. The initial quantity of power exchanged between the two countries was 5 MW at a fixed price. This exchange of power has subsequently been increased. As a result, the import from India shot up to 14 MW and the export to India to 7 MW.  Influenced by the World Bank, both parties agreed in 1988-89 to increase the power exchange to 50 MW. However, technical and supply constraints on both sides have prevented the trade from reaching the desired level so far.5

The Potential projects like Pancheshwar with capacity of about 6000 MW would be developed to export power to India, which needs special institutional and financial assistance. The other projects which are being considered for development and exporting power to India are West Sati (750 MW) and Arun Hydroelectric Project (685 MW). To transmit power from these projects 765/400 KV lines are being constructed which would terminate at suitable locations.6

As of now, most of the power exchanged between Nepal and India is through the interconnection lines, two at 132 KV level and 14 others at 33 KV and 11 KV levels.  Both these 11 KV and 132 KV lines are used to connect the Gandak power station with the Bihar State Electricity Board (BSEB). An additional 132 KV line from Tanakpur of India to Mahendranagar of Nepal is under construction.7 One point to be noted here is that, till now the Nepalese and the Indian power grids are not directly interconnected at any point. The exchange of power between the two countries is mainly handled by the local operational organizations in isolated areas.8

Multilateral Initiatives:
The initiatives taken at the multilateral level can further be subdivided into two categories – initiatives taken by the South Asian states on their own and the initiatives taken by the South Asian states due to some external factors. Both types of initiatives have been taken in South Asia in recent times.

Among the initiatives taken on multilateral cooperation in the energy sector in South Asia, the one by the Federation of Engineering Institutions of South and Central Asia (FEISCA) is significant. In collaboration with the Institute of Engineers, Bangladesh (IEB), FEISCA organized a two-day workshop on Improving the Availability of Power in South Asia: Search for Optimal Technology Options, at Dhaka on August 7 and 8, 1998. Most speakers at this workshop observed that the countries in South Asia would benefit immensely by sharing their energy resources.9 This workshop also highlighted the importance of setting up a Regional Power Grid. The Dhaka Declaration, released at the end of the Conference, suggested the creation of a SAARC Power Grid to ensure quality power supply in the region (see map 3.1). It also indicated that, “this new spirit of cooperation would help to resolve not only the power supply situation and the infrastructure development but also catalyse the economic resurgence of the region.”10 It was reported during the workshop that the Power Grid Corporation of India Limited had already completed a feasibility study on the exchange of 150 MW electricity between Bangladesh and India, and India at the following two intersection points:

 i) between Farakka of the Eastern region of India and Isharwadi of the west zone of Bangladesh, and
 ii) between Shahjibajar of east zone of Bangladesh and Kurnaghat of the  NorthEastern region of India.
 iii) Although it was not the first and the only initiative to promote subregional cooperation in South Asia, this workshop can be considered a major step toward such cooperation in recent times.

Similarly, the World Bank, impressed with the ASEAN experience of Growth Triangle, has also expressed its eagerness to support a similar cooperative venture in South Asia. It may be recalled that the scheme of “growth triangle” of the ASEAN involves three geographically close regions of the three member-countries to achieve economic complementarity. Under the banner of growth triangle, three major initiatives have been taken. First, the ‘Southern Growth Triangle’, the oldest one, involves Rian of Indonesia, Johor of Malaysia and Southern Thailand. Secondly, there is the ‘Northern Growth Triangle’, which links the northern tip of Sumatra with the northern peninsula of Malaysia and Southern Thailand. Finally, there is also the ‘East ASEAN Growth Area (EAGA)’, which roughly involves the Southern Philippines, the Indonesian islands of Sulawesi and Maluku, Sarawak and Sabah in Eastern Malaysia and the Sultanate of Brunei.11 This scheme of growth triangle of the ASEAN has influenced the World Bank to promote the ‘South Asia Development Triangle’ (SADT). The proposed project has emphasized a programme of transboundary development cooperation. It may be noted that the geographical proximity is an important criterion in initiating a process of subregional groupings. Therefore, the World Bank has suggested a basin-wise cooperation encompassing most of the Ganga-Brahmaputra-Meghna basin, and it covers the Eastern and the NorthEastern parts of India, Bangladesh and Nepal.

The Asian Development Bank (ADB) has also viewed the subregional cooperation in South Asia from an optimistic perspective. According to the ADB, the “dividend of effective cooperation in this region is beyond imagination.” It has also mentioned that, there is tremendous potential for such cooperation in the generation of hydropower and preparing other infrastructures. However, the ADB’s definition of subregionalism is slightly different from that of the World Bank. The ADB has emphasized on a ‘growth quadrangle’ instead of a ‘growth triangle’, comprising Bangladesh, Bhutan, Nepal and NorthEastern and Eastern parts of India.

Perhaps a success story of the Mekong subregion in Southeast Asia since 1992 has influenced the ADB to promote the idea of a similar type of subregional cooperation in South Asia. In this context, a brief look at the Greater Mekong Subregion (GMS), named after the Mekong River, may help us to appreciate the significance of such cooperation. The GMS comprising Cambodia, Laos, Myanmar, Thailand, Vietnam and the Yunnan province of the People’s Republic of China (PRC), covers a land area of 2.3 million square kilometres with a population of almost 230 million (as of 1996). Within the GMS, there are evidences of sharing of borders, natural resources and, of course, people-to-people interactions. (See map no. 3.2)

The economic cooperation within the GMS started in an informal and limited way. Initially, it took place bilaterally. In order to restore peace in the subregion and also to speed up the market-oriented economic reforms in Cambodia, the PRC, Laos, Myanmar and Vietnam, opportunities for large-scale comprehensive cooperation were created. Here the ADB (Asian Development Bank) played a very crucial role. As a development finance institution aiming at the promotion of regional cooperation and development among its developing member-countries, the ADB has played the role of a catalytic agent in the GMS initiative. Thus, the GMS has emerged as an informal grouping of the neighbouring countries with specific activities within the framework of existing relationships. With the assistance of the ADB the six member-countries of the GMS entered a new phase of economic cooperation in 1992.

From the very beginning of its journey, the GMS has some unique features in its decision-making structure. This cooperation programme is based on the initiatives taken by the member-countries. The major decisions have been adopted through the ‘subregional consultations’, both at the ministerial as well as the bureaucratic levels. Usually, a series of ministerial conferences lead to the formation of agreements in concerned sectors for cooperation. These agreements mainly highlight three major requisitions: first, to fix criteria for setting priorities among the projects; secondly, to ascertain the priorities of different subregional projects and initiatives; and thirdly, to establish the institutional arrangements without which these cooperative initiatives cannot be implemented.
Seven priority sectors, viz., transport, energy, telecommunications, environment, human resource development, trade investment and tourism have initially been identified. The GMS attaches importance to the making of Master Plans on the basis of sectoral studies for every priority sector. It is believed that, in the absence of such Master Plans, it would be difficult to implement the concerned initiatives in a fruitful manner. At the very outset, the GMS has taken up the sectors of infrastructure and energy to facilitate economic cooperation. In the energy sector, altogether twelve subregional projects have been prioritized. Out of these, eight are in the areas of power generation and transmission, two in the hydrocarbon sub-sector and the rest are in the area of institution-building.

These subregional energy projects are as follows:

Power Generation and Transmission:
1. Xe kong and Se San Basin Hydropower Development Project in Cambodia, Laos and Vietnam including the transmission interconnection among them.
2.  Nam tha Hydropower Project in Laos including the transmission interconnection with Thailand.
3.  The transmission interconnection with Thailand of the Jinghong Hydropower Project in Yunnan province.
4.  Nam Theun Basin Hydropower Development in Laos, including the transmission interconnection with Thailand and Vietnam.
5.  Thanlwin Basin Hydropower Development in Myanmar and Thailand, including the transmission interconnection between the two countries.
6. Theun Hinboun Hydropower Project in Laos including the interconnection with Thailand.
7.  The immediate Interconnection of the existing power systems.
8.  The long-term subregional generation and transmission system development.

Natural Gas Transmission:
1.  Yadana-Bangkok (Myanmar-Thailand) gas pipelines project.
2.  The planning and preparedness for emergency response to the marine oil and hazardous substance pollution.

Institution-Building:
1.  The establishment of an electric power forum for the GMS.
2.  The strengthening of the legal and institutional planning and framework for effective water management.12

Therefore, appropriate lessons could be learnt for South Asia from the success story of the GMS. The proposed subregional cooperation in South Asia could be initiated either on the basis of   ‘basinwise cooperation’, or cooperation within ‘growth triangle’, or within ‘growth quadrangle’. Mr. Horayangaputra, the then ADB Chief of Mission in Dhaka in 1997, argued that the ADB and other co-financiers had already funded a hydroelectric power project in Laos to meet the electricity demands of Thailand, and other member-states of the subregion. He said that the ADB would like to help the South Asian region in the same way.13 Mr. Horayangaputra is optimistic about the cooperation between Nepal and India’s NorthEastern state of Meghalaya, which has the potentiality to produce about 50,000 MW of hydro electricity. The ADB has already funded a technical assistance project to facilitate the commercial arrangements in electricity sharing between Bangladesh and India. The ADB tends to view that, “Bangladesh could become a financial hub of the subregion if its ports were developed and opened to cater to the needs of the landlocked Nepal, Bhutan and the seven NorthEastern states of India.”14

The ADB also organized a three-day South Asian Summit on National Gas Potential during March 19-21, 1995. The focus of that summit was on broad themes of policy pricing, institutional, technological and contractual issues related to the regional trade on natural gas. The summit provided an opportunity to discuss the emerging issues and develop approaches for future development. It also facilitated discussions on maximizing gas transmission efficiency, determining institutional measures needed, identifying the barriers to import of natural gas, developing security of supplies and making financing agencies more responsive to the needs of the borrowers. These issues are of pivotal concern to the future economic development of South Asia.

The summit also assessed the structure, economy, and logistics of regional gas transportation. The discussions involved both policy and practical issues. During the first day of the summit, the issues such as, ‘Role of Natural Gas in the Economic Development of South Asia’, ‘Role of Private Sector and Multinational Institutions in South Asia Natural Gas Development’, were discussed. Day two brought the issues like ‘Future Natural Gas Pipelines for South Asia’, and  ‘Supply Options of Natural Gas to South Asia’. Finally, a panel of experts reviewed the deliberations over the two days, and provided a summary and the conclusions.15

It may be noted that the idea of subregional cooperation has a great impact on the minds of the South Asian decision-makers. They have started to believe that they can also replicate the ASEAN model of subregional cooperation. At the official level, the South Asian subregionalism has already received the initial momentum from a few steps taken by the governments of Bangladesh, Bhutan, India and Nepal since 1996. The decision-makers of these states have identified several projects which can be viewed as the ‘priority subregional projects’.

The meeting of the four concerned Foreign Secretaries at Kathmandu in January last year has also lubricated the process of subregionalism in South Asia. Accordingly, the concerned states are expected to present their Detailed Project Reports (DPRs). Bangladesh is still preparing the project papers on two areas – harnessing the natural resources and energy. Nepal is doing it on transport and tourism and Bhutan on environment. India is expected to submit the project papers on trade and investment. On the basis of these DPRs, the ‘master plan’ for each priority project can be drawn. As Bangladesh is yet to prepare its report on energy, the whole process of proposed energy trade is still on hold.

It appears that the governments of this subregion are keen to develop a process of mutual cooperation. Several non-governmental organizations (NGOs), like the Dhaka-based Bangladesh Unnayan Parishad (BUP) and the Centre for Policy Dialogue (CPD) and the Centre for Policy Research, both of New Delhi and Nepal’s Institute for Integrated Development Studies (IIDS) have also taken initiatives to promote mutual understanding among the countries in the subregion. These institutes of Bangladesh, India and Nepal have carried out a collaborative research to assess the prospects of undertaking joint development programmes for the Ganga-Meghna-Brahmaputra (GMB) basin. They are interested in harnessing the Eastern Himalayan rivers for the equitable benefit of ‘coriperian’ countries. They have tried to mobilize support for environmental management and water resource development in the region through conferences and seminars. Their report was published in 1994. The name of this publication is Converting Water into Wealth: Regional Cooperation in Harnessing the Eastern Himalayan Rivers.16

These institutes of Bangladesh, Nepal and India first prepared their country reports in order to make the regional report. This final report indicated that the steady development of the Himalayan hydel resources and gas and coal-fired thermal stations in India and Bangladesh, would lead to the possibility of inter-linkages in an Eastern Himalayan power and gas grids, covering Nepal, Bhutan, Bangladesh and India. The report said that it would not only stabilize the power system as a whole but also help to improve its operational efficiency. It also mentioned that water resource development must not be viewed merely as a ‘single-sector end-objective’, but as a prime factor to develop larger systems with multiple linkages.17

The report advised to prepare a general ‘framework’ treaty, which would presumably be a kind of water resource treaty or treaty on rivers and would no doubt embody an agreement between the countries concerned on a set of general principles.18 The report also cited several international experiences in this regard, which can be noticed from table 3.1.

In 1995, the ESCAP and UNDP took an initiative for a project to enhance technical cooperation in South Asia through the collaboration in energy and environment.  Technical experts and governmental officials, and politicians belonging to both the government and the opposition of the countries concerned participated in different meetings to identify the collaborative projects.
Since late 1996, there has indeed been a coordinated campaign in favour of subregional cooperation in South Asia at the governmental level. The concept of subregional cooperation was first floated in South Asia at state level by the Bangladesh Foreign Minister, Abdus Samad Azad in December 1996 at the SAARC Foreign Ministers’ Conference in New Delhi. It is, however, interesting to note that the meeting was held only a few days after the landmark Indo-Bangladesh Treaty on the Ganga water. The former Prime Minister of India, I.K.Gujral, also admitted that the contiguous zone comprising Bangladesh, Nepal and Bhutan forms “a dynamic area of growth.”19 Nepal also expressed its enthusiasm to create a subregional grouping in South Asia’s eastern part. The former Nepalese Water Resources Minister, Shumsher Rana, optimistically declared that, “the subregion has enormous rivers flowing through it, enormous water resources and enormous deposits, whether it be the minerals in Bihar or the gas in Bangladesh.”20

The priority list of the proposed subregional cooperation includes various important and relevant issues: water sharing, cooperation in the field of energy, tackling the problems of trafficking in women and children, promotion of cross-border trade and controlling intra-regional smuggling, checking environmental degradation and combating insurgency and terrorism in the region.21 The concept of SADQ is expected to get a new shape when the Foreign Secretaries of the four countries met at Kathmandu on January 6, 1998 to present specific project papers on two areas, harnessing natural resources and energy. Bhutan undertook the task of preparing the paper on environment, while Nepal was engaged in making a study on multimodel transportation and tourism. India was expected to submit a project paper on trade and investment.22

The first phase of the SADQ took off in July 1997 with a stipulated one-year timeframe. As agreed among the member-states, the conceptual papers on specific projects were to be completed within this period. Initially, except Bangladesh, the other three countries decided to implement the proposal for subregional cooperation independent of the SAARC. Accordingly, Sheikh Hasina Wajed, the Prime Minister of Bangladesh said at the Male Summit of the SAARC, held in May 1997, that, according to Article VII of the SAARC Charter, the proposed initiative would, in fact, supplement the efforts of regional cooperation by the SAARC.23

This was the beginning of a not-so-smooth journey to subregionalism in South Asia. As far as the subregional cooperation in the energy sector is concerned, three different types of energy resources are usually referred to in South Asia. These are the natural gas resources of Bangladesh, coal resources of India and hydropower resources of Bhutan and Nepal. It was expected that, in future, studies would be undertaken to assess the techno-economic feasibility of different projects from the point of view of the potential investors. Simultaneous attention would also be given to make the investment projects acceptable to the people of the respective countries and the politicians.24

Notes and References
1. R.P.Singh, B.K.Banerjee and I.S.Jha, “SAARC Power Grid Inevitable for Optimal Development of the Region” in the Proceedings of the Regional Workshop on Improving the Availability of Power in South Asia: Search for Optimal Technological Options, FEISCA, Dhaka, August 7-8, 1998, p.51
2. Kuensel, July 26, 1997
3. R.P.Singh, B.K.Banerjee and I.S.Jha, “SAARC Power Grid Inevitable for Optimal Development of the Region” in the Procedings of the Regional Workshop on Improving the Availability of Power in South Asia: Search for Optimal Technological Options, FEISCA, Dhaka, August 7-8, 1998, p.51
4. Ibid.
5. K.Lindstrom, The World Bank Mission to Nepal on Power Exchange between Nepal and India, IVO Systems Control Centre, Finland, 1991, p.1
6. Economic Cooperation in the Greater Mekong Subregion: An Overview, Asian Development Bank, Manila, July 1996, p.15
7. R.P.Singh, B.K.Banerjee and I.S.Jha, “SAARC Power Grid Inevitable for Optimal Development of the Region” in the Proceedings of the Regional Workshop on Improving the Availability of Power in South Asia: Search for Optimal Technological Options, FEISCA, Dhaka, August 7-8, 1998, p.52
8. Ibid.
9. K.Lindstrom, The World Bank Mission to Nepal on Power Exchange between Nepal and India, IVO Systems Control Centre, Finland, 1991, p.2
10. Financial Express, August 8, 1998
11. Financial Express, August 9, 1998
12. For an earlier perspective on the ASEAN notion of Growth Triangle, see Pushpa Thambipillai, ‘The ASEAN Growth Triangle: The Convergence of National and Subnational Interests’, in Contemporary Southeast Asia, December 1991
13. The Independent, July 11, 1997
14. Ibid.
15. For details, please see, Natural Gas Potential: South Asia Summit, Conclusion Papers, ADB, March 19-21, 1995
16. Q.K.Ahmed, B.G.Verghese, Ramaswamy R.Iyer, B.B.Pradhan, S.K.Malla (eds.), Converting Water into Wealth: Regional Cooperation in Harnessing the Eastern Himalayan Rivers, Academic Publishers, Dhaka, 1994
17. Ibid., p.106
18. Ibid., p.87
19. Abul Kalam, ‘Environmentalism in South Asia: Building a Shared Water Community in the Eastern Himalayan Region’ in BIISS Journal, Vol.17, No.4, 1996, p.535
20. Quoted in M.R.Josse, ‘South Asia Subregional Grouping: A Bloc within a Bloc? A Kathmandu Perspective’ in Regional Studies Journal, Islamabad, Vol. XV, No.4, Autumn 1997, pp.41-51
21. The Daily Star, February 6, 1997
22. POT Bangladesh, January 15, 1998
23. Article VII of the SAARC Charter provides that, “the Standing Committee may set up Action Committees comprising Member-States concerned with implementation of projects involving more than two but not all Member-States.”
24. Interview with Nurul Islam, BUET, Dhaka, on November 15, 1998.

Chapter 4: Problems & Prospects of Subregional Cooperation in South Asia

In the preceding chapters, we have already dealt with the various aspects of the utilization of energy resources in the eastern part of South Asia. In view of such prospects of utilization of these resources, a few questions may now arise as to how to sidetrack the existing differences of opinion among the states in this subregion, where the historical past still dominates over geographical proximity, in order to initiate cooperation in the energy sector, how to strike an agreement so that the people of the subregion could have the maximum benefit from the natural resources, especially hydropower, natural gas and oil of this subregion and finally, how to ensure a more or less equitable distribution of these benefits.

These questions perhaps indicate that there is an urgent ‘need for new thinking’, looking beyond the concept of state sovereignty. It is high time to realize mutual mistrust, suspicion and animosity usually lead to more conflicting situations. Even the ‘national interest’ of the concerned states may be difficult to be safeguarded this way. What is desirable is a ‘durable agreement’1 that ‘does justice to all’. Such an agreement would pave the way for a ‘positive-sum game’ involving mutual understanding, cooperation and accommodation. After all, world politics does not necessarily involve a ‘zero-sum game’, where the gain for one is the loss for the other, and the net result of the game is zero leading to ‘unrelieved competition’. There is scope for ‘positive-sum game’ in the domain of international relations, which usually can facilitate cooperation.

This awareness is required not only at the political level, but more so at the level of the civil society. The role of the civil society is usually very crucial for the creation of a suitable environment for such cooperation. Only as an exception, Bhutan has been able to enter into a mutually beneficial bilateral agreement with India over the sharing of electricity although in Bhutan the civil society has not quite evolved. By and large, if the civil society becomes aware of the urgency of cooperation it can mount pressure on the concerned states to take positive steps in that direction. And for bringing this awareness among the people of the subregion, there is a need for dissemination of information. After all, information forms the basis of knowledge and knowledge is power.

Simultaneously, there is also a crucial need to change the dominant perspectives on national security. It is important to appreciate that the national security can best be ensured through the security of the people and not by simply arming the states of a region. The notion of unidimensional security implying only military security should be replaced by the concept of ‘common security’, encompassing the whole region.2 After all, any contemporary definition of security should include economic and social security of the people over and above military security.

Hence the need for subregional cooperation in South Asia. In an age of economic interdependence and cooperative security, a sustained growth is one of the major objectives of all the states in the subregion. This approach would have a tremendous positive impact on the economies of the countries in South Asia. After all, in an era of economic liberalization, the states in South Asia can hardly afford to lag behind in seizing opportunities for regional and subregional cooperation, which could facilitate rapid economic growth3.  As energy is likely to be one of the major determinants in world politics in the new millennium, the four concerned states of the Eastern South Asia may take concrete steps to initiate specific projects for sharing the energy resources of the region.

It seems from the discussions in the earlier chapters that, there is hardly any doubt about the technical or economic feasibility of subregional cooperation in the energy sector in the eastern part of South Asia. In fact, it has a bright prospect in this part of the world. Taking stock of the resource base in this region would suggest that there is a significant degree of complementarity in the subregion. In other words, if there appears to be a resource crunch in a particular part of a country of this subregion, then there is no dearth of such resources across the border in the neighbouring country. However, enough has to be done for the proposed cooperation.

Decisive steps have to be taken at the political level. It is the political will among the countries concerned, which could turn an environment of mutual animosity into one of mutual cooperation. It may be noted that, the bilateral tensions between India and Pakistan, mainly over Kashmir, have so far dominated the politics of South Asia. The South Asian Association for Regional Cooperation (SAARC), although born in 1985, has hardly been able so far to create a congenial atmosphere for regional cooperation here The Indo-Pak tensions have been primarily responsible for this. The recent nuclear race between the two neighbours, the Kargil conflict and the hijacking of the Indian Airlines flight IC 814 have only increased the mutual suspicion between India and Pakistan.
But, in the proposed subregion, the bilateral tensions do not appear to be so crucial a factor. As Pakistan is not a part of this subregion, it is unlikely that the Indo-Pak bilateral tensions would vitiate the atmosphere of subregional cooperation. India’s relations with Bangladesh, Bhutan and Nepal have never been so contentious as it has been between India and Pakistan since their birth in 1947.

However, even in the proposed subregional cooperation in the energy sector, there may be several roadblocks. Let us first take up the case of energy cooperation between Northeast India and Bangladesh, which is a classic example of politics of energy in the subregion. Various estimates put the gas reserve in Bangladesh from 15 trillion cubic feet (TCF) to even 80 TCF, but such high estimates have not been corroborated by all concerned so far. The figures like 21 TCF as the discovered reserves and 12.6 TCF as proven or recoverable reserves appear to be officially acceptable. Newly discovered reserve, but not announced yet, put forward by some source is of 5.5 TCF.4 According to one estimate, so far, Bangladesh has roughly consumed 3 TCF of this amount, leaving about 10 TCF. With the additional discovered reserve, the total recoverable reserves at this point are over 15 TCF. But contradictory estimates lead to apprehensions about the feasibility of long-term cooperation.

On the other hand, the known natural gas reserve in the Eastern and the Northeastern India may not be adequate for the generation of electricity in the region, as evident from the presently available data. However, India has a huge economy with a growing appetite for energy, and various Indian organizations are, in fact, planning to import gas from distant suppliers in West and Central Asia. In this scenario, Bangladesh definitely has a competitive advantage that could work to the mutual benefit of both Bangladesh and India. Therefore, on the one hand, there remains a strong possibility of Bangladesh exporting gas to India, and on the other, another possibility of supplying gas from Assam and Tripura through Bangladesh to the rest of India for a fee.

However, there is a strong anti-India lobby in Bangladesh. This lobby feels that the proposed cooperation would lead to an Indian hegemony over Bangladesh. Against this backdrop, there is an ambiguity in the policy of Bangladesh on whether it should export its surplus gas to India for supporting the latter’s electricity generation or not. While a gas-based cooperation between India and Bangladesh seems to be techno-economically prospective, the Government of Bangladesh has developed cold feet after displaying initial interest in this issue. In March 1997 the 14-member Bangladesh delegation, led by Abdus Samad Azad, Foreign Minister of Bangladesh, had given its consent to the Indian proposal for exporting natural gas for some projects in West Bengal.5 But, both the ruling and opposition parties in Bangladesh seem to agree on the point that the natural gas from Bangladesh is not for export, “now or in the near future”.6 On March 21, 1999, while inaugurating the Jalalabad Gas Plant in Sylhet, the Prime Minister of Bangladesh Sheikh Hasina Wajed once again reiterated her country’s stand and said, “Bangladesh has no plan to export gas...”. Earlier she had said, “We don’t think about export of gas yet…”. Former Prime Minister and now the Leader of the Opposition in the Parliament, Begum Khaleda Zia said, “We cannot sell our wealth and then become beggars.”7 Some other political parties of Bangladesh like Bangladesh Muslim League or Jamaat-i-Islami had expressed their concern at the very outset when the prospects of forming a subregional grouping within SAARC were being discussed in 1997.8

Therefore, the uncertainty over gas exports from Bangladesh to India persists. Some politicians from both the ruling and the opposition parties in Bangladesh have argued that a pragmatic approach to exports of gas is likely to emerge, especially, if there are several big discoveries in the early stages of exploration. The need to diversify the country’s export base may also dictate the timing of any gas exports. After all, eventually the oil companies may persuade Bangladesh to export gas for their own financial reasons.

It should be noted that there is certainly a ready market in India, where the energy demand is far outpacing domestic supplies. Over and above, India is ready to buy Bangladeshi gas. Cairn, operator of the new Sangu offshore field near Chittagong, estimated that reserves of about 7 TCF would be enough for a pipeline carrying between one billion cubic metres of gas a day to the power stations and industries in Eastern India. That would probably earn the Government of Bangladesh about $500 million a year.9

Be that as it may, it is interesting to note that India and Bangladesh are not the only two countries which are involved in this politics of gas export. Even some extra-regional players have a keen interest in such politics. For instance, while both the ruling party and the opposition leaders of Bangladesh have expressed their reluctance to export gas to India, the US Ambassador to Bangladesh, John Holzman, believes that “Bangladesh should now consider gas export to India as the domestic consumption alone would not bring about an economic breakthrough.”10 He said this while speaking at a seminar on Developing Bangladesh’s Gas Resources held in Dhaka. According to him, the gas reserves of Bangladesh would last for about 45 years. He argued that, “if one assumes 10 per cent annual growth in domestic consumption, a very fast and probably unsustainable rate, the reserves would last 17 years.” Ambassador Holzman, therefore, concluded that Bangladesh has already discovered enough natural gas to comfortably meet domestic demand until 2015 to 2020. Holzman argued that these figures do not take into account any of the reserves that might be discovered in the blocks included in the second gas bid round in Bangladesh.

It is interesting to note that while visiting Bangladesh in February 1999, the US Assistant Secretary Calvin Humphrey offered, on behalf of his country, to help Bangladesh carry out a study of existing drilling data (i.e., not relying fully on the data available from the Petrobangla, the official agency dealing with the issue in Bangladesh), and production and depletion rates to determine a new estimate of recoverable reserves. Humphrey also suggested that such a study could be carried out with the help of a grant from the United States Trade and Development Agency or through a partnership with the United States Geological Survey.

According to Ambassador Holzman, the conclusions from such a study “would surely engender greater confidence in estimates of the size of Bangladesh’s already discovered gas reserves and could be the basis for more informed decision-making about the gas industry’s future.”11 It is interesting to note that the US Geological Survey is currently conducting a worldwide resource survey which will include the Brahmaputra basin. The results, when available, could also serve as an indicator of Bangladesh’s potential natural gas resource base.12

It is important to remember that in an era of globalization the multinational corporations have become the key players in the area of investment. With the growing dominance of these corporations in the world economy the states, particularly in the underdeveloped regions, have sometimes been quite marginalized. In other words, these multinational corporations, more often than not, are in a position to compel the concerned states to change their overall policies, even at the cost of the latter.

Therefore, in the near future, Bangladesh may be persuaded to export gas to India just for the interests of the foreign multinational corporations if not for any other reason. The multinational corporations involved in the exploration of gas in Bangladesh have their own priorities and it is these priorities which might prevail over the political and economic considerations of Bangladesh in the long run. If their dreams come true, these multinationals may be interested in sending Bangladeshi gas to Calcutta or Haldia through pipelines rather than only selling it to the potential consumers in Northeast India. In other words, if left to the multinationals, there is no guarantee that the gas available from Bangladesh would at all be utilized for generation of power in India as envisaged by many. Such gas may ultimately be processed and sent elsewhere in SouthEast Asia through Calcutta or Haldia port for higher dividends.

Moreover, even if Bangladesh ultimately agrees to export gas to India for the latter’s power sector, the militant outfits in NorthEast India could put up another serious roadblock by sending gas from Bangladesh to, say, Calcutta. The demand might be raised by such organizations that these resources have to be allowed to be used in Assam or other parts of NorthEast India through which the pipelines would go. From past experience with regard to the disruption of oil supply from Assam to the rest of India, such apprehensions are not easy to push over.

As far as the proposed cooperation between India and Nepal in the energy sector is concerned, it has to be kept in mind that Nepal is a repository of water resources. Therefore, the hydel power projects built on the rivers and waterways of Nepal could be of immense help to the power-starved India. However, here also there are at least two problems. First, due to their political differences and other factors, the fate of the Mahakali Treaty hangs in a precarious balance. Therefore, the chances of power-sharing between India and Nepal seem to be remote. Given the presence of an anti-India lobby also in Nepal, the situation may be more complicated. Secondly, one has to take into account the recent arguments against the big dams all over the world. There have been scathing attacks on such initiatives across South Asia (as it has been the case in Arun III high dam project in Nepal or the Sardar Sarovar project in Western India). Under the circumstances, the plan of constructing new big dams over the rivers in a comparatively densely populated Nepal may not be translated into reality. So, it would not be easy to generate hydel power through the construction of high dams and to supply the surplus electricity, if any, to the Eastern and NorthEastern India.

Moreover, as some experts have pointed out, any cooperation between India and Nepal in the sector of hydel power should involve the states of Bihar and UP in India. After all, the Ganges flows through these states. Therefore, it would be rather unwise to think about a water-sharing formula without taking Bihar and UP into account. Even a subregional cooperation should include these states although the state of UP does not belong to Eastern or NorthEastern India.

As far as the energy cooperation between India and Bhutan is concerned, there are maximum possibilities of raising the level of such mutual collaboration. It has already been pointed out how the states of Eastern India get benefited through the power available from the Chukha Hydel Power Project in Bhutan. The installation of a much larger Tala Power project in a few years would add more teeth to such outstanding cooperation between India and Bhutan.

If one closely looks at the cooperative ventures, both existing and potential, in this subregion of South Asia, it becomes clear that the prospects of such cooperation in the energy sector are mainly confined to the bilateral level and do not necessarily reach the multilateral level. For instance, the cooperation between India and Bhutan, the best so far in South Asia, is a cooperation between two friendly neighbours of the subregion. Here a sparsely populated tiny Himalayan kingdom, having a shortage of capital and skilled manpower, gets financial and technical help for her enviable hydel power projects from one of the largest countries in the world, and from a major power of the region at that And, in return, she agrees to supply surplus electricity to India at a very nominal price (although power sector is the largest revenue-earner for the Government of Bhutan). When the Tala project would be fully operational, the additional surplus power could partially be supplied to certain parts of Nepal through the chicken-neck corridor of Siliguri/Birpara in Northern Bengal. However, the issue of Nepali immigrants in Bhutan and the consequent refugee problem in Nepal do not go well between these two Himalayan states. Therefore, although the technical experts in these two countries do not find any difficulty in this potential cooperation, the political decision-makers on two sides are by and large reluctant about it.

At the technical level, there appears the factor of huge transmission loss in in supply of electricity in the South Asian countries. This loss can be accounted for in two major ways. First, the inferior quality of transmission lines leads to such loss. Unless and until necessary steps are taken to upgrade the lines, the amount of loss will be difficult to reduce. However, as the electricity boards, particularly in Eastern and NorthEastern India, are suffering from ill-health, it is easier said than done. Secondly, the large-scale hooking from the transmission lines also leads to huge system loss.

Financially speaking, the illegal electrical connections from the transmission lines or nearby posts give rise to poor earning of revenue for the electricity authorities. This is one of the principal causes of the poor financial health of the electricity boards in India. Secondly, quite often the populist measures by the concerned regimes in different states in South Asia also contribute to the ill-health of the electricity authorities in this region.

So far as the issue of complementarity in the energy sector is concerned, the experts suggest that there should be an optimum hydro-thermal mix in order to get maximum benefit out of the proposed cooperation. Demand and supply management of electrical energy is gaining special importance in view of the current deficits in meeting peak demands. In the subregional context this assumes a greater significance with the large hydro potential of Nepal and Bhutan and coal/gas-based thermal power generation in Eastern India and Bangladesh. Over and above, the environmental issues are taking rightful entry in energy planning and the subregion under study has a combination of sources, which could be developed and integrated in the transition from conventional to ecologically sustainable energy supply. Therefore, the utilization of renewable energy resources of the subregion could also lead to increased cooperation among the states of this subregion.

Despite these, as has been pointed out earlier, the main problem lies at the political level. One the one hand, there is, by and large, a lack of political will to initiate cooperation at the transnational level, particularly at the multilateral level. On the other hand, the presence of strong anti-India lobbies in Bangladesh and Nepal does not also allow the four neighbours in Eastern South Asia to go for a subregional cooperation.

Therefore, even if the investors and the technical experts of the concerned countries of the region seem to be optimistic about the potential supply of gas from Bangladesh to ignite some power stations in the contiguous zones of Eastern or NorthEastern India, the lack of political will appears to choke the possibility of translating this optimistic flow of ideas into reality. The political leaders of the states in the Eastern part of South Asia are still oblivious of the techno-economic demands of development of their region and, therefore, they are not yet prepared to bury their traditional differences.

Against this backdrop, the problems still outsmart the prospects of subregional cooperation in South Asia. Nevertheless, as has been argued before, the civil society in this subregion could facilitate a change in the traditional mindset, and this could possibly set the tone for a potential subregional cooperation in South Asia. If this happens, it is the people of South Asia who would benefit from the resources available in the region. Otherwise, as the demands for electricity rise in this part of the world, it will gradually plunge into darkness due to the lack of necessary cooperation among the neighbouring countries.

Notes and References:
1. Q.K.Ahmed et al (eds.), Converting Water into Wealth: Regional Cooperation in Harnessing the Eastern Himalayan Rivers, Academic Publishers, Dhaka, 1994, p.96
2. Shaukat Hassan, ‘Playing Politics with South Asian Water’ in Himal, May-June, 1991, p.13
3. The Daily Star, June 23, 1997
4. See Muslehuddin Ahmad, “Politics of Gas Export”, The Daily Star, April 3, 1999
5. POT Bangladesh, April 1, 1997
6. The Daily Star, March 17, 1999
7. See Muslehuddin Ahmad, “Politics of Gas Export”, The Daily Star, April 3,  1999
8. See POT Bangladesh, April 1, 1997
9. Habibur Rahman Khan, ‘Current Debate on Gas & Oil Exploration in Bangladesh, Quarterly Bangladesh Foreign Policy Survey, Vol. 4, No. 2, April-June 1998, Bangladesh Institute of International and Strategic Studies, Dhaka, p.9
10. The Daily Star, March 23, 1999.
11. See John C. Holzman, “Prospects for Bangladesh Gas”, The Independent, March 24, 1999
12. See Holzman, op. cit.

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