core sector communique

Regional Co-operation is Key to Ensure South Asia Energy Security: Sudhir Vyas, Secretary(ER), Ministry of External Affairs

With India looking at increasing power availability by 800,000 GW by 2030 to sustain GDP growth rates of 8-9%, the country’s demand for energy will drive the formation of the SAARC energy grid, said Shri Sudhir Vyas, Secretary(ER), Ministry of External Affairs, Government of India, while releasing a report on “South Asia Energy Cooperation and Business Opportunities in the Power Sector” published by the Confederation of Indian Industry (CII) at the Round Table Session focusing on the same subject in New Delhi today. He further stated that while initial steps have been taken, much more needs to be done to expedite regional cooperation in this space. “A lot is being done at the bilateral level but this needs to be scaled up to the regional level” he said.

Focusing on the policy issues that need to be addressed for energy security through regional cooperation, Dr Kirit Parikh, Chairman, IRADe (Integrated Research and Action for Development) emphasized that a competitive electricity sector with independent regulators is imperative to meet the goals of power to all and poverty alleviation. “There is clearly a strong argument for energy cooperation given the advantages of lower costs, more effective utilization of resources and an increase in capacity factor. However, the way forward is not only a strong reliance on large scale government interventions. It is also important to promote private sector participation on smaller platforms. This can be done by the development of an institutional set up which facilitates the set up of transmission lines and true open access extended across borders.” He further added that the power purchase agreements need to be symmetric with clauses like formula-based tariff setting built into these agreements so that developers are assured of getting the right price. Functioning of a transparent power exchange and minimization of political risks is essential to expedite energy cooperation among these countries.

Dr Sudhir Kapur, Member CII National Committee on Power and Chairman & Managing Director, Country Strategy Business Consultant Pvt Ltd, said in his welcome remarks that given the growth potential in the entire south Asian region, an almost four fold increase in energy demand and also supply is expected. “Currently, thermal plants account for the bulk of the power supply in these regions at 65% followed by hydro power at 20%. Given the twin objectives of ensuring energy security and addressing the climate change challenge, it is important to capitalize on the over 200 GW of hydro potential in countries including India, Bhutan and Nepal. A comprehensive approach comprising an integrated policy, and integration of the grids as well as substantial investments has the potential to be a game changer in providing the countries in this region with uniform access to power,.” he said.

Highlighting the benefits of cross border trading Shri Jayant Deo, Member CII National Committee on Power and Managing Director, Power Trading Corporation Ltd. said, “With key advantages including the creation of transparent & neutral platforms; savings on operating costs, utilization of cheaper generation; optimal use of resources and enhanced efficiency and reliability of power supply, cooperation among countries in the energy space is increasing globally. In India, as well, to facilitate the development of cross border power exchanges, it is important to develop mechanisms for deviation settlement, payment security and clearing &settlement. This will pave the way for a single South Asia electricity market

Assessing the business opportunities in this segment, Shri Amulya Charan, Chief Mentor, Tata Power Company Ltd stated, “All our neighboring countries including Nepal, Bhutan, Pakistan and Sri Lanka either have the demand or the supply resources which are unfulfilled and therefore setting up a SAARC grid has huge potential. For instance, Nepal and Bhutan have adequate hydropower resources which if harnessed effectively can provide these countries with adequate national income. This has already been happening very effectively in Bhutan where hydropower exports account for a substantial portion of the country’s GDP.” Citing the example of Europe, he said, “The multiple nation grid is a well established phenomenon and needs to be replicated in South Asia. This will lead to a win-win situation for all the countries in this region.”