Indo-Bangladesh Energy Trade

80392126-flag23by Adarsh Kumar

South Asia, fastest growing part of the world, has registered significant economic growth, however the energy sector, which is very important for sustainable development and economic prosperity, has faced several challenges. So for better energy efficiency it’s essential to have healthy relationship with our neighbours, healthy and profitable relationship with neighboring country increases the wellbeing of commons at large. South Asia consumes world’s most of the energy. China and India, two biggest consumer of energy in this world, need more and more energy to sustain their economy. In that case cross border energy trade becomes essential for whole South Asia. India, world second most populous country is rapidly growing in terms of population, (it is expected that it will surpass China’s population by 2050) economy and power, will need more and more energy in future. For growth of India it’s essential that their neighbours also achieve highest peak of growth, because in long run they will be responsible for growth of India.

India and Bangladesh diplomatic relations are very important for South Asia as a whole. India and Bangladesh share cordial relationship since partition, share similar cultural values, ethnic identity and problems of energy, water and food. Both nations are key trade partners for each-others. Although Bangladesh has a high trade deficit with India, India’s imports from

Bangladesh have grown more than sevenfold between 2001 and 2012, while India’s export to Bangladesh has increased four times in between these years. A study by World Bank indicates that free trade agreement between these two countries could increase Bangladesh’s export to

India by 180% and India will also gain 126% of increase in its export. For India, closer economic cooperation with Bangladesh can be an important stepping-stone to reduce the economic isolation of its northeastern states. Bangladesh has a predominantly gas-based electricity generation while India has substantial amounts of coal and hydro-based electricity potential. Both can utilize their energy potentials for cumulative productivity gain and economic prosperity.

India-Bangladesh Electricity Trade

Nowadays for any economy electricity is as important as water for any plant. It helps in economic growth and prosperity of nation. India and Bangladesh has different demand seasonal and daily demand of electricity. The difference in weekly and festival holidays and the 30-minute time difference can also provide opportunities for exchanging power. In this context, Bangladesh and India are examining the modalities for mutually beneficial mechanisms to share the benefits from their respective generation assets, considering also the importance of the energy security of both countries.

The possible routes for the exchange of power are between

  1. 1. The eastern region of India and the Western Grid of Bangladesh
  1. 2. The northeastern region of India and the Eastern Grid of Bangladesh

The detailed analysis done by Asian development Bank and Government of India so far shows that interconnection between the northeastern region of India and the Eastern Grid of Bangladesh would have limited attractiveness since any power transmitted would exacerbate the critically overloaded East–West power interconnector of Bangladesh. Development of the 750 MW gas-operated power plant at Tripura, close to Agartala in India, adds to the case for reconsidering possible cross-border interconnections. The most attractive interconnection between Bangladesh and India in the near term is through the route between the Western Grid of Bangladesh and the eastern region of India. The proposal to connect Bangladesh and India (on the western side) through an HVDC1 back-to-back link of 500 MW capacities has been approved, and construction will commence shortly. It is expected that this interconnection will be upgraded to around 1,000 MW in the longer term2.

India Bangladesh Gas Trade

In this world India is most energy hungry country after China, its increasing population and infrastructure will demand more and more energy as time will pass. India and Bangladesh both have significant amount of gas resources but due to lack of any substitute it’s very difficult to swap it with any other energy resource because of its illumination and general use. Amongst different sources of energy, gas provides a highly competitive alternative, not only in terms of environmental benevolence but also helps in securing energy needs. Gas, thus provides, a better political and financial option and for these reasons search for gas has increasingly become a policy imperative in India. One critical aspect about securing access to gas is that transport related reasons underscore the importance of gas rich neighbours. The Indian access to assured gas supplies continues to be uncertain and India frequently pays higher pricing for spot LNG (Liquefied natural gas) purchases. The importance of gas to development aspirations in India, can also be seen by the fact that in 2011-2012, 10% of energy produced in India, came from gas, next only to coal and hydro-power. The first proposal to export natural gas from Bangladesh to India came from one of the foreign producers operating in Bangladesh. Unocal (now Chevron) which had developed a gas field in north-eastern Bangladesh proposed the construction of 847mile (1363km) gas pipeline from Bibiyana to New Delhi3. However, the issue became politically contentious in Bangladesh and the proposal was nipped in the bud.

A  report  Gas  Strategy  for  Bangladesh  (January  2006)  prepared  for  Petrobangla  by  Wood Mackenzie Ltd assumes a proved level of 9.2 tcf4, proven plus probable reserve of 14.4 Trillion Cubic Feet(tcf), and a proven plus probable plus possible reserve of 22.2 tcf, these being the most conservative estimates. The government has been reluctant to make any commitment for the export of gas or gas based electricity on account of the uncertainty of its reserves position. It is claimed that if coal mining and coal based power development takes root, and if the country has access to the hydropower of Nepal, Bhutan and Myanmar, it might adopt a little more liberal approach to gas exports (World Bank 2007).

Triangular Gas Trade (Myanmar-India-Bangladesh)

Myanmar has estimated natural gas reserves of 89.722 tcf, of which 18.012 tcf are considered proven recoverable reserves. Many Investors from Thailand, Australia, Britain, Canada, China, Indonesia, India, South Korea, and Malaysia are engaged in gas and oil extraction from Myanmar. From India ONGC and GAIL have a 30% stake in the partnership with Daewoo of South Korea (60%) and South Korean Gas Corporation (10%) in the off-shore gas exploration of Blocks A-1 and A-3 off the western Rakhine coast. GAIL and Essar have other assets as well in Myanmar. Indian company ONGC Videsh Ltd has successfully bid for two on-shore blocks in the 2013 Myanmar Oil and Gas Bids recently. For the transportation of gas to India, in July 2005 Bangladesh permitted 559 mile of pipeline, but with many trade restrictions and asked for several trade concessions, including removal of tariff, non-tariff and administrative barriers to Bangladesh exports to India, provision of access to hydroelectricity from Nepal and Bhutan and an establishment of the free trade corridor to these countries. The construction of the Myanmar-China pipeline project which consists of dual oil and gas pipelines originating at Kyaukryu port on the west coast of Myanmar and entering China at Yunnan’s border city of Ruili also worked in favor of China.

Indo-Bangla Hydro Power

Whenever we talk about hydro-power project between India and Bangladesh, Tipaimukh project accrue immense importance. This Project is designed for Generation of 1500 MW hydro-power and prevention of flood in Manipur and Mizoram. This involves building a 162.8 meter high rock-fill dam around 500 meters downstream of the confluence of river Barak with Tuivai. It is also believed that it will control flood in Bangladesh too. But Bangladesh feels that, a water resource from Barak has been reduced and it will harm ecology and economy of Bangladesh. Bangladeshi opponents have often compared the project with Farraka Barrage, although Government of India took note of these opposition and convinced Bangladeshi team.

Tipaimukh Dam is largely a power generation project and not a water diversion project. This dam has capacity to keep monsoon water of 10 days, which controls flood in Bangladesh and also help in augmentation of water in crisis session thus it (Dam) manage water in critical condition. Due to limited communication from the Indian side and little objective study, speculative fears in Bangladesh still prevail and certain sections in Bangladesh and they are not convinced with this Tipaimukh Dam project. But if Government of India assures that Bangladesh will get access to a part of power generated in the project that can change the situation. In fact,

India has plans to generate substantial hydro-power in its north-eastern states which can entire change the power supply scenario in the entire eastern south Asia sub-region and India-Bangladesh energy relation can assume a new level.

Conclusion

For the growth of south Asia, energy generation plays an important role, but nations seek well planned cooperation to garner peak of energy production. India and China are most populous countries in this world and their increasing demand for energy must be fulfilled for the holistic growth and wellbeing of world. India, which comprises nearly 1.2 billion people, will surpass china by 2050 in terms of population. In terms of growth rate India can surpass China by 2020 (Datta, Sreeradha -2008). Thus India needs energy cooperation and technological Innovations with neighboring nations. Although Government of India has initiated research on energy crisis and management, and in continuation of this nearly all IITs and few central universities (such as Delhi University, JNU and BHU) has center for energy research and The Energy resources Institutes are working tremendously well. In long run India’s geographical position will also help in achieving its goal.


  • 1 High Voltage DC technology enables the interconnection of two asynchronous AC networks.
  • 2 Taken From Energy Trade in South Asia Opportunities and Challenges By Asian Development Bank.
  • 3 Bose, Srinjoy (2007), Energy Politics: India-Bangladesh-Myanmar Relations, IPCS Special Report, No 45, New Delhi: Institute of Peace and Conflict Studies

  • 4Trillion Cubic Feet – Tcf’ A volume measurement used by the oil and gas industry. A trillion cubic feet (1,000,000,000,000 cubic feet) is a volume measurement of natural gas that is equivalent to approximately one Quad.

References

  1. 1. Nitya Nanda, K. D. (2013). India-Bangladesh Energy Relation. New Delhi : The Energy & Resources Institute (TERI).
  1. 2. Sultan Hafeez Rahman, P. D. (2011). Energy Trade In South Asia:Opportunities And Challenges. Philippines: Asian Development Bank Report
  1. 3. World Bank, Sustainable Development Department, South Asia Region (2007), Potential and Prospects for Regional Energy Trade in the South Asia Region, New Delhi
  1. 4. Institute for Defence Studies and Analysis, 2010, Water Security for India: The External Dynamics, IDSA Task Force Report, IDSA, New Delhi
  1. 5. Datta, Sreeradha (2008), Bangladesh Factor in Indo-Myanmarese Gas Deal, Strategic Analysis, 32(1), 103-122
  1. 6. India and Bangladesh Can Make Significant Gains by Opening Their Markets to Each Other, Says New World Bank Study. (2012, December 17). Retrieved Nov. 1, 2015, from The World Bank:http://www.worldbank.org/en/news/press-release/2012/12/17/india-bangladesh-significant-gains-opening-markets
  1. 7. ADB to finance India-Bangladesh electricity link upgradation . (2015, Oct 1). Retrieved Nov 1, 2015, from The Economics Times: http://economictimes.indiatimes.com/news/economy/finance/adb-to-finance-india-bangladesh-electricity-link-upgradation/articleshow/49186100.cms
  1. 8. Nafees Imtiaz Islam. (n.d.). Bangladesh-India relationship: A new dimension in the region. Retrieved Nov 1, 2015, from BRIEF: Empowering Growth: http://www.briefindia.com/bangladesh-india-relationship-a-new-dimension-in-the-region
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