India and its Himalayan neighbor Nepal are set to build a massive power transmission line across their border, a step toward addressing rising energy needs in a region that analysts say has been held back economically by political distrust.
The two countries will meet later this month to finalize a deal in which India will export electricity to Nepal over 87 miles of new power lines. In return, Nepal will construct power plants and eventually send its surplus electricity to India, which is negotiating similar arrangements with Bangladesh, Sri Lanka and Bhutan.
The countries of South Asia, which have historically watched one another with suspicion, also plan to set up a regional power grid as a severe energy shortage drags on the economies of more than 1.4 billion people. Anaylsts say the project could build trust in a region that will require new levels of cooperation to continue growing economically.
“South Asia is a major hub of fast-growing economies with 25 percent of the world’s population. There is an ongoing shift in focus from agriculture to manufacturing,” K.C. Venugopal, India’s deputy power minister, said at a conference in New Delhi. “No South Asian country can meet its energy needs entirely from within its own domestic resources. We need to integrate the entire region by a robust power grid.”
As a model, power officials are studying a regional grid connecting Norway, Denmark, Sweden and Finland and another that connects South Africa, Botswana and Zimbabwe.
India will need to add about 250,000 megawatts of power by 2017, a fivefold increase, to sustain its economic growth. A South Asian grid will give the region 100,000 megawatts of power to trade and help India tap the hydropower and natural gas reserves of its neighbors, officials say.
“What is happening in South Asia mirrors the larger trends occurring across the continent. We have seen similar energy agreements between China and Russia, Thailand and Malaysia,” said Kent E. Calder, director of the Edwin O. Reischauer Center for East Asian Studies at Johns Hopkins University. “As economic interdependence increases and the cost of transmitting power long distance becomes less, energy has become the cutting edge of a broader regional integration in the past decade.”
Nepal and Bangladesh, wary of India’s tendency to play the bullying big brother, have feared that it might exercise control over them through such alliances.
Cooperation on the subcontinent has also failed to take off because of the deep hostility between Pakistan and India, which have fought three wars since 1947. After the terrorism attacks in Mumbai in 2008, relations further soured and the two countries did not revive initial talks for linking their electricity grids, although discussions are expected to resume this year.
For regional energy cooperation to fully take off, Pakistan’s future role as a supply route for gas is pivotal. A planned pipeline, called the New Silk Route and running through Turkmenistan, Afghanistan, Pakistan and India, promises to supply 3.17 billion cubic feet of natural gas daily to energy-starved South Asia.
The $7.6 billion pipeline, financed by the Asian Development Bank, is expected to be completed by 2016, and fuel prices, transit fees and gas sales and purchases are being negotiated. But discussions have faltered many times in the past decade, and many issues remain unsettled. Officials in the region also worry about how to insure against supply disruptions in the event of political hostilities between India and Pakistan.
But the trust deficit in South Asia can be overtaken by the push to end the power deficit, officials say.
“The geopolitical challenges in the region are tremendous, but they will have to be overcome because of the sheer demand for electricity. The popular pressure on the governments to deliver power is too great,” said Jayant Prasad, special secretary in India’s foreign ministry.
Plans are also underway to set up a $450 million undersea power transmission link between India and Sri Lanka, and Indian companies hope to help build hydropower plants in those countries. Only 9 percent of the total hydropower potential of South Asia, rich with Himalayan rivers, has been tapped, according to a background note prepared jointly by the U.S. Agency for International Development and the Confederation of Indian Industry.
“We begin now by buying power from India. But by 2019, we will harness about 3,000 megawatts of hydropower and will start exporting some of that to India,” said Ram Chandra Pandey, general manager of Nepal Electricity Authority. “That is what India is ultimately eyeing. But we need political will to realize the dream.”