The stability of Bangladesh’s energy and electricity generation has been one of the pertinent triumphs of Prime Minister Sheikh Hasina’s office, and it has significantly decreased load shedding in important urban centers, industrial hubs, and ports over the past decade. But since August 2022, due to the global energy crisis and price hike of raw materials, energy prices in Bangladesh have soared. One of the key issues on Prime Minister Sheikh Hasina’s itinerary, while she visits India from Sept. 5 to 8 will be boosting energy cooperation to resolve the problems brought on by high fuel and commodities prices. This will complement the relatively stable energy market of Bangladesh. Besides, effective cooperation between the two neighbors will also bring opportunities for the region to maintain a stable energy regime. The completion of the Bangladesh-India Friendship Pipeline and the Maitree Super Thermal Power Project would both be accelerated, the leaders of Bangladesh and India decided in 2020 during a virtual conference. The Framework of Understanding (FoU) on Cooperation in the Hydrocarbon Sector has also been signed by Bangladesh and India during that session. By streamlining investments, encouraging hydrocarbon connection, technology transfer, cooperative studies, and training, were anticipated to significantly improve energy linkages.
Major Initiatives Expected for Energy Cooperation
According to Foreign Secretary Masud Bin Momen, the Bangladeshi government is seeking a long-term agreement with India to import fuel oil from its excess in the face of the country’s energy shortage. He claimed that the neighbors are “in a better position on the fuel issue” when discussing Prime Minister Sheikh Hasina’s upcoming trip to India. As per media reports, the two prime ministers will jointly inaugurate the Maitree Thermal Power project during their three-day trip. In addition to the previously existing and extremely relevant areas, this initiative would improve the developing domain of energy security in bilateral relations between Bangladesh and India. The 1,320 MW coal-based power station, which is close to the Sundarbans and Mongla Port, is Bangladesh’s largest power plant to date. This is based on a joint venture of 50/50 between the Bangladesh Power Development Board (BPDB) and the Indian state-run National Thermal Power Corporation (NTPC). Dhaka has a substantial advantage in this booming market due to its strategic location near the Mongla Port, as it intends to export coal from the power plant to nations like Indonesia, South Africa, and Australia, which in turn will benefit India.
Cross Border Electricity Trade: A Regional Cooperation
In the electricity domain, Bangladesh bought 17.31percent more electricity from India worth 4712.91 crores Taka in 2020-2021 compared to 2019-2020. But this is not through the IEX. Nepal and Bhutan have the privilege to do so. Back in 2018, an initiative from both governments was taken to include Bangladesh within the framework. This time the framework to include Bangladesh in the IEX grid connectivity can be an important issue on the table. Previously, on April 17, 2021, IEX launched the first Cross Border Electricity Trade (CBET) by starting trading with Nepal in its Day-Ahead Electricity Market.
Bangladesh-India Friendship Pipeline: Encouraging New Pipelines with Depots
If the Bangladesh-India Friendship Pipeline is finished on schedule, diesel importing from Numaligarh Refinery Limited in India’s Golaghat district to an oil depot in Parbatipur upazila of Dinajpur will presumably start at the end of 2022. Through a ceremonial opening in March 2020, the Bangladesh-India Friendship Pipeline’s construction got underway. Additionally, work on the buffer storage tank is progressing normally at the Bangladesh Petroleum Corporation (BPC) oil depot in the Parbatipur Upazila. Currently, Bangladesh receives about 2,200 tonnes of diesel per month from the Numaligarh Refinery via the West Bengal Railway, and the BPC transports the fuel to the Parbatipur oil depot via Bangladesh Railway. When finished, the additional tank will increase the depot’s present 15,000-tonne storage capacity by 29,000 tonnes. New pipelines with increased depot facilities can be asked for the growing market inside Bangladesh.
The visit will bring immense possibilities in the energy domain of the region as well as in the bilateral relations between Bangladesh and India. Some issues cannot be put on the table but these will get attention since the discussions on those are going on in the public domain. First, there is a prospect for consolidating grid connectivity as intraregional energy trade is now taking place in the BBIN bloc through the exchange of electricity between India and Nepal, India and Bhutan, and Bangladesh and India. A regional grid of connection and the shipping of LNG to and from third countries are two examples of multilateral cooperation in South Asia that may result from the success of the bilateral cooperation paradigm. Second, another prospect lies in charging reasonable pricing in cross border electricity trade. Nepal was the first nation to participate in the CBET transaction, which started in April 2021. Bhutan also started trading on the day-ahead power market on January 1st, 2022, through Druk Green Power Corporation. Since this visit may open up some new possibilities for Bangladesh, in near future, while Bangladesh will be on the line to connect with the grid, which will create scope for a more reasonable price. Third, hydropower will emerge as a major domain of cooperation. South Asian nations continue to struggle with improving energy security and access in a reliable and competitive way due to their low per capita electricity usage.
Searching for Gas Importer in a Collective Way: Strengthening BBIN
The meeting will portray that two of the most stable economies in the region are acting on the same pitch. This is a message for the actors outside the region. Hence the regional level can be used to handle the issue of energy cooperation while the gas reserve is depleting in a gradual manner. Despite having commercially viable gas sources, Bangladesh and India are becoming more reliant on the import of LNG to meet their growing demand brought on by economic expansion. Nepal and Bhutan, two more members of the BBIN (Bangladesh, Bhutan, India, and Nepal) group, lack proven natural gas supplies to meet their needs, while Bangladesh and India’s reserves are rapidly running out. Trade within the BBIN sub-region can provide a way to address short-term energy needs, and eventually this strategic alliance can also provide affordable access to the LNG market.
In the conclusion, it is clear that the visit has manifold implications for energy cooperation both from bilateral and sub-regional and regional perspectives. Trading in power benefits both countries. India had in principle agreed to let Nepal use its land to open the door for Bangladesh to import electricity produced by hydropower. In this situation, Bangladesh can diversify its energy purchasing market to ensure a more stable energy regime. Taking into consideration the above-mentioned issues, citizens from both sides can expect cooperation in the energy sector between Bangladesh and India to steer a bright future in the era of global chaos and uncertainty.
[Photo by Prime Minister’s Office, India]
*Syed Raiyan Amir is a Research Associate at the Center for Bangladesh and Global Affairs. He was a Research Assistant at the United Nations Office on Drugs and Crime (UNODC) and International Republican Institute (IRI). The views and opinions expressed in this article are those of the author.