The BIMSTEC Ini­tia­tive:

Coun­tries around the Bay of Ben­gal go be­yond trade and com­mer­cial ties to cre­ate one of the world's largest, in­te­grated, en­ergy mar­kets.

India Business Journal - - CONTENTS - IBJ BUREAU

Coun­tries around the Bay of Ben­gal go be­yond trade and com­mer­cial ties to cre­ate one of the world's largest, in­te­grated, en­ergy mar­kets.

ndia is plan­ning to set up a liq­ue­fied nat­u­ral gas (LNG) im­port terImi­nal

in Myan­mar as it looks to ex­pand en­ergy diplo­macy in its neigh­bour­hood. The ter­mi­nal to im­port su­per-cooled nat­u­ral gas will be in ad­di­tion to the sim­i­lar fa­cil­i­ties planned by In­dian com­pa­nies in Bangladesh and Sri Lanka as a part of a larger plan of en­ergy con­nec­tiv­ity in the South Asian neigh­bour­hood, Petroleum Min­is­ter Dhar­men­dra Prad­han has said.

Speak­ing at a sem­i­nar on 'Assess­ing In­dia's Con­nec­tiv­ity With Its Neigh­bour­hood', Prad­han has dis­closed that Nu­ma­li­garh Re­fin­ery (NRL) in As­sam is ex­plor­ing sup­ply of diesel to Myan­mar and look­ing at op­tions to build fuel stor­age and dis­tri­bu­tion sec­tor in that coun­try. "In­dian Oil Cor­po­ra­tion (IOCL) is also work­ing with Myan­mar com­pa­nies in set­ting up LPG stor­age fa­cil­i­ties, and Petronet LNG is work­ing on set­ting up an LNG ter­mi­nal there," adds the oil min­is­ter, with­out giv­ing any fur­ther de­tails.

In­dia is also work­ing with Bangladesh in in­ter­con­nect­ing gas grids and sup­ply­ing diesel through pipe­lines. Cur­rently, In­dian com­pa­nies sup­ply diesel through rail rakes from Silig­uri in West Ben­gal to Par­batipur in Bangladesh and are in the process of con­struct­ing a 130-km­long prod­uct pipe­line for un­in­ter­rupted sup­ply.

Re­gional co­op­er­a­tion

The In­dian com­pa­nies plan to sup­ply gas to Bangladesh's Khulna power plant through the con­nected gas grids. "This will be an ex­em­plary dis­play of re­gional co­op­er­a­tion, adds Mr Prad­han. Bangladesh is set­ting up an 800-mw power plant in Khulna, for which it has signed an agree­ment with the Asian De­vel­op­ment Bank (ADB) for a $500-mil­lion fund­ing.

Petronet is look­ing at build­ing a 7.5mil­lion tonne per an­num (mtpa) LNG im­port ter­mi­nal in Bangladesh to feed that coun­try's en­ergy needs us­ing im­ported gas. "In view of pro­vid­ing en­ergy ac­cess to the north-eastern part of In­dia, there are plans to im­port LNG in Bangladesh and trans­port it through road or pipe­line to the re­gion while also cater­ing to the de­mand of Bangladesh," the min­is­ter in­forms.

In Sri Lanka, In­dia is jointly de­vel­op­ing Trin­co­ma­lee oil stor­age tank farm and also work­ing on set­ting up an LNG ter­mi­nal and a 500-mw, LNG­fired, power plant near Colombo. There is also a pro­posal to de­velop city gas dis­tri­bu­tion (CGD) and CNG mar­ket and in­fra­struc­ture in Sri Lanka.

IOC Lanka, which is a sub­sidiary of IOCL, has 43.5 per cent of the to­tal fuel mar­ket share in the is­land nation. In­dia is work­ing with Sri Lanka on a pro­posal to set up a so­lar power plant in Sam­pur, which will be of 50 mw to be­gin with.

In­dia cur­rently sup­plies all of Nepal's petroleum prod­uct re­quire­ments through trucks. A pipe­line for sup­ply of petroleum prod­ucts is un­der con­struc­tion, which will en­sure un­in­ter­rupted sup­ply. "There are also dis­cus­sions with Nepal on an LPG and nat­u­ral gas pipe­line," notes the oil min­is­ter, adding that Nepal has ex­pressed in­ter­est in im­ple­ment­ing free cook­ing gas (LPG) con­nec­tion scheme for poor women on the lines of the Prad­han Mantri Ujjwala Yo­jana (PMUY) to ex­pand the cov­er­age of LPG.

"The Hy­dro­car­bon Vi­sion 2030 for North-East In­dia en­vis­ages a nat­u­ral gas pipe­line from Nu­ma­li­garh to­wards Sit­twe (in Myan­mar) in dif­fer­ent phases. The gas pipe­line will open fu-

ture pos­si­bil­i­ties of gas ex­change and grid con­nec­tiv­ity," Mr Prad­han adds.

In­dia sup­plies all of petroleum prod­uct needs of Bhutan, which too is plan­ning to ex­tend LPG cov­er­age to 100 per cent of the pop­u­la­tion by sourc­ing sup­plies from the re­finer­ies in As­sam, he said. In­dia sup­plies all of Mau­ri­tius' en­ergy prod­ucts.

"Our (neigh­bour­ing) coun­tries are con­sid­er­ing con­struc­tion of a bunker­ing fa­cil­ity along with a jetty. In­dian com­pa­nies are also work­ing with Viet­nam, the UAE and Oman for pres­ence in the up­stream sec­tor to pro­duce oil and gas," points out Mr Prad­han.

"Re­gional in­te­gra­tion through con­nec­tiv­ity across all modes -phys­i­cal, util­i­ties-based and dig­i­tal - among our coun­tries in the im­me­di­ate neigh­bour­hood is one of the top pri­or­i­ties of our gov­ern­ment. It is im­per­a­tive that we, to­gether as a group, ad­dress the weak links and over­come chal­lenges," stresses the petroleum min­is­ter.

In­te­grated mar­ket

The BIMSTEC (Bay of Ben­gal Ini­tia­tive for Multi-Sec­toral Tech­ni­cal and Eco­nomic Co­op­er­a­tion) re­gion is abun­dant in en­ergy re­sources, such as hy­dropower, hy­dro­car­bons and re­new­able en­ergy. "Since the re­gion en­joys high in­so­la­tion, In­dia is con­sid­er­ing de­vel­op­ment of a com­mon so­lar grid in the re­gion to cash in on the nat­u­ral ad­van­tage.

More­over, Bangladesh and Myan­mar have large gas re­serves, which can be ex­plored as al­ter­na­tive sources of gas sup­ply. Sim­i­larly, Nepal and Bhutan have im­mense po­ten­tial of hy­dropower, which is un­tapped due to the ab­sence of a mar­ket that can cre­ate de­mand of this mag­ni­tude.

On the other hand, In­dia and Sri Lanka are net im­porters of en­ergy, like many other de­vel­op­ing coun­tries. "The en­ergy de­mand-sup­ply sec­tors in Bangladesh, In­dia, Myan­mar, Sri Lanka, Thai­land, Nepal and Bhutan of­fer a po­ten­tial for re­gional re­source co­op­er­a­tion, which could go be­yond ex­port-im­port trade re­la­tions and link the re­gion in a Bay of Ben­gal En­ergy Community and thus con­trib­ute to the process of re­gional in­te­gra­tion," points out Mr Prad­han, adding: "The key to de­vel­op­ing such a community lies in iden­ti­fy­ing com­ple­men­tary con­di­tions and the com­bi­na­tion of in­ter­re­lated pro­duc­tion char­ac­ter­is­tics among en­ergy sup­ply and de­mand sec­tors of th­ese coun­tries."

Mr Prad­han has called for re­form and re­struc­tur­ing of the en­ergy sec­tor in each of th­ese na­tions in such a way that the bloc be­comes more com­pet­i­tive and ef­fi­cient. The na­tional en­ergy sys­tems - gas and elec­tric­ity net­works - in the South Asian coun­tries are largely iso­lated from each other. Cur­rently, only In­dia, Bhutan and Nepal trade elec­tric­ity. In ad­di­tion, In­dia sup­plies some amount of power to Bangladesh.

De­mand for elec­tric­ity in South Asia, and par­tic­u­larly in Bangladesh, Bhutan, In­dia and Nepal, is grow­ing rapidly. This calls for co­op­er­a­tion and trade that should even­tu­ally cre­ate one of the world's largest, in­te­grated, en­ergy mar­kets. The Hy­dro­car­bon Vi­sion 2030 en­vi­sions dou­bling pro­duc­tion of oil and nat­u­ral gas in the North­East and pro­mot­ing trade in the re­gion and the neigh­bour­ing South Asian As­so­ci­a­tion for Re­gional Co­op­er­a­tion (SAARC) coun­tries. Be­sides, the BIMSTEC coun­tries have re­alised that they can over­come their re­spec­tive hur­dles to high eco­nomic growth by co­op­er­at­ing and col­lab­o­rat­ing.

As BIMSTEC marks its twen­ti­eth an­niver­sary, a con­flu­ence of fac­tors has cre­ated an op­por­tu­nity for the or­gan­i­sa­tion to help make the bay re­gion more in­te­grated. Re­spond­ing to the in­roads China has made in the re­gion, In­dia is plac­ing an un­prece­dented em­pha­sis on strength­en­ing re­gional con­nec­tiv­ity and links with South-East Asia. Small BIMSTEC coun­tries see re­gional mul­ti­lat­er­al­ism as a po­ten­tial check on the ris­ing ca­pa­bil­i­ties of China, In­dia and ma­jor ex­ter­nal pow­ers. The BIMSTEC ini­tia­tive could help power the re­gion into one of the world's ro­bust en­gines of growth.

"The en­ergy de­mand­sup­ply sec­tors in the re­gion of­fer a po­ten­tial for re­gional re­source co­op­er­a­tion, which could go be­yond ex­portim­port trade re­la­tions and link the re­gion in a Bay of Ben­gal En­ergy Community."

DHAR­MEN­DRA PRAD­HAN

Petroleum Min­is­ter

In­dia is also ex­plor­ing pos­si­bil­i­ties of tap­ping so­lar and hy­dropower po­ten­tial in the South-East Asian re­gion.

The Hy­dro­car­bon Vi­sion 2030 for North-East In­dia en­vis­ages a nat­u­ral gas pipe­line from Nu­ma­li­garh to­wards Sit­twe (in Myan­mar) in dif­fer­ent phases.

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