Larger benefits will accrue through reduction in fuel cost and 6.5 per cent cut in greenhouse gas emission. The savings should come through replacement of thermal power with hydro-electricity to be sourced mostly from Nepal, followed by Bhutan and Afghanistan.
The study by World Bank economists Michael Torman and Govinda Timilsina expects Nepal to add 52.1 GW (giga-watt) in 2040, over and above the existing 1 GW. Bhutan will add 9.1 GW and Afghanistan 3.6 GW.
Without trade opportunities, Nepal and Bhutan cannot maximise hydro-electric generation potential because of the smaller size of domestic economies.
Torman and Timilsina were in the city on Tuesday to discuss the findings of the three-year research at a meeting organised by CUTS International. They will be in Bangladesh tomorrow for similar discussions. “The purpose of the study is to quantify the anticipated benefits from cooperation,” Timilsina said.
Aimed at promoting market-based trade of electricity, the study discounted the subsidy element in different fuel and generation programmes.
Torman admitted that the real life challenges in implementing the programme in a region known for political volatility and, is witnessing limited cooperation through the BBIN (Bhutan, Bangladesh, India and Nepal ) sub-regional group.
“The purpose of the study is to suggest a way forward,” he said.
Citing examples of such regional trade in other parts of the world, the study points that cooperation would bring dividends to everyone (India stands to gain more because of its size and contribution).
The region currently has a combined generation capacity of 325 GW. Of the total, India shares 276 GW; Afghanistan, 1 GW; Bangladesh, 16 GW; Bhutan, 4 GW, Nepal 1 GW, Pakistan 25 GW, and Sri Lanka 3 GW.
In the absence of cooperation, Pakistan should increase power production by seven times to meet its demand in 2040, Bangladesh by 4.3 times, Sri Lanka by 3.7 times and India by 2.8 times.
The capacity addition will come mostly through coal-fired utilities, requiring a total investment of $859 billion.
India will require a mammoth $ 518 billion investment followed by $206 billion of Pakistan, $77 billion of Bangladesh and Sri Lanka $ 13 billion. Bangladesh, Pakistan and Sri Lanka currently have reasonable shares of costly gas (and even liquid fuel) based generation capacities.
Cooperation can change the ball game. Bangladesh can save 11GW capacity addition, Pakistan 13 GW and Sri Lanka by 0.5 GW or 500 MW, a huge savings for a tiny island nation.