Bangladesh’s Prime Minister Sheikh Hasina, who was in India only a fortnight in the past to attend the swearing-in of the Narendra Modi authorities, was again in New Delhi on June 21-22 on a bilateral state go to, which was the primary by a overseas chief after the inauguration of Modi’s third time period as prime minister.
In a press convention on the finish of her go to, Hasina described it as “temporary however fruitful.” The go to seems to have cleared the air in New Delhi concerning hypothesis about Bangladesh’s much-talked-about tilt in the direction of China, supposedly undermining Indian pursuits within the area.
Probably the most notable end result of the go to was a rail connectivity settlement between the 2 international locations that may enable India to make use of Bangladesh’s rail community to move items to its northeast. India has additionally agreed to increase transit services to Nepal and Bhutan for Bangladeshi items by its railway networks.
Bangladesh additionally has given its approval for India to ship its specialists to guage the Teesta River Venture. China submitted a proposal to develop the mission, which has raised issues in India.
Whereas some commentators predicted a tug-of-war between India and China over the mission, Hasina noticed in her post-India go to feedback that India has a good likelihood of successful this bid since that may remedy the longstanding water-sharing problem with India across the river.
Whereas most different agreements and mutual understandings revolve round capability constructing in numerous sectors, Bangladesh has an enormous alternative to achieve from one deal specifically: the opening up of vitality connectivity with Nepal and Bhutan through India.
In line with the joint assertion issued on the finish of the go to, India and Bangladesh have dedicated to increasing “energy and vitality collaboration” and creating “intra-regional electrical energy commerce.” This may begin with expediting the development of a 765 kV high-capacity grid with appropriate Indian monetary help.
As a result of risky situation of gasoline and vitality markets for the reason that Russian invasion of Ukraine, fossil gasoline costs have confronted a lot tumult, typically rising past anticipated limits. Because of Bangladesh’s subsequent vitality insurance policies, the nation’s efforts to impress all households by 2021 resulted in a heavy reliance on imported fossil fuels, primarily gasoline and coal.
Bangladesh’s import funds knowledge reveals a soar in petroleum product imports. The World Financial institution recognized petroleum merchandise as a driver of Bangladesh’s surging imports in April 2023. This, together with different principal commodities, created strain on the nation’s stability of funds, forcing Bangladesh to impose import restrictions and slowing down the financial system.
Excessive gasoline prices and imports are additionally driving electrical energy era prices in Bangladesh, which grew from 7 cents/kWh in 2020 to round 11 cents/kWh in 2023. Greater than half of all electrical energy produced in 2022-23 FY in Bangladesh got here from gas-fired energy vegetation. The common electrical energy era price from gasoline remained a lot decrease for many years due to the pure gasoline reserves. Nonetheless, Bangladesh turned to importing LNG because the pure gasoline reserves are depleting attributable to rising calls for.
In line with Bangladesh’s energy division estimates, the price of producing electrical energy from LNG stood at round 15 cents/kWh. On this context, the price of producing electrical energy is predicted to develop with the present energy combine except the value of imported fuels drops drastically.
That is the place the vitality connectivity with Nepal and Bhutan can present Bangladesh with a respite.
Nepal and Bhutan are among the many few international locations that produce virtually 100% electrical energy from renewables. Nepal alone has an economically viable hydroelectricity potential of round 40,000 MW. Its energy demand is estimated to be round 13,000 MW in 2035. It plans to improve its era capability by using its full potential and exporting the surplus electrical energy to neighboring international locations.
Bangladesh, Nepal, and India have been in talks over energy transmission from Nepal to Bangladesh by India for the previous few years. In line with Each day Observer, a pro-government day by day in Bangladesh, the tariff is under 7 cents/kWh. Though it’s unclear whether or not the tariff contains India’s service cost, this determine is considerably decrease than Bangladesh’s common energy era price and half of the price of electrical energy coming from LNG-fired energy vegetation.
Therefore, the vitality connectivity cope with India will enable Bangladesh to import cheaper and cleaner electrical energy produced from renewable sources in Nepal and Bhutan, thus decreasing their dependency on imported fossil fuels for energy manufacturing. Bangladesh already has a plan in place to import 9,000 MW of electrical energy from neighboring international locations.
Nonetheless, some important challenges persist.
Bangladesh has dozens of energetic, long-term energy buy agreements with energy vegetation commissioned within the final decade. If Bangladesh plans to import a big a part of its electrical energy from neighboring international locations – Nepal, Bhutan, and India – the Bangladeshi energy vegetation are anticipated to sit down idle, and Bangladesh can be compelled to pay a big sum of cash in capability modifications to them.
For Nepal, the problem is round accumulation of assets and funding for energy era and transmission, because the nation goals to supply round 30,000 MW by 2035 and export a big portion of it.
With India’s energetic assist, a collaboration between the private and non-private sectors in Nepal and Bangladesh, backed by the event monetary establishments (DFI), may also help overcome the challenges. World hydropower giants can be invited to spend money on these initiatives.
In the meantime, to cut back the burden of capability prices and gasoline imports, Bangladesh can think about coming into right into a discount with the present fossil gasoline energy vegetation to plan for early phase-out.
