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Mainstream, VOL LI, No 14, March 23, 2013 - Special Supplement on Bangladesh

India-Bangladesh Energy Cooperation: Historic Newer Trends

Monday 25 March 2013

by MAHENDRA P. LAMA

Energy security is emerging to be one of the most critical issues in the South Asia region. Disruption of power and other energy supplies can lead to serious crisis affecting both human (food, livelihood, employment and economy) and national security (environment, inter-national trade communications, transport and all other services). The inability to cater to the increasing industrial and other commercial needs have adversely affected their productive activities, social development and investment climate. The per capita commercial energy consumption in the region continues to be quite low. At the same time, the persistent shortage of energy has been a major factor in keeping the region at a low growth equilibrium.

In Bangladesh the pattern and composition of energy availability and consumption are likely to undergo significant changes mainly because of the increasing exploitation of hitherto unharnessed and untraced natural resources including hydel resources and natural gas. This opens up a promising scope in the arena of regional cooperation and integration. This article mainly focuses on the power sector cooperation.

Reforms and Power Sector

BOTH in Bangladesh and India, power generation and its supply for long remained a state mono-poly. Respective governments owned, operated and regulated the power entities. This resulted in overlapping and to a large extent undemar-cated responsibilities. The lack of accountability in terms of operational performance and service standards and codes worsened the situation. Most of the power generating units remained highly dependent on the subsidies and other inputs provided by the state. They stood thoroughly unexposed to any competitive and efficient atmosphere.

The power distributing units lacked commer-cial independence, suffered from unclear definition of the corporate structure and respon-sibilities. On top of the low tariff rate in relation to the financial requirements of the operating entities, the high system loss and low collection from the consumers ultimately made these entities both defaulters and sick. A high propor-tion of losses at the transmission and distribution (T & D)—Bangladesh 33 per cent and India 26 per cent—levels includes non-technical losses like theft, pilferage and improper billing.

Both India and Bangladesh have focused on the following strategies in power sector reforms:

• Segregation of the regulatory functions from the government and vesting them in an Independent Regulatory Commission.

• Unbundling the various activities from a vertically integrated unit to distinct and separate units based on functions.

• Corporatisation of various units, namely, vesting the units in a company incorporated under the Companies Act, 1956.

• Tariff reform.

• Private sector participation, wherever the same is considered by the state to be advantageous.

In Bangladesh, the National Energy Policy 1995 (NEP), has been designed to ensure “proper exploration, production, distribution and rational use of energy sources to meet the growing energy demand of different zones, consuming sectors and consumer groups on a sustainable basis”. The NEP, among other things, is aimed at reduction of imbalance in energy consumption in the rural-urban areas as well as east-west zone and socio-economic groups and encouraging public and private sector participation in the development and manage-ment of the energy sector. The Power Policy provides for regional/international cooperation for importing electricity from neighbouring countries, utility cooperation, and linkages amongst the utilities in the region for sharing experience for human resource development.

India’s power sector reforms have been at both the Union and State levels. Besides the setting up of the regulatory commissions, both at the Centre and in the States, the Electricity Act 2003 has injected fairly advanced and comprehensive policy changes. The reforms in the State level utilities have been mainly prompted by inadequate revenue flows. Most of these utilities could not cover even a reasonable share of investment costs as they had to meet both debt service and operation and mainte-nance (O&M) expenses. All these adversely affected investments in new capacity additions. For instance, the financial health of most of the State Electricity Boards (SEBs), the most vital buyers of power in India, has been deteriorating over the years.

One of the crucial provisions of this new Act is that all distribution companies, traders and generating companies will have non-discrimi-natory open access to the inter-State electricity transmission system in the country on payment of specified transmission charges. This open access is expected to facilitate competition in the industry and thereby create conditions for the development of the market. There are adequate provisions of moving away from the cost-plus- regulatory regime to a new regime of lighter regulation. This changeover from intrusive regulation, involving detailed scrutiny of the various actual costs, to light-handed regulation based on the normative parameters of perfor-mance, is to be followed by all the inter-State generating and transmission utilities. In other words, the Electricity Act 2003 promises to usher in an era of multi buyer-seller model. There are quite encouraging responses from the private sector in the aftermath of the reform initiatives. A large number of IPPs showed their interest and started participating.

Installed Capacities 

WITH Bangladesh having installed capacities of 5275 MW and India 1,24,310 MW, there are quite revealing variations in these capacities of power utilities. These variations also reflect the potentialities as based on their natural endow-ments. Hydro-power has been the most vital source of the total installed capacity in Bhutan (100 per cent), Nepal (90 per cent) and Sri Lanka (65 per cent) whereas thermal power dominates in Bangladesh (85 per cent gas based), India (50 per cent mainly coal based) and Pakistan (71 per cent). In some countries of South Asia, the composition of the installed capacity has been changing. The share of hydro sources has gone down very steadily in India and Pakistan.

The analysis of the demand-supply gap in the power sector in the region is very crucial in reaching any conclusion on the possibility and potentiality of cross-border power trade. South Asian countries are largely energy importers. Most of these countries have increasingly faced a serious power shortfall because of the excess industrial and residential demand over their power-generating capacities. For the South Asian region as a whole, it is estimated that on an average the demand for power has increased at an annual rate of nine per cent, doubling its magnitude every eight years, whereas the supply side has recorded both smaller and erratic growth pattern. This has increasingly led to power cuts and rationing. A major chunk of the demand could come from the rural areas. The overwhelming rural population in the region is gradually demanding more and more power.

Seasonality Dynamics 

THE seasonality factor in both generation and demand is highly noticeable in the South Asian countries. This has in turn generated a lot of interest in cross-border power trading in the region. In case of Bangladesh, two distinct trends are available as far as the pattern in power demand is concerned. Firstly, during December- February the demand goes down and in March-May load-shedding becomes a common feature. Even the day-peak of the system cannot be maintained in this season. As a result industrial, commercial and agricultural activities suffer.

During the monsoon period of June-August, agricultural pumping is not necessary. A full capacity of hydro generation (230 MW) is available during this period. Secondly, the demand for electricity increases sharply during evening mainly because of the typical evening shopping culture. This is a critical problem in the power system operation. Typical daily load curves for the whole of Bangladesh do show that

  • a pronounced lighting demand occurring in the evening (6:00 pm to 11:00 pm);
  • minimum load occurring after midnight till 6:00 pm;
  • minimum load is about 45 per cent of the peak demand (depending on seasonal varia-tions);
  • the peak demand is in the range 150 per cent of the average load.

A sizable generation capacity to the tune of at least 1200 MW more or less remains unutilised during the off-peak hours and in effect the plants remain shut for these hours. They produce power only when they are requisitioned to produce. This capacity is to meet the peak demand and these plants are treated as peak-hour plants. If demands for electricity could be created and their need time could be planned to match the off-peak time, the technical, economic and managerial performances as well as fuel efficiency and plant factors would significantly improve. If possible, this available capacity can be a ready source for regional cooperation for the import-export of electricity from neighbouring countries.

In India, there exists a clear seasonality in power generation. It particularly becomes clear in the hydel power generation. The peak months for hydro-power generation are August-September while the lean remains from January to June. The thermal plants’ generation has been mostly designed to match and balance the trough months created by the hydel plants in winter and the pre-monsoon season.

Demand-Supply Gaps Projection

BANGLADESH is divided into two zones by the mighty river Padma. All gas fields so far discovered are located in the East Zone and most of the major power plants, based on natural gas, are located there. The East-West inter-connector at 230 KV level was built over the Jamuna river in 1982 with an objective to transfer cheaper power from the East Zone to the West Zone. The maximum power transfer so far made was 404 MW. However, after the completion of the Bangabandhu Jamuna Multi-purpose Bridge (BJMB) gas has reached the West Zone thereby opening avenues for developing major power plants based on natural gas.

The projection made in the National Energy Policy of Bangladesh indicates that the deficit level will go upto 43,698 GWh (low scenario) and 74,102 GWh (reference scenario) by 2020. On the other hand, the PSMP study has used 1994 (July 1993 to June 1994) as the base year for the forecast which covers a period of 1995-2015. The forecast projects electricity requirements by the principal consumption category for established supply areas as well as consumption in the more recently electrified rural areas. The Dhaka, Central and Southern regions, on the east of the Jamuna river, constitute almost 75 per cent of the entire Bangladesh electricity market. The Western and Northern regions on the west of the Jamuna river consume the remaining 25 per cent. Since 1971, for most of the years the effective generation capacity have failed to meet the peak demand. There exists little or no margin to meet the peak demand leading to delay in carrying out scheduled overhauling of plants causing excessive wear and tear including inefficient operation.

There are alternative forecasts also which are made to formulate the plan in a changing econo-mic development scenario. The reference forecast is used as the basis of generation, transmission and distribution planning within the PSMP.

• Low forecast: net generation: 42,050 GWh

8000 MW demand by 2015.

Average annual growth rate 7.5 per cent from 1994 base.

Represents 85 per cent of reference forecast values.

• High forecast: net generation 56,800 GWh

10,800 MW by 2015. Annual growth rate of nine per cent from 1994 base.

Represents 15 per cent higher than the reference forecast value.

In India there are a range of projections based on different sets of assumptions in each model.

Scope for Cooperation 

ECONOMIC gains based on regional cooperation in the energy sector have become a firmly esta-blished practice across the regional groupings. Many developing countries, because of their low income and resulting small market size, are unable to capture by themselves the inherent economies of scale of major infrastructure investments. Cross-border exchanges and power trading will bring the entire issue of cooperation in the energy sector on a regional basis to the forefront.

The choice of a model to trade or exchange electric power and other energy varieties between countries is a crucial issue. There are instances of international power trading mechanisms in some regions across the world. One notable enabling feature in the power markets in these regions is the prevalence of competitive electricity trade legislations. For instance, the European Union’s Electricity Market Directive leaves the choice of power trading arrangements to individual countries. They can evolve the mechanisms and arrangements as per their competitive advantage and cost effectiveness. There are examples of such regional power pools successfully operating in several parts of the world. For instance, the Southern African Power Pool (SAPP) created in 1995 encompassing among others South Africa, Lesotho, Mozambique, Namibia, Malawi, Zimbabwe and Zambia under the regional cooperation organisation, namely, the Southern African Development Community (SADC), is one example which matches very well with the South Asian situation. They trade in power with a view to provide reliable, consistent and economical power supply. The SAPP countries have a diverse mix of hydro and thermal power generation plants serving a population of over two hundred million people.

Interconnection of power systems of conti-guously located countries and their co-ordinated operation provide immense technical and economic benefits. All these interconnections allow each electrical utility to make savings on power plant investment and operating costs as a result of the improved use of the interconnected system. It also contributes to the quality of electricity supplied to customers as well as reduces environmental damage. The trans-mission system, its location, substation capacity and the system configuration are of prime importance. The economic criterion of inter-connection and the power transfer are invariably determined on the basis of configuration of the transmission system and the regional demand.

There already exist considerable network of inter-connections among the South Asian countries. India’s Power Grid Corporation has worked out the inter-connections required, their feasibility and the cost and benefits to the participating countries in the South Asia Growth Quadrangle (SAGQ) region consisting of Bangladesh, Bhutan, the North-Eastern region of India and Nepal. All these inter-connecting channels will very well match the Indian effort to have integration of all regions to form a National Grid in the near future.

A strong possibility of power trading is emerging in the South Asian region. There are four highly reinforcing and solid factors that are bound to promote power trading in the South Asian region in the near future.

I. A huge power crisis is leading to long hours of load-shedding in many South Asain countries thereby affecting the social, economic and commercial activities. This could even lead to political instability. There have been tremendous public pressures on respective governments to act upon to improve the situation. Most people are willing to pay for the electricity. There is no short term solution within the country facing power shortage and hence cooperation with the immediate neighbouring countries is inevitable.

II. There is growing realisation among the leaderships of South Asian countries to expedite the process of energy exchange. They have increasingly moved forward towards this as indicated by the declarations in various SAARC Summits. Of late the Summit declarations have pointed to the need to take effective actions on the decisions adopted by the SAARC Summits. The idea of energy exchange could be one of the major areas where these decisions would be implemented. It started with the Islamabad Declaration 2004 where the concept of an Energy Ring was discussed. The Male Summit—2011 called for the conclusion of an Inter-governmental Framework Agreement for Energy Coope-ration and the Study on the Regional Power Exchange Concept as also the work related to a SAARC Market for Electricity.

III. There are various levels of sensitisations and preparations for energy trading that have been undertaken in the past decade or so and have started bearing fruits now. A number of organisations in the region and outside have been consistently working towards fostering cooperation in the energy sector in South Asia. Among these are the technical and professional public sector organisations including Petrobangla, Power Grid and Power Trading Corporations of India, Electricity Authorities of Nepal, Sri Lanka and Pakistan. On the other hand, international agencies like the World Bank, ESCAP, Asian Development Bank, USAID (SARI-E initiatives) and UNDP have also been fairly active in the last few years in the arena of power exchanges and trading. The SAARC has formed a Technical Committee exclusively on energy sector cooperation under its Integrated Programme of Action and has set up an Energy Centre in Islamabad.

The private sector’s role on issues of energy cooperation in the region is rather slowly emerging. The independent power producers have started actively exchanging notes for cooperation across the border. Laying and consolidating transmission lines across the country in most of the South Asian countries have been steadily taken up.

IV. A large number of studies have been conducted and policy suggestions by several academic and professional organisations have been advanced. A number of studies have already been conducted on various aspects of energy cooperation in the region. These are carried out by research organisations like the South Asia Network of Economic Research Institutes (SANEI), Coalition for Action on South Asian Cooperation (CASAC), South Asian Centre of Policy Studies (SACEP), Bangladesh Unnayan Parishad (Dhaka), Centre for Policy Dialogue (Dhaka), Institute for Integrated Development Studies (Kath-mandu), Centre for Policy Research (New Delhi) and Tata Energy Research Institute (New Delhi), and premier universities like the Jawaharlal Nehru University (New Delhi), Sikkim University, BUET (Dhaka), Quad-i-Azam University (Islamabad), Lahore University of Management Sciences, Tribhu-van University (Kathmandu) and Colombo University (Sri Lanka). Some of these institutes and universities have played a very active role in advocating issues of cooperation on both water and energy in the region. Professionals and international institutions like the World Bank, Asian Development Bank and USAID have done similar work. Several training programmes and capacity building projects have been conducted at various levels both for the government institutions and private agencies in different SAARC countries and these include those by the USAID’s SARIE project.

All these together have brought to the fore a strong urge, demand and willingness to undertake power trading in a commercial and sustainable manner.

Power Trading Mechanisms: Alternatives and Options

THE possibility of power purchase has opened up new vistas of cooperation. Cross-border power trade will lead to i) effective utilisation of natural resources, ii) increase in the reliability of power supply, iii) economy in operation and mutual support during contingencies, iv) bring about large scale transformation in the sectors contributing to economic growth, and v) will act as the single most effective confidence building measure through the participation of multiple stakeholders.

Cross-border trade in energy may work as an effective confidence building measure among countries in the region. This will not only create diverse stakeholding across the border but would also give rise to some positive and permanent interest groups. In South Asia, the CBMs built by the economic stakeholders have always been effective. These have promoted and sustained good relations among countries like Bangladesh, Bhutan, India, Nepal, and Sri Lanka.

The three generally accepted trading mechanisms are:

i) Pool based,

ii) Bilateral power trade,

iii) Wheeling Facilities.

i) Pool Based Mode 

In case of pool based mechanism, if the power market is available, the daily pay System Marginal Price (SMP) is used to establish competitiveness in power trade. The pool based approach is also known as agent based integrated simulation. This can possibly provide support to develop a competitive long run market equilibrium in regional power trade. In this context establishing a Regional Power Trading Corporation (RPTC) would be highly beneficial to launch this type of market mechanism in the South Asian region too. This could be called “SAARC-RPTC”. The SAARC-RPTC could provide market feed-back to the individual power producers (agents) as well as the power consumers. The SAARC-RPTC can maintain and disseminate information on plant structures, avoidable cost of production, plant sales prices, sales volume, rate of utilisation, profits generated, target utilisation and market conditions, consumer behaviour, and ongoing plant building and future investment in the sector.

This in essence would be the pooling of surplus power generated by individual plants in the participating countries and transporting into deficit ones by a coordinated exchange mechanism depending on demand and consumer categories (estimating consumer surplus).

India has recently introduced the concept of the Regional Power Trading System which will help various regions of the country in reducing the power deficit by transferring surplus power from another region. Under the Electricity Act 2003, the Indian companies could pool power in an exchange. A consumer would be free to buy it from anyone. This concept of power pool within India can also be enlarged to cover the neighbouring countries like Bangladesh, Bhutan and Nepal after the establishment of a sub-regional power pool and necessary inter-connections among these countries are put in place. This can ultimately form a regional power pool thereby generating a huge opportunity for power trading in the region.

There are both one-way power transfer and two-way exchanges of power in India. However, in countries like Bangladesh and Nepal, it has been only one-way power flow from the surplus to deficit regions.

ii) Bilateral Mode

Cross-border power trade on a bilateral mode already takes place widely between India and Bhutan and to a certain extent between India and Nepal. The India-Bhutan Energy Exchange takes place through long-term Power Purchase Agreements (PPAs) for three critical projects that include the Chhukha Hydro Electric Project (336 MW), Kurichu HEP (60 MW) and Tala HEP (1020 MW). These are all run-of-the-river projects with four hours peaking. Bhutan exports over 84 per cent of its total generation (1494 MW) after keeping aside 1152 MW (peak load 187.5 MW) for internal consumption. Its annual export is around 5922 MW that generates an electricity sale revenue of US $ 203 million (47 per cent of the national revenue).

 A large number of hydro projects are under development; these will generate 10,000 MW by the year 2020. The sale of surplus power to highly power deficit areas of West Bengal, Odisha and the North-East has been the hallmark of this project. The transmission link has also been a great success and this is likely to be upgraded to help evacuation of 4500 MW from the three large potential power projects which are being built in Bhutan. However, Bhutan is keen to diversify the power market as at the moment it is a clear situation of monopoly where India is the only buyer. This is more so as a number of hydel plants are under construction in the North-Eastern region which may to a large extent lead to the diminution in the demand for Bhutanese power.

iii) Wheeling Mode

The border regions of Bangladesh, Bhutan, India and Nepal have significant scope for both power generation and marketing. The surplus generated by the hydro plants in Bhutan and Nepal coincides with seasonal peak demands in the supply-short countries—India and Bangla-desh. Further, for the purpose of load-balancing, hydro capacity provides better load following capa-bility than the fossil-based systems in India and Bangladesh. This would result in more efficient use of resources.

As India and Bangladesh strengthen their economic and social linkages through projects both at the bilateral and regional levels, there are distinct advantages for Bangladesh to import power from Bhutan and Nepal because of both the lower tariff and supply reliability. This is where India has to play a critical role of providing exclusive wheeling facility which could be used by Bangladesh even for buying power from anywhere in India on a commercial basis. Since India is developing a very comprehensive transmission line across the country, Bangladesh could make use of it in a sustained and commercial manner.

Bhutan: Huge Generation Surplus by 2020 and 2030 

Existing Installed Capacity I.C. Capacity addition by 2020 I.C. by 2020 Capacity addition 2030? IC by 2030? I.C. by (IC)
1480 11,864 13,344 14,653 27,997
5 13 60 78
HEPs HEPs HEPS HEPs

Historic Newer Trends

THE Indian and Bangladeshi Prime Ministers have met twice during 2010-11 and worked together on very crucial areas of energy cooperation. These include:

• MoU for cooperation in Renewable Energy

• A high-level Steering Committee set up.

• Joint Interconnection Study (Ishurdi, Bangladesh-Bahrampur, India) is being done

• Potential Bilateral Energy Cooperation under consideration

• Power Import of at least 500 MW from Western Interconnection (Bangladesh-West Bengal)

• Power Import of at least 300-500 MW from Eastern Interconnection (Bangladesh-Tripura)

• Regional Grid construction for power trade

• Human Resource Development of Utility professionals

• Joint Venture Power Generation Projects, especially large coal power projects.

As a result, three very far-reaching projects are underway between India and Bangladesh:

i) 250 MW exports from India likely to start in mid-2013.

ii) A grid inter-connection between Bheramara in Bangladesh and Bahrampur (West Bengal) in India is likely to be completed by mid-2013. ADB loan has played a critical role.

iii) 1320 MW coal based unit at Rampal (350 kms south-west of Dhaka under the Bang-ladesh-India Friendship Power Company consisting of BPDB and NTPC has been initiated. This project, which costs $ 1.5 billion, is likely to be completed by 2017.

These are path-breaking projects because:

i) These showed new and more realistic and matured relations between India and Bangla-desh and a new trend of harmonised and coordinated approach among various Ministries within a country. This also in a way indicates a generational shift in the bureaucracy of both these countries.

ii) There are strong commercial and profes-sional elements in the exchanges. This paves the way for the related institutions to come together in a much more comprehensive and sustainable manner.

iii) Issues of the orthodox variety of national security are for the first time overwhelmed by more serious concerns about non-traditional security threats such as energy insecurity and human insecurity. Both the leaders have discarded their traditional positions and showed unprecedented “political will”.

iv) Borders are used as opportunities rather than sources of threats.

v) Though these are essentially bilateral projects, there are in them strong contents of sub-regionalism based on physical contiguity and socio-cultural exchanges. This could lead to the much-wanted sub-regionalism-based growth triangles and quadrangles in South Asia.

vi) Also the role of international agencies like the ADB, World Bank, UNDP, USAID other private conglomerates has been recognised.

vii) Very aptly benefits from the critical roles played and substantive contributions made by civil society institutions, universities, think-tanks, academics, media and private sector in taking forward the cause of regional coope-ration in this region have been acknowdged. In a way this is a prime example of a Track II transforming into a Track I diplomacy in a full-fledged manner.

These three projects are going to be landmark starting projects as they for the first time break a long journey between potential negotiations and implementations and protracted disconnect between people’s aspirations and feeble political will. These projects could lead to several such exchanges among South Asian countries including between the India and Pakistan and could have unprecedented positive impact on all sectors of cooperation at both the bilateral and SAARC levels.

Let us also acknowledge the fact that a large number of points exist along the India-Bangla-desh border where the distance of inter-connections between the two sides may be well within 20 to 60 kms. For instance, there are 21 grid substations combining both sides at 230/132 KV levels where the distance from the border is less than 20 kms. Some of these substations are so close that they could be interconnected at a very nominal cost and within a very brief time-span to facilitate power exchange/trading. A large number of points exist along the India-Bangladesh border where the distance of interconnections between the two sides may be well within 20 to 60 kms. The cities and towns, such as Agartala, Rokhia and Farakka, on the Indian side of the border are located on the border itself or extremely close to it. These existing substations supplying power in their own territory could serve the neigh-boring towns in Bangladesh as well. Grid inter-connections on two sides would permit larger power flows and would integrate the two grid systems to bring them to the same frequencies.

Missed Opportunities: A Costly Affair 

IN 2005, a Tripartite Ministerial Meeting between India-Myanmar-Bangladesh held in Yangon agreed to import natural gas through pipeline from Myanmar via Bangladesh. It mentioned that the

“Government of Myanmar agrees to export natural gas to India by pipeline through the territory of Bangladesh and India to be operated by an international consortium .......... The route of the pipeline may be determined by mutual agreement of the three Governments with a view to ensuring adequate access, maximum security and optimal economic utilisation.”

It was considered to be a major policy shift in the Indian approach to issues of cooperation in the neighbouring region on two grounds. First, it was a clear move away from traditional bilateral approach to a new tripartite (multi-lateral) approach. And secondly, this was a deal which was negotiated and managed by the line agency, that is, the Ministry of Petroleum, and not by the Ministry of External Affairs.

The deal however, could not be implemented purportedly because India did not agree to Bangladesh’s demands of i) transmission of hydro-electricity from Nepal and Bhutan to Bangladesh through Indian territory; ii) corridor for supply of commodities between Nepal and Bhutan and Bangladesh through Indian territory; and iii) to take necessary measures to reduce trade imbalance between the two countries. Though these were discussed on the sidelines of the Tripartite deal and even a formal joint bilateral press statement was issued by the Indian and Bangladeshi Ministers with some very positive views on these demands by the former, the entire deal collapsed. It essentially became a deal between India and Myanmar which never took off.

Bangladesh’s demands looked very reason-able, particularly in the context of the conspi-cuous trend of steady liberalisation and economic integration the region has recorded in the last decade or so. The Singh-Hasina agree-ments of 2010 and 2011 have in fact proved that Bangladesh was asking for what India would have in any case agreed upon.

Though this tripartite agreement looks fizzled out at the moment, India lost a major oppor-tunity even in terms of literally handing over the gas fields to China. Even if the gas is made viable to India by Myanmar once again, India could do so now only at a very heavy cost of diverting this gas pipeline through its own territory in Assam. It has also forgone a good opportunity to make substantive geo-strategic and socio-economic gains in the long run. The goodwill and diverse stakeholders generated by this project could have been used by India to resolve its longstanding demands vis-à-vis Bangladesh. This includes getting a better access to energy projects in Bangladesh and transit facilities to reach its North-Eastern States. It could have triggered a number of projects in Bangladesh with large scale development and social impact. This could have in turn in some ways even discouraged the Bangladesh-India cross-border movement of people in search of better livelihood. The Bangladesh transit corridor could have been used as a major route to enter into the South-East Asian countries via Myanmar under the Look East policy.

A transit corridor through Bangladesh is so very vital for India. The 11th Five Year Plan (2007-12) clearly mentions that the North-Eastern region had a much higher per capita income than the rest of India before 1947. It has steadily gone down and is much lower than the national average today. Assam’s Chief Minister was more emphatic when he said:

“Assam, which was once a prosperous State at the dawn of independence, became gradually a backward State. The history of woes began with the partition of the country, which made Assam a totally landlocked region with a narrow corridor to connect it with the main-land. All transit routes through Bangladesh were closed to the State and access to Chittagong and Dhaka ports was denied to us. The traditional trade relations with the neighbouring countries were disrupted.”

Prof Lama is the Founding Vice-Chancellor of the Central University of Sikkim and a former Member of the National Security Advisory Board of the Government of India. He is presently Professor of South Asian Economies at the Jawaharlal Nehru University, New Delhi.

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