BIMSTEC: The Bay of Ben-gal Initiative for Multi-Sectoral Technical and

Economic Cooperation (BIM-STEC) is a regional organizationcomprising seven memberstates (Bangladesh, Bhutan,India, Myanmar, Nepal, SriLanka and Thailand). The re-gional group constitutes abridge between South andSouth East Asia and represents areinforcement of relationsamong these countries.

Economy & InvestmentBIMSTEC region is one of the fastestgrowing with a combined GDP of US$3.75 trillion (2018) and is home to 1.65billion populations. BIMSTEC regionhas recorded a robust economic growthover the past twenty years (figure 1) andexpected to remain robust in comingyears. In 2018, global economy grew atan average of 3.6%. Except Sri Lanka,all other BIMSTEC countries grew fasterthan the world average. Bangladesh,

Bhutan, India, Myanmar, Nepal, SriLanka and Thailand reported GDPgrowth rate of 7.9%, 4.6%, 6.8%, 6.8%,6.7%, 3.2 and 4.1% respectively as perthe world Economic outlook1. The in-flow of investments is considered as akey driver for accelerating the economicgrowth through employment genera-tion, global capital, global technologytransfer, product markets and distribu-tion network. Foreign Direct Investment

(FDI), an important catalyst for eco-nomic growth in the developing coun-tries, for the year 2018, region received61.7 billion USD (only 4.8% of theworld FDI). The other regions such asASEAN, BRICS, SAARC, ECOWAS,EAC, Euro Area received 148.6 billionUSD (11% of the world FDI), 261.2 bil-lion USD (20% of the world FDI), 50.7billion USD (3.9% of the world FDI), 9.4billion USD (1% of the world FDI), 4.7

billion USD (8% of theworld FDI), 163.8 bil-lion USD (13% of theworld FDI)2.

Energy & Power SectorScenarioTo sustain this high eco-nomic growth, the BIM-STEC economiesrequired affordable andcompetitive supply ofenergy/electricity onlong term basis. Ade-quate, affordable, cleanand sustainable supplyof energy is a funda-mental pre-requisite forall the developmentpursuits and endeavors;

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Cover Article

March 16, 2020

Regional Energy Cooperation for AcceleratingCross Border Electricity/Energy Trade & Mobilizing

Investment in BIMSTEC RegionRajiv Ratna Panda & Maitreyi Karthik

from economicdevelopment toscientific re-search, knowl-edge creation,education, afford-able healthcare,quality of life,prosperity, well-being and happi-ness for thepeople of BIM-STEC region.

Yet despite thisimpressive macro-economic growth,the energy sectorin the BIMSTECregion has notbeen able to keeppace, BIMSTECper capita electric-ity consumption continues to be low inmany BIMSTEC countries and there is awide variation among BIMSTEC coun-tries (figure 2). BIMSTEC countries’ percapita consumption ranges from 190kwh per person for Nepal to 2,821 kwhper person for Thailand, 2,976 forBhutan and the region on an average, itis only around 1,086 kwh per person,which is much lower than the world av-erage of 3,132 KwH per person. Thisdemonstrates limited energy supplieseven though electricity installed capacityof the region have more than doubledsince 2010, grown from 176 GW in2010 to 447 GW by 2019.

Despite the recent focus on renewableenergy by BIMSTEC country govern-ments, electricity sector (figure 3) con-tinues to be dominated by fossil fuels.As of 2019, coal constitutes around48% of the energy mix, renewable en-ergy constitutes around 20%, gas con-stitutes of 14%, oil & diesel takes up8.2%. Most of the large BIMSTEC coun-tries imports large amount of its energyneeds from outside of the region and arevulnerable to the disruption in globalenergy supplies. As per, the world en-ergy trilemma index3, (based on EnergySecurity, Energy Equity, and Environ-mental Sustainability of Energy Sys-

tems), BIMSTECcountries havepoor ranks (bestrank is 68).B a n g l a d e s h ,India, Myanmar,Nepal, Sri Lankaand Thailandrank4 (overalltrilemma ranks)114, 109, 104,117, 85 and 68r e s p e c t i v e l yamong 128countries (Table-1). On energy se-curity indicators,B a n g l a d e s h ,

India, Myanmar, Nepal, Sri Lanka andThailand rank 114, 67, 42, 126, 63 and76 respectively among 128 countries.As per NITI Aayog report5, India’s over-all energy import dependency is pro-jected to increase to 61% by the year2047 from 31% in the year 2012 inbusiness as usual scenario.

Energy Resource Potential of BIMSTECFortunately, the region is endowed withabundant natural resources comprisingof 323 billion tonnes of coal, 664 mil-lion tonnes of oil, 144 trillion cubic feet(TCF) of natural gas, 11,346 milliontonnes of biomass and 328 GW of largehydropower and renewable energy of1,117 GW potential (Table-2). There ishuge amount of resource diversityamong the countries. The coal resourceis mainly concerted in India (319 billiontonnes) followed by Bangladesh (3.3 bil-lion tonnes) and Thailand (1 billiontonnes). Whereas India, Myanmar,Bhutan, Nepal possess 145 GW, 100GW, 42 GW and 23.8 GW of hydropower potential respectively. Renew-able energy potential is dominated byIndia (1000 GW) followed by Myanmar(60GW) and Thailand (23 GW).

Regional Energy Cooperation (REC) &Cross Border Energy Trade (CBET)Governments of the BIMSTEC countrieshave recognized issues and challenges

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being faced by the energy/electricitysector and the need to cooperate in en-ergy sector. It is arguable that in theBIMSTEC region, probably energy/elec-tricity cooperation has been most suc-cessful among other forms of regionalcooperation. It is certainly the case inBIMSTEC region in particular in theBBIN region. CBET has been increasingin a rapid pace in the region. CBET hasincreased from ~1350 MW in the year2012 to almost ~ 3563 MW by 2020.Currently CBET between Bhutan- Indiais ~1800-1900 MW; India — Bangladeshis ~1160 MW, India-Nepal is ~550 MWand India-Myanmar is ~3-5 MW. De-spite progress in REC & CBET, the poten-tial remains large. There isapproximately 328 GW of hydro powerpotential existing in the region, whichcan be only exploited through acceler-ating cross border electricity trade. Thedomestic demand of large hydro re-source rich countries such as Bhutan(23.8 GW), Nepal (42 GW) and Myan-mar (100 GW) are limited, developmentof these hydro resources will require aregional approach and robust regionalenergy/power market. Due to lack of arobust regional outlook/approach andlimited cooperation, only a small por-tion of these resources have been uti-lized. Against the total hydro potentialof 328 GW, the BIMSTEC’s total in-stalled capacity of hydropower is only57 GW i.e. only 17% has been ex-ploited so far (figure 4).

The BIMSTEC countries complement

each other in the areas of energy re-sources, load curve, demand and supplyscenario. For example, India is abun-dant in coal reserves (319 MT) whereascountries such as Bhutan (23.8 GW),Myanmar (100 GW) are rich in hydroresource. Myanmar and Bhutan cansupplement their additional power re-quirements through cross border tradelinks with India and other BIMSTECcountries. The demand-supply seasonalvariations exist throughout the day,weekends, weekdays among BIMSTECcountries, demand can be met throughenergy trade links with countries thatare surplus in other alternative re-sources. Due to the high variation ofseasonal demand across the countries,provides opportunities for optimal uti-lization of resources. Seasonal differ-ences during the monsoon providessufficient to excess hydro power output,

whereas in lean periods (dry winter sea-son), more thermal power support canbe provided. This optimization of en-ergy resources will also lead to afford-ability of energy/electricity among thecitizen of BIMSTEC countries. There isalso a difference in time zone (Thailandis 1 hour and 30 minutes ahead of India)between the countries of the region,leads to diversity in the exact time ofpeak demand among the BIMSTECmember states. This offers the possibilityof meeting peak demand with less peakgeneration capacity coupled with CBET,instead of each country trying to meetpeak demand entirely on its own. Thedifference in the daily load curve pro-vides opportunities for optimizing theload-generation balance across the re-gion. BIMSTEC nations should capital-ize on the complementary nature oftheir resource base and their differentialpower demand to satisfy their energyneeds. With focus on shifting towardsrenewable energy in most BIMSTECcountries, deepening regional grid inte-gration can help balancing the grid bymanaging the intermittency of renew-able energy. The current power genera-tion mix varies widely among BIMSTECcountries. The hydro rich (Nepal,Bhutan and Myanmar) and gas powerrich countries (Bangladesh and Myan-mar) can provide balancing power tothe BIMSTEC regional grid. Apart fromelectricity cooperation, there exists ahuge potential for other forms of coop-eration in oil and gas sector. The gov-ernments have already taken steps in

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this direction, various cross border oiland gas pipeline between BIMSTECcountries has been established and arein the process of planning.

Multidimensional benefits of BIMSTECRegional Power/Electricity GridThe diversity of endowments in BIM-STEC region as a whole is a great moti-vator for driving the countries in thisregion towards cross border energy in-terconnection. Electricity grid integra-tion and CBET entails multidimensionalbenefits which have been summarizedbelow and in the figure 5.

A) Economic & Financial benefits— This type of benefit allows for availability of power at competitive price, access to cheaper alternative sources of energy, utilization of surplus power generation of one country in another and acceler-ated economic growth and develop-ment of the region. The cheaper cost of electricity acts as a driver in case of im-port of power by Nepal from India. In Bangladesh, the cost of power genera-tion in FY19 was 7.00 US cents per kWh. It purchases power from India at cheaper rates; from NVVN at 6.08 US cents per kWh and from PTC at 5.62 US cents per kWh. In 2019 Nepal recorded its import power cost from India at 6.08 US cents per kWh which was lower than their overall average power purchase cost of 6.52 US cents per kWh. Hydropower export con-tributes over 27% of government rev-enue6 & 14% of Bhutan’s GDP.

B) Technical & Operational benefits—This includes improved energy securityand reliability of respective power sys-tems. Increased power availability, op-timized transmission networkdevelopment, facilitating renewable en-ergy grid integration, improved regionalgrid balancing and management of peakdeficit are some of its other features. Forexample, Bangladesh imports coal, oiland LNG in order to meet its own en-ergy demand. In FY 2019, the countryimported 9.62% of its annual electricityrequirement from India.

C) Environmental benefits & addressingclimate change—BIMSTEC regionalpower grid would allow for energy and

climate security, reduce fossil fuel im-ports, achievement of sustainable devel-opment goals, sustainable developmentof energy resources, mitigating the ad-verse impacts of climate changeamongst others. For instance,“Bangladesh plans to buy 2000 MWsolar power from India” as quoted byDhaka Tribune (18 April 2018). India’simport of clean and green hydropowerhelps in decarbonising the power sectorand to reduce emission of India.

D) Energy/power market development—The benefits include in bringing un-tapped energy resource to the marketwhich otherwise will remain untapped,commercial and market form of trade,development of domestic and regionalcompetitive power market. Bangladeshbuys around ~750 MW on commer-cial/market basis from India.

Concurrently, since climate change hasemerged as a key global developmentchallenge of the 21st century, policiesand programs facilitating regional en-ergy trade and the large-scale adoptionand deployment of clean and renew-able energy will need to play a centralrole in BIMSTEC region in meeting cli-mate challenges and, at the same time,fulfilling energy requirements. Dealingwith climate change is also important tomeet the sustainable developmentgoals. Currently (2018) the CO2 emis-sion of BIMSTEC countries is about3064 Megatons of CO2 per year.Power/energy sector (1360 Megatons

CO2 per year) and transport sector(398.9 MTCo2 per year) collectivelycontributes 57% of total CO2 emissionamongst the BIMSTEC countries (figure6). Power and energy sector alone con-tribute to 44% of total CO2 emissionamongst the BIMSTEC countries. Thus,there is a need to focus on decarboniz-ing the power and transportation sector.

Energy & Power OutlookAs per the BIMSTEC Energy outlook7

published by SARI/EI/IRADe, the totalprimary energy supply in the BIMSTECregion is projected to grow at an annu-alised rate of 3.36 per cent during theperiod 2015-30, to increase from 1,070Mtoe to 1,758 Mtoe. The peak electric-ity demand in the BIMSTEC regiongrows at an annualised rate of 6.5 percent during the outlook period, an in-crease from 175 GW in 2014 to 482GW in 2030. Almost three-fourths ofthis demand will come from India andthe remaining from the other countriesin the region. BIMSTEC’s generation ca-pacity is projected to increase threefold,from 293 GW in 2014 to almost 904GW in 2030. The generation mix in theregion would see a shift from predomi-nantly thermal-based capacity tocleaner sources as more renewables getadded in the system. Renewable-basedcapacity addition is expected to grow atan annualized rate of 16.6 per cent, thehighest recorded rate during the outlookperiod, expanding from 38 GW in 2015to 383 GW in 2030. The share of re-newables in the electricity mix will be

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the highest, at 42 per cent, up from 12per cent in 2015. This share is also ex-pected to increase significantly withGovernment of India and Governmentof Thailand having revised their renew-able energy targets. India has made asharp upward revision of renewable en-ergy targets, 450 GW8 of renewable en-ergy by 2030 (earlier target was 175GW). The current installed renewablescapacity (excluding large hydro) in Indiais 86 GW (as on Feb, 2020). The Thaigovernment has decided to raise thenon-hydro renewable target from 20percent to 30 percent by 20369(As ofApril 2018, renewable energy suppliedwas about 15 % of total power con-sumption in Thailand.)

On cross border front, many cross-bor-der interconnections are being plannedand proposed. In the western side, theimport of electricity from Bhutan andNepal to India and to Bangladesh willbe the key drivers for developing thetransmission infrastructure. It is pro-jected to have 30 GW of cross bordertransmission interconnection capacityby 2030-2035 (figure 7).

Power Sector Investment RequirementsBIMSTEC as a region offers significantbusiness opportunities in the electricitysector. The region will require US$1,056 billion investments in the gener-ation sector till 2030 in order to achievethe projected electricity capacity re-

quirement. Renewables, coal and hy-dropower will attract approximately 93per cent of the overall investment poten-tial. The investments in renewables willbe the highest at US$ 724 billion, whichis approximately 68.6 per cent of theoverall investment requirement, fol-lowed by coal that will require US$ 168billion or 16% of the investment poten-tial. Hydropower will require US$ 93.3billion or 9% of the overall investmentsin the region.

Opportunity for Comprehensive EnergyCooperation in BIMSTEC RegionGlobally energy and power system areunder rapid transformation with tech-nology improving swiftly. In addition toCBET, BIMSTEC countries should coop-erate and focus on other areas of energysector such as energy efficiency meas-ures, industrial efficiency improvement,LED replacement, promotion of smartgrid initiatives, integration of distributedgeneration, clean coal technologies, en-ergy storage, electric vehicles and large-scale integration of renewable energy tothe grid, hydrogen energy, fuel cell,clean coal, energy storage and electricvehicles. Countries like India (in partic-ular) and Thailand are taking significantsteps in this direction. Energy coopera-tion including transfer of new energytechnologies among the BIMSTECcountries will help in social and eco-nomic development of their people.

While the MoU on BIMSTEC grid inter-connection10 will promote electricitygrid integration in the region, there is aneed to develop a BIMSTEC-Compre-hensive Plan for Energy Cooperation(BIMSTEC-CPEC) to augment all per-spective area of energy cooperation (in-cluding oil and gas sector) for greaterenergy interconnectivity and promoteregional energy trade.

Issues & Challenges for AcceleratingCross Border Energy TradeLack of common set of policy, legal, andregulatory frameworks, political com-mitments, inadequate transmission sys-tem interconnections and lack ofregional electricity market creates vari-ous risks and challenges (figure 8) foraccelerating CBET in BIMSTEC Region.There are various policies, regulatory, fi-nancial and commercial risks associatedwith the cross-border electricity proj-ects. Cross-border project risks in gen-eral tend to be high without acomprehensive policy, regulatoryframework in place for large scale CBETproject development. Cross-border ele-ment greatly amplifies the risks due togeopolitical, economic and trade re-lated factors. It is often seen that, evenprojects that appear to be feasible, ra-tionale, economical in practice struggleto get it financed and built.

For example, a) what happens if the do-mestic policy, regulatory framework

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changes which impacts CBETproject/Investment? What is the protec-tion available to buyers/sellers/in-vestors? b) What happens if theeconomic assumptions on the projectchanges? What is the protection avail-able to buyers and sellers? c) What hap-pens if the infrastructure to transfer theenergy is not built or not in time or isnot available when needed? Hence,risk identification and balanced mitiga-tion is important for promoting invest-ment and CBET in the region.

BIMSTEC member states are substan-tially different in levels of market evolu-tion, varying policy and regulatoryframeworks for regulation & institu-tional framework (figure 9). Most of thecountries except India have single buyermodel and limited power sector re-forms. Except Myanmar, all other coun-tries have electricity regulators in place.Thus, harmonization of grid requiresdeeper level of coordination and har-monization, institutional mechanism atvarious levels. While it may be a chal-lenge, it is also an opportunity too toleapfrog, through learning and sharingfrom each other. Central Electricity Reg-ulatory Commission (CERC), India hasissued, Cross Border Trade of ElectricityRegulations, 2019, a first of its kind ded-icated regulations on CBET in the re-gion. It comprehensively addressesvarious aspects of CBET and providesclarity, transparency, consistency andpredictability in regulatory mechanism.This can be a learning process & startingpoint of reference towards developmentof Regional Regulatory Framework forCBET in the BIMSTEC Region. There isalso a need to further improve ease ofdoing business in the BIMSTEC region(regional average rank is 99), 5th among11 regions.

Emerging Trends (ETs) in Cross BorderEnergy Trade in the BIMSTEC RegionThere are three key emerging trends inthe region which are impacting or willimpact CBET significantly. ETs-1: Cur-rently most of the CBET are bilateral innature. India’s Guidelines for Import/Ex-port (Cross Border) of Electricity-201811

opens up the trilateral trade. Bangladeshplans to import power from Bhutan andNepal through India (from Bhutan, 500

MW by 2032, 500 MW by 2034 (Bon-gaigaon/Rangia —Jamarpur); (fromNepal, 500 MW by 2031, 500 MW by2035 and 500 MW by 2038). RecentlyBangladesh finalized the deal withUpper Karnali project (being developedby GMR) in Nepal to import 500 MW ofelectricity from Nepal @ 7.72 cents perunit for a period of 25 years12. Themodalities of transmission and wheelingof power through Indian transmissionnetwork is under discussion and final-ization. ETs-2: As mentioned earlier, re-gion is facing significant climate changechallenges and countries are steppingup their renewable energy targets. In thiscontext, the role of cross-border hydroin renewable energy grid Integrationand regional grid balancing becomesextremely important. The five-year vi-sion document for power sector ofIndia13 recommends introducing prod-ucts in balancing market for trading ofbalancing services from fast responseplants such as Hydro to enhance crossborder trade through market products. Italso recommends, introducing financialproducts (futures and derivatives) to en-hance CBET. Therefore, the role ofcross-border trade in regional grid bal-ancing is going to increase in the nearfuture. There are already establishedglobal models in similar regional gridbalancing for RE integration, such as inthe case of Denmark and Norway,where Norway’s hydro power plants areutilized to balance Denmark’s windpower capacity. Similar models in BIM-

STEC are expected to become a keydriver of regional energy cooperation.ETs-3: CBET has increased in BIMSTECregion from ~1350 MW in the year2012 to almost ~ 3563 MW by 2020.The major share of CBET has only beenenabled between the four countries i.e.Bangladesh, Bhutan, India and Nepal(BBIN) and has been initiated primarilythrough Power Purchase Agreements(PPAs) signed as part of special MOUs(Memorandum of Understanding) be-tween the various governments. Moreinterestingly it is now moving towardscommercial from of trade and hopefullysoon will see trade through power ex-changes. Out of 3500 MW of CBET,~1100 MW is being traded on commer-cial and market basis. India’s Guidelinesfor Import/Export (Cross Border) of Elec-tricity-201814 allows, cross-borderpower trade through Indian power ex-changes. Going in future more andmore CBET is expected to happenthrough commercial and market basisand through power exchanges platformof India.

Way forward & Recommendations forAccelerating Cross Border ElectricityTrade and Mobilizing Investment inEnergy Infrastructure Projects inBIMSTEC RegionWe suggest a following 10-point con-crete formula:

1. Harmonised Policy, Legal, & Regulatory FrameworkThe development of cross-border

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physical transmission infrastructure andits complementary regulatory, policy,pricing, and market mechanisms are yetto evolve fully in the BIMSTEC regionalcontext. It is desirable that each partici-pating country needs to adopt comple-mentary relevant policies, withinterconnection being an integral ele-ment. Without a consistent and coher-ent regional regulatory framework inplace, investment opportunities andconsequently large-scale CBET thatcould benefit both importing and ex-porting in nations may not happen. Inthe BIMSTEC countries’ regional con-text, the risks associated with forging anintra-regional, CBET project would begreatly minimised if each participatingcountry adopts complementary regula-tory frameworks to facilitate cross-bor-der interconnection and electricitytrade. Therefore, there is a need to de-velop harmonised Policy, Legal, andRegulatory Framework, which will cre-ate the enabling systemic conditions fora sustainable market for investment forCBET by minimising the risks associ-ated. While the, BIMSTEC MoU for es-tablishment of the BIMSTEC gridinterconnection has been signed, it isimportant to provide actionability to thevarious articles of MoU.

2. Regulatory Instrument for Fair, Trans-parent & Sustainable CBETIt is important that BIMSTEC membercountries put in place various regulatoryrequirement for fair, transparent and sus-tainable CBET such as licensing provi-sion for CBET; Open Access (OA) totransmission system; transmission pric-ing mechanism for cross border trade;regional transmission planning; imbal-ance settlement, scheduling & dispatch,congestion management framework;energy accounting and settlement pro-cedures; harmonization of grid codes,dispute resolution: (transparent and fairlegal framework).

3. Development of a Robust BIMSTECRegional Power Grid (BRPG)A strong, physically interconnected gridof BIMSTEC countries (both throughHVDC and HVAC) will establish theBIMSTEC power grid, which is essentialto reap the potential benefits of regionalenergy cooperation and CBET in the Re-

gion. A BIMSTEC Transmission Intercon-nection Master plan (BGIMP) will be ofimmense help towards the creation ofBRPG. While countries will benefit fromsuch grid, it is important to developmechanisms/principles to fully recoverthe costs and share benefits equitably,resulting from the reductions in invest-ments on generation, transmission sys-tems and fuel cost. Such sharing ofbenefits builds trusts and confidenceamong parties in the BIMSTEC regionalpower generation & transmission inter-connections projects. BRPG will be im-mense social value to the region.Cross-border interconnection of re-gional/national electricity systemsthrough BRPG will allow the BIMSTECcountries to enhance its security of sup-ply and to integrate more renewablesinto energy markets.

4. Moving from Bilateral to Trilateraland Multilateral Power Trade (TMPT) inBIMSTEC RegionBIMSTEC countries have been success-ful in regional energy cooperation andcross border power trade through bilat-eral forms of cooperation between anytwo countries. Due to the immense di-versity that exist among BIMSTEC na-tions, trilateral and multilateral powertrade have the potential to accrue more

benefits in terms of higher trade vol-umes, lower installed capacity and op-timisation of investment cost, lesserreserve capacity due to sharing of re-serve, reduced CO2 emission and over-all regional cost optimisation &economies of scale. There is a need toput in place concrete measures and adetailed roadmap for transition to TMPT.

5. Regional Energy Market Develop-ment- BIMSTEC Regional Market forElectricity (BRME)While recognising the fact that, most ofBIMSTEC countries are at early stage ofmarket reform, it is important to have aconcrete vision of regional power/en-ergy market. For long-term sustainability,there is need for a transparent and reli-able regional competitive power market,as well as preferably domestic marketsin each BIMSTEC country. A vibrant re-gional competitive BRME will make theBIMSTEC power sector competitive, in-crease cross border trade and streamlineinvestments, making it lucrative for in-vestors who seek fair, steady, and risk-mitigated short- and long-term returnson their capital. Currently (2018) only13 billion units of electricity is traded inthe BIMSTEC region. In 2018, Europe,the traded volume of electricity in themarket exceeded 12000 billion units.

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6. Institutionalizing the Process of CBETin BIMSTEC RegionInternational experiences have shownthat regional governing as well as en-abling institutions play a strong role inenabling energy integration. For exam-ple, in South Africa Power Pool (SAPP),the Regional Electricity Regulators Asso-ciation of Southern Africa (RERA) facili-tate synchronization of regulatorypolicies, legislation, standards and prac-tices and is the platform for effective co-operation among energy regulatorswithin the region. Similarly, in Europeanpower market, there is European net-work of transmission system operatorsfor electricity (ENTSO-E) to developrules and coordinate grid operations andAgency for Cooperation of Energy Reg-ulators (ACER) for coordination in regu-lations and legislations. While BGICCwill be responsible for development ofBIMSTEC transmission master plan,there is a need to create forums for dis-cussion and deliberation at various lev-els to help/facilitate in coordination ofregulations; transmission planning; sys-tem operations and market operationsetc. Such forums could be developed inBIMSTEC region such as a) BIMSTEC En-ergy/Electricity Regulators Forum (BERF)b) BIMSTEC Power System OperatorsForum (BPSOF) & C) BIMSTEC EnergyMarkets Forum (BEMF).

7. Innovative Financing Mechanisms & Public Private PartnershipPower and energy projects being capital intensive, arranging cheaper source of funding, innovative financing and finan-cial closure of the projects are always a challenge. Often such investments are Long term, irreversible in nature. Look-ing at the scale of investment (1,056 bil-lion US$ investments in generation sector only by 2030) it is important to focus on innovative financing instruments/mech-anism and public private partnership in CBET projects. BIMSTEC Countries can promote and facilitate for a) accessing Green funding options (e.g. green bonds, Green Climate Fund, clean en-ergy tech funds) b) blend financing to improve project financial viability c) de-velop comprehensive financing ecosys-tem (exchange, platform, broker, market-makers, advisor, equity research etc.) d) work towards integration of cap-ital market of BIMSTEC countries ande) prioritizing of cross border powerprojects (especially clean energy proj-ect) and economic incentives for invest-ment in these. A BIMSTEC EnergyIntegration Fund (BEIF) may be createdto finance regional energy integrationprojects in the Region. This can be cre-ated with the help and support of MDBssuch as World bank, ADB and other DFIsuch as U.S. International Development

Finance Corporation (DFC) and privatesector. Regional energy projects willbenefit from access to low cost financefrom such fund and other developmentpartners.

8. BIMSTEC Energy InvestmentFacilitation Forum (BEIFF)For mobilising investment and address-ing various issues & overcoming chal-lenges, technical assistance and supportand dedicated facilitation is required fordevelopment of regional energy proj-ects, not just for financing, but also forrisk mitigation. The BEIFF will act as aplatform for promoting investments incross-border energy infrastructure andaddressing cross-cutting investment andfinancing issues among financial and in-vestment community and other stake-holders. It will also suggest innovativepolicy, fiscal and market instruments re-quired/needed to mobilize investmentsincluding specific financial/fiscal instru-ments for BIMSTEC energy sector. Theforums should also help in capacitybuilding and sharing success stories andinternational best practices.

9. BIMSTEC-Comprehensive Plan forEnergy Cooperation (BIMSTEC-CPEC)Energy sector in modern days are farmore integrated than it is used to be infuture. Integrated approach will help inderiving the best optimal outcome of the

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Figure 9: BIMSTEC: Variations* in Regulatory Frameworks & Power Market structure

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Market evolution and system operationPower sector and regulatory frameworks

Legacy integrated utilities Unbundled utilities Monopoly Single Buyer Competitive* Includes subjective interpretations BIMSTEC: Variations in Regulatory Frameworks & Power Market structure /Rajiv Ratna Panda,Technical-Head, SARI/EI/IRADe I © SARI-IRADe -2020, All rights reserved

REC in BIMSTEC countries. Therefore,there is a need to develop a BIMSTEC-Comprehensive Plan for Energy Coop-eration (BIMSTEC-CPEC) to augment allperspective area of energy cooperation(including oil and gas sector) for greaterenergy interconnectivity, integration andpromoting long term regional energytrade. The same is also echoed by theleaders of BIMSTEC countries during the4th BIMSTEC Summit. BIMSTEC-CPECshould also provide a long-term roadmap and concrete action plan for imple-mentation.

10. Sustainability of Energy Infrastruc-ture Project DevelopmentWhile there is large potential of energyresources in the region, it is important todevelop these resources in a sustainableand environment friendly manner withlimited environment degradation. Peo-ple’s participation in the energy infra-structure development and sharingbenefits with all project stakeholdersand affected parties are important. Thiswill not only help in development of en-ergy Infrastructure robust but also willhelp in meeting sustainable develop-ment goals and benefits to the citizensof BIMSTEC countries.

For any information & feedback, pleasereach at rajivratnapanda@gmail.com

Rajiv Ratna Panda;Technical-Head, SARI/EI/IRADEMaitreyi Karthik;Sr. Research Associate, SARI/EI/IRADE

1. https://www.imf.org/external/datamap-per/NGDP_RPCH@WEO/BTN/IND/MMR/NPL/LKA/THA/BGD

2. Calculation based on UNCTAD FDIdatabase accessed on 5th March, 2020

3. https://www.worldenergy.org/publica-tions/entry/world-energy-trilemma-index-2019

4. Bhutan has not been considered forRanking by World Trilemma Index Re-port

5.https://niti.gov.in/writereaddata/files/En-ergising-India.pdf

6. https://www.hydropower.org/country-profiles/bhutan

7. https://sari-energy.org/wp-content/up-

loads/2018/03/SARI-EI-Report-on-BIM-STEC-Energy-Outlook-2030-Rajiv-SARI-EI-IRADe.pdf8. https://www.livemint.com/politics/pol-icy/india-confident-of-adding-450-gw-of-renewables-by-2030-raj-kumar-singh-11571137804129.html9. https://thediplomat.com/2019/03/thai-lands-renewable-energy-transitions-a-pathway-to-realize-thailand-4-0/10.https://powermin.nic.in/sites/default/files/uploads/BIMSTEC_MoU.pdf

11.https://powermin.nic.in/sites/default/files/uploads/Guidelines_for_ImportEx-

port_Cross%20Border_of_Electric-ity_2018.pdf

12.https://kathmandupost.com/money/2019/12/20/bangladesh-agrees-to-pay-7-7-cents-per-unit-for-upper-karnali-power

13. http://indiaenergyforum.org/22nd-india-power-forum/images/Souvenir%20-%2022nd%20India%20Power%20Forum_6th%20DRAFT%20for%20website.pdf

14.https://powermin.nic.in/sites/default/files/uploads/Guidelines_for_ImportEx-port_Cross%20Border_of_Electric-ity_2018.pdf

25March 16, 2020

Report

Gas production from fields in In-donesia supplying LNG plants

looks set to decline through 2030, ac-cording to analyst GlobalData.

However, gas supply may also pick upfrom 2026 if two planned mega-naturalgas and LNG projects — Gendalo-Gehem and Abadi — go forward.

According to Cao Chai, oil and gas an-alyst at GlobalData, construction is pro-gressing on the BP-operated offshoreTangguh expansion program, which willadd a liquefaction unit of 3.8 MM metricton/yr (4.19 MM t/yr) production capac-ity to the existing Tangguh LNG plant,lifting total capacity up by 50% to 11.4MM metric tons/yr (12.57 MMt/yr).

“For Badak LNG, a pickup of the feedgas supply will be observed in 2021

after the Merakes field comes on-stream,” Chai said, adding that Gen-dalo-Gehem, the second phase of theChevron-operated Indonesia deepwaterdevelopment, could also add significantnew supply to the plant.

But it looks like that project will notcome onstream until 2025 at the earli-est; due in part to continued discussionsregarding the share of production be-tween Chevron and SKK Migas.

The new development plan for the off-shore Abadi gas field was finally ap-proved in 2019, but operator INPEX andpartner Shell still face challenges due tothe remoteness of the planned onshoreAbadi LNG facility and the layout of theinfrastructure.

Mega Offshore Projects Needed to SafeguardIndonesian LNG Supply

EP

Tangguh LNG plant

EP