Growing power cooperation between India and Bangladesh

One of the most important aspects of the multi-faceted India-Bangladesh ties has been the power cooperation between the two nations. India’s bilateral engagement with Bangladesh in power sector has expanded after Prime Minister Sheikh Hasina’s assumption of office in January 2009. The power is one area where India could earn the goodwill of Bangladesh by developing its infrastructure.

Bangladesh has been confronting severe power shortage since its inception. It presently has an installed capacity of 10,283 MW which is much below the total requirement. The country faces a daily shortage up to 1,500 MW of electricity retarding the growth of the economy. According to World Bank, nearly two-fifth of Bangladesh’s 160 million people does not have access to electricity. Bangladesh badly needs international financial and technical assistance to improve its power sector and India could assist the eastern neighbour in meeting its rising demand for electricity.

To enhance cooperation between India and Bangladesh in the field of power, the two countries signed an agreement on January 11, 2010 during Prime Minister Hasina’s landmark visit to New Delhi. India subsequently started supplying power to Bangladesh from December 2013 after the up gradation of transmission network in the neighbouring country. Currently, India is providing 500 MW of power from Bahrampur-Bheramara inter-connection.

The bilateral power cooperation received further impetus when India’s Prime Minister Narendra Modi visited Dhaka in June 2015. Responding to Dhaka’s persistent demand, New Delhi decided to supply additional 600 MW of electricity to Bangladesh in the next two years by constructing one more grid inter-connection in the western region of the neighbouring country. On June 6, 2015, two deals worth USD 5.5 billion were inked between Bangladesh Power Development Board (BPDB) and Indian companies Reliance Power Limited and Adani Power Limited to set up 4,600 MW power plants in Bangladesh.

Reliance Power agreed to invest USD 3 billion to build an integrated facility, consisting of a 3,000 MW liquefied natural gas ( LNG)-based power plant and a LNG terminal with a floating storage and re-gasification unit. The proposed project is in line with Bangladesh’s Master Plan of 2010, under which BPDB sought to develop a 3,000 MW LNG-based power project to meet the escalating demand for power and supplement the domestic gas reserves. Under the memorandum of understanding signed between Gujarat-based Adani Power Limited and BPDB, the former agreed to invest $ 2.5 billon to construct two coal-fired power plants with a capacity of 1,600 MW.

However, both the power projects could not materialise as the Bangladesh government has not succeeded in acquiring land for the proposed projects. Recent reports suggest that Reliance Power will now set up a 750 MW gas-fired power plant at Meghnaghat near Dhaka instead of a 3000 MW one because of “land constraints”. On the other hand, Adani group will build a 3000 MW power plant in a suitable location in India and sell electricity to Bangladesh instead of setting up a 1600 MW coal-based power plant in the neighbouring country.

Meanwhile, in September 2015, India’s key engineering and construction firm Larsen & Toubro (L & T) secured a Rs 17,000 crore order from Japan’s Marubeni Corporation to build a 400 MW gas-based power plant in Nabiganj Upazilla under northeastern Habiganj district. The BPDB awarded the contract to the Japanese firm which in turn awarded the sub-contract to L& T on a turnkey basis. Earlier, L & T signed a contract with BPDB to set up a 225 MW gas-based power plant worth $ 200 million at Sikalbaha in Chittagong.

In a major boost to the National Democratic Alliance (NDA) government’s “Neighbourhood First Foreign Policy”, India’s state-run Bharat Heavy Electricals Limited (Bhel) is set to secure the largest overseas power project order of $ 1.6 billion in southern Bangladesh’s Khulna Division. India’s NTPC Limited is about to build a coal-fired 1,320 MW power project jointly with BPDB at Rampal Upazilla in Bagerhat district. While competing against a Chinese company, Bhel emerged as the lowest bidder.

Reports say the Bangladesh government has already acquired land for the power plant. Construction of the project is scheduled to begin this year after the signing of the deal. As the Awami League government wishes the Bangladesh India Friendship Power Company Limited (a 50:50 joint venture between NTPC and BPDB), to make the plant operational within its tenure, the company aims at completing the task by the end of 1919 with the entire power to be supplied to Bangladesh.

It is a welcome development for India against the backdrop of China’s increasing foot prints in the infrastructure development of the South Asian region that New Delhi considers its own back yard. It is the biggest foreign power project by an Indian firm in Bangladesh. The Bhel project has the potential to generate goodwill for India in electricity-starved Bangladesh. The project is part of India’s strategy to expand economic and strategic influence in its immediate neighbourhood through infrastructure development. India has stepped up efforts to build infrastructure in South Asia, with the NDA government pushing for greater engagement in the neighbourhood.

In another significant development on March 23, 2016, Modi inaugurated 100 MW power supply from Tripura’s Palatana to Bangladesh, while his counterpart Hasina provided 10GB Internet bandwidth to India simultaneously. India’s NTPC Vyapar Nigam Limited, a subsidiary of NTPC, signed a deal with government-run BPDB to supply electricity to Bangladesh on February 28, 2012.The deal was a follow up of the agreement inked during Hasina’s 2010 New Delhi visit.

The 726 MW gas-based Palatana Power Project in southern Gomti district in frontier state Tripura is a good example of growing friendship and cooperation between India and Bangladesh, which facilitated movement of heavy project equipment and turbines to project site through its territory by road and waterways from Haldia port in West Bengal. This additional supply will help Bangladesh to address the power crisis in its eastern region especially Comilla.

India could play a crucial role in achieving Bangladesh’s goal of generating 24,000 MW of electricity by 2021. Modi during his Dhaka visit urged Bangladesh government to facilitate the entry of Indian companies, in power generation, transmission and distribution sectors of the country. Some of the Indian firms are interested to engage in long-term power business with Bangladesh. India also seeks to send power from the North Eastern region to other parts of the country via Bangladesh and submitted a proposal the latter’s government in this regard.

Similarly, Dhaka seeks transit facilities through Indian territory to import power from Nepal and Bhutan and New Delhi accepted this request during Modi’s visit. In July 2015, India’s grid manager Power System Operation Corporation said the country would begin to export an additional 500 MW power to Bangladesh once the work of SAARC grid is completed in the next one year.

There is enough scope for investment and joint ventures in the arena of power between Bangladesh and India’s North East given the region’s geographical proximity and hydro-electric potential. The key North Eastern state Meghalaya that shares 443 km border with Bangladesh seeks to expand trade and cooperation with Bangladesh in a number of areas, including power. State Chief Minister Mukul Sangma during his visit to Dhaka in September 2011 proposed to develop hydro-electricity through joint venture with Bangladesh. Sangma said his government would provide all policy support to the Bangladeshi companies if they invest in the power sector. Responding to the Meghalaya government’s offers, Bangladesh’s industry leaders met Sangma in Shillong on November 15, 2015, and showed interest in investing in power projects harnessing the Indian border state’s huge water resources.

Bangladesh is also keen to import power from Meghalaya to meet its ever-increasing demand of electricity. On October 2, 2013, Bangladesh premier’s International Affairs Adviser Dr. Gowher Rizvi and the country’s then High Commissioner to India Tariq A Karim met Sangma and urged him to enhance bilateral cooperation in several areas, including power generation. They explored the possibility of linking power grids between Meghalaya and Bangladesh near Cherrapunjee. The Hasina government has been seeking greater Indian participation in Bangladesh’s economic development and it is expected that the NDA government would take concrete steps to fulfill the neighbouring country’s aspirations taking the bilateral ties to a new height.

(Dr. Rupak Bhattacharjee is an independent strategic analyst writing on issues related to India’s North East and Bangladesh. He can be reached at: drrupakbhattacharjee_2011@hotmail.com)