Thursday, November 27, 2014

SAARC nations ink power deal opening regional trade

South Asian countries today signed a last-minute deal to trade electricity among themselves opening opportunities for development of hydropower projects in Nepal.
Before the SAARC summit concluded here in Kathmandu, foreign ministers of all the eight countries signed the SAARC Framework Agreement on Energy Cooperation and Electricity Trade that will boost the investment and trade, apart from a greater regional connectivity.
The deal will also ensure electricity trading through grid connectivity.
Howver, the eight countries failed to sign two pacts – one on motor vehicle and another on railways – that could have increased intra-regional connectivity to fuel trade in the South Asia.
SAARC Energy Center – based in Islamabad of Pakistan had long been doing groundwork – and SAARC energy ministers had finalised the draft framework agreement at a meeting in New Delhi on October 16-17.
The framework provisions South Asian governments to enable their agencies for grid connectivity, policy harmonisation and trading as well as facilitating the supply of electricity to power-deficit cities
The framework agreement comes into effect from today.
After the signing of the agreement of the concluding session, SAARC chair and Prime Minister Sushil Koirala announced that the two pacts which will boost connectivity and encourage people-to-people contact and movement of goods will be approved within three months.
At the end of the two-day 18th SAARC summit – which took place after three years, a 'Kathmandu Declaration' was also adopted. The 'Kathmandu Declaration' recognised that after nearly 30 years of its existence, it was time to "reinvigorate' SAARC's regional cooperation and 'revitalise' the bloc as an effective vehicle to fulfill the developmental aspirations of the people in the region.
The summit declaration also identified trade as a key area with leaders renewing their commitment to achieve South Asian Economic Union in a phase-wise and planned manner through a free trade area, a customs union, a common market, and a common economic and monetary union.
The declaration said the leaders unequivocally condemned terrorism and violent extremism in all its forms and manifestations and underlined the need for effective cooperation among the member states to combat them. The SAARC leaders also directed respective authorities to ensure full and effective implementation of the SAARC Regional Convention on Suppression of Terrorism.
Koirala also declared that the 19th SAARC Summit will be held in Islamabad of Pakistan in 2016.
The SAARC member countries – Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka – host the summit alphabetically every year, though it has been held in three years this time. The two-day SAARC Summit – started yesterday – was attended by Presidents of Afghanistan, Sri Lanka, the Maldives, and Prime Ministers of India, Pakistan, Bangladesh, Nepal and Bhutan.


Nepal to benefit
KATHMANDU: Nepal will benefit from the energy agreements among the SAARC nations. Currently, some Indian companies are giving special interest to invest in the energy sector in Nepal, but Bangladesh has also shown in joint investment in hydropower in Nepal to meet its increasing energy demand.
Investment Board of Nepal has recently signed agreements of 900-MW each Upper Karnali and Arun III hydropower projects.
According to the agreements, Nepal will get 306-MW power free of cost. Nepal will also get free shares of the Upper Karnali and Arun-III. The Arun III is going to Rs 1 billion worth shares to locals, while the country will get 27 per cent share of the Upper Karnali.
Likewise, the government is planning to invest Rs 100 billion soft loan from India in Budhigandaki Hydropower.
These projects will not only help Nepal reduce ballooning trade deficit with India, but also help meet rising energy demand in India.
Currently, India has been providing electricity to Bangladesh. India has also promised Pakistan and Afghanistan to provide 1,000 MW each soon. However, India is a net buyer of power from Bhutan, currently, as India has already signed bilateral energy trading agreements with Bangladesh and Bhutan.
September's Nepal-India Power Trade Agreement (PTA) has opened door to sell the electricity produced in Nepal to Bangladesh. But the SAARC framework agreement has expanded the opportunity to regional level.
Similarly, World bank is helping construction of Dhalkebar-Muzaffarpur Transmission Line that will help cross border connectivity. Some 1,400 MW of power can be exported and imported through the transmission line.

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