Fifteen years in the past, the election of Sheikh Hasina as Bangladesh’s prime minister marked the beginning of the nation’s bilateral cooperation with India on varied fronts, together with power.
In October 2013, the 2 international locations linked their electrical energy grids, permitting Bangladesh to purchase electrical energy from India for the primary time and paving the best way for extra power cooperation.
By monetary 12 months 2022-23, Bangladesh had signed three offers to purchase 2,656 megawatts (MW) of electrical energy from Indian energy crops. These embrace the Adani energy plant in Jharkhand (1,496 MW), in addition to the Bohorampur (1,000 MW) and Tripura (160 MW) energy crops.
Past electrical energy imports, the 2 international locations have been constructing their shared manufacturing capability with the 1,320-MW coal-powered Rampal energy plant in south-western Bangladesh, an equal three way partnership. The primary unit of the plant got here on-line in December 2022, and the second unit began its trial run in October 2023.
However the ouster of Sheikh Hasina in August 2024 after weeks of protests has put a query mark on future power cooperation.
A doable assembly between the pinnacle of the interim authorities in Bangladesh, Muhammad Yunus, and the Indian Prime Minister Narendra Modi on the sidelines of the UN Normal Meeting didn’t occur. Though the 2 governments defined it as a timing difficulty, there was intense hypothesis as to why such a gathering couldn’t be organized.
A gathering between the overseas secretary of Bangladesh and the Indian excessive commissioner on Sunday highlighted the strained relations, with visa processing nonetheless not normalised and no date for the following International Workplace Session between the 2 international locations.
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We is not going to want the coal-fired energy from India after we can restore gasoline, coal and diesel provide to our energy crops. In the long term, I feel, import of coal energy from India would stop.
Ijaz Hossain, professor, Bangladesh College of Engineering and Expertise
Each a greenback disaster and unusable put in electrical energy capability means power imports from India stay essential to the well being of the Bangladeshi financial system, particularly the ready-made garment industries, authorities sources and enterprise figures instructed Dialogue Earth. However within the face of political tensions, they expressed concern in regards to the stability of the imported provide.
The greenback disaster and Bangladesh’s huge import payments
The greenback disaster has been key in driving Bangladesh’s import of electrical energy. Bangladesh’s overseas reserves shrank drastically from US$48 billion in August 2021 to US$13 billion by Might 2024, partly because of world volatility after the Ukraine conflict, although it has since bounced again to US$24 billion as of September.
The low overseas reserves have meant the nation’s capacity to pay for costly imports, particularly of coal, gasoline and different gasoline wanted to supply its personal energy, has been sharply restricted, says Ijaz Hossain, a professor on the Bangladesh College of Engineering and Expertise.
In idea, Bangladesh has sufficient put in capability for 27,791 MW. Sixty-two state-owned firms can produce a complete of 11,821 MW (43 per cent of complete put in capability), with 80 non-public sector crops capable of produce 10,836 MW (39 per cent). Two three way partnership thermal crops – one with India and one with China – account for one more 2,478 MW of capability (9 per cent). Lastly, 2,656 MW (9 per cent) may be imported from India.
However the actuality is completely different, in accordance with Md. Shamim Hasan. Hasan oversees public relations of the Bangladesh Energy Improvement Board (BPDB), and says Bangladesh can solely provide about 14,000 MW due to the fossil gasoline scarcity. The present demand is round 15,500 MW, and this results in a shortfall of 1,000-1,500 MW a day.
With the imports from India, “we’re paying extra, however we’re getting ready-power provide,” notes Hossain.
“In any other case, the ability provide in Bangladesh could be in huge bother,” he provides, and given the load-shedding of “as much as 1,500 MW” in Bangladesh, “if provide from India comes down, the scenario would worsen”.
However Hasan additionally expressed considerations in regards to the long-term stability of the availability from India because of the change in authorities.
“Adani’s Jharkhand thermal plant was arrange completely to provide energy to Bangladesh,” he says. “We have now come to know, after the autumn of the earlier authorities, [that] the Indian authorities modified a regulation permitting Adani Group to promote the Jharkhand energy to its home market. This means that Bangladesh is unlikely to get devoted energy provide from the plant except we’re on good phrases.”
In the meantime, the Adani Group final month despatched a letter to the Bangladesh authorities over its unpaid US$800 million energy provide invoice.
BPDB officers instructed Dialogue Earth that that they had already paid US$150 million of this to Adani Group regardless of its greenback disaster, and hoped to pay the complete quantity.
Extra renewables wanted in India-Bangladesh power cooperation
Hossain is anxious about Bangladesh importing “almost 15 per cent” of its complete electrical energy requirement from India.
“This isn’t choice,” he says, stating that energy era from Bangladesh’s personal gas-fired crops was less expensive at about BDT 6 (US$0.05) per unit in comparison with BDT 14 (US$0.12) for a unit of electrical energy imported from the Adani energy plant, as soon as the capability cost was factored in.
“We is not going to want the coal-fired energy from India after we can restore gasoline, coal and diesel provide to our energy crops. In the long term, I feel, import of coal energy from India would stop,” Hossain says.
Nonetheless, Bangladesh should stay engaged with India in power cooperation to remodel itself right into a low-carbon financial system, he provides. This could require “importing hydropower from India, Nepal and Bhutan sooner or later,” that means Bandladesh “should get India’s approval to import electrical energy from Nepal and Bhutan by way of Indian territory”.
In June, the Bangladesh authorities signed a deal to import 1,000 MW of renewable energy from India and 40 MW of hydropower from Nepal by way of Indian territory, however this can be a small share of the bigger wants to remodel Bangladesh’s rising power wants.
Nevertheless, Humayun Kabir, president of the Bangladesh Enterprise Institute and former deputy excessive commissioner to India, stated he didn’t count on that energy cooperation with India was more likely to proceed in “an open approach” because it had up to now.
He additionally expects the federal government of Bangladesh “will consider the power-purchase offers with India and should even go for renegotiating with them,” however provides: “The interim authorities has no different choice however to proceed energy buy from India for now.”
“Even when we import energy from Nepal, we should use Indian land to get it,” Kabir provides. “Towards this background, the federal government should not cease shopping for electrical energy from India.”
He agrees with Hossain that future power cooperation wants to maneuver away from fossil fuel-generated energy. “We must always aggressively endeavour to develop the renewable power sector,” Kabir says. “We must always goal to generate no less than 50 per cent from renewable power sources by 2050. Now it is just 4 per cent.”
Coal energy crops resembling Rampal have invited intense criticism from environmental teams because of being sited close to mangrove forests, and together with others resembling Adani, have been denounced for charging excessive costs.
Companies undergo with uneven electrical energy provide
A gradual provide of electrical energy, and doable lack thereof, will likely be of specific curiosity to the nation’s ready-made garment sector, which accounts for over 80 per cent of its complete exports and employs almost 4 million folks, principally poor rural girls.
Nevertheless, Mir Nasir Hossain, a former president of the Federation of Bangladesh Chamber of Commerce and Business, stated impacts of load-shedding could be contained.
“A lot of the ready-made garment factories have their very own captive energy crops as the federal government can’t guarantee uninterrupted provide of high quality energy,” he says, emphasising that it was voltage fluctuations that “hamper manufacturing”. Nonetheless, he identified that such non-public crops meant greater prices.
“If the federal government may guarantee uninterrupted high quality energy provide, the enterprise competitiveness of our industrial models, together with the ready-made garment sector, could be enhanced,” Mir Nasir Hossain provides, and the nation’s world competitiveness would improve.
“The present electrical energy disaster hits the small and cottage trade [most] as a result of they can’t afford [to install] devoted unbiased energy crops,” he added, noting that such small industries make use of a really massive variety of folks in Bangladesh.
Mita Bose, managing director of leathercraft firm Goose Restricted, stated bigger companies would even be impacted. Whereas acknowledging that smaller companies couldn’t afford the turbines that allowed larger companies to proceed manufacturing, she stated that the extra prices made even huge companies uncompetitive.
“Rising the price of enterprise is like stabbing a businessperson,” she tells Dialogue Earth. “The underside line is that energy shortages have an effect on everybody, be it huge or small. When prices shoot up, enterprise turns into harder and ultimately unviable.”
This text was initially revealed on Dialogue Earth beneath a Inventive Commons licence.
