The Saarc region has the potential to generate about 300,000 megawatts of hydropower that would benefit countries like Bangladesh that have electricity shortages.
The issue came up at the inaugural edition of the South Asia Economic Conclave held at the Indian capital from September 28 to 30.
The Confederation of Indian Industries, a not-for-profit non-government organisation, hosted the three-day event with support from its government and the World Bank.
The objective of the event was to stimulate informed dialogue between the private sector and governments of the eight South Asian nations to promote regional trade and investment.
There is so much asymmetry in the energy sector between the countries, said Piyush Goyal, India's minister of state for power, coal, new and renewable energy.
“Some are in surplus, while some are in deficit. So a two-way trade and a two-way exchange in the energy sector can be a win-win situation of all countries.”
Nirmala Sitharaman, Indian minister of state for commerce and industry, said the Saarc region has the potential to generate 300,000 megawatts of hydropower. More than 80 percent of the potential is yet to be harnessed.
She went on to give a breakdown of the figure: India has the capacity to produce 140,000MW, Bhutan 30,000MW, Nepal 42,000MW, Pakistan 45,000MW and Afghanistan 25,000MW.
The Saarc (South Asian Association for Regional Cooperation) countries need to coordinate better to make the best of the potential, not only for the environmental reasons but also for access to long-term cheap power.
It can raise competitiveness of the entire region's manufacturing sector, according to the Indian state minister for commerce and industry.
To materialise this potential, $400 billion will have to be invested in various inter-regional projects, and for that, a South Asian Development Bank can be formed for concessional financing.
Besides, the WB and the Asian Development Bank can finance the regional projects, where more ground work is needed, she added.
Hydropower is the low-hanging fruit for Bhutan in the context of regional integration, said Lyonpo Norbu Wangchuk, the kingdom nation's economic affairs minister.
Bhutan is blessed with unique river systems: rivers flow 4,000 to 5,000 metres down from the Himalayas in very short spells. So these rivers can be turned into hydropower projects, he said.
The landlocked nation has hydropower potential of 30,000 megawatts but it has only been able to harness 5 percent of it, he said.
By harnessing this potential, Bhutan can benefit, as well as other countries in the region like India and Bangladesh.
Annette Dixon, WB's vice-president for South Asia region, said regional growth can be boosted by securing opportunities much closer to home.
These can be found in the hydropower potential of Bhutan and Nepal, the textiles of Bangladesh, the IT and services sector in India, the resource corridors of Afghanistan and Sri Lanka, tourism from the Maldives and light manufacturing from Pakistan.
“Imagine a South Asia where people, industries, goods and services can flow freely in the most profitable way for all.”
Unrestricted electricity trade provision could save $9 billion a year in electricity supply costs in South Asia, according to a recent WB study. It will reduce carbon dioxide emissions as well.
The move could help transform the lives of some 400 million citizens who still live without electricity, Dixon added.
Goyal underlined the enormous potential for extensive energy cooperation between the South Asian economies.
He made a mention of the strident progress achieved in India's bilateral energy cooperation with Bangladesh, Bhutan and Nepal and the ongoing efforts to build similar engagements with Sri Lanka.
He referred to the last Saarc energy ministers' conference in New Delhi, where the inter-regional agreement or trade pact on the electricity side was finalised and discussions on an integrated grid were held.
“If we look at the various facets of the economic cooperation going forward, transport can be one and energy can be another.”
With Bangladesh, India is already trading 500MW, with plans for adding another 1,000MW. Besides, there is a plan to transfer 100MW power from Tripura, according to Goyal.
India is also working on a 7,000MW high tension AC-DC bi-pole line with Bangladesh in a 50-50 joint venture between NTPC and Bangladesh Power Development Board.
“The name of the company is so appropriate. It is Bangladesh-India Friendship Power Company, which reflects the true intention of the project.”
Goyal said India is also planning to set up a 1,320MW coal-based power plant in Bangladesh.