The South Asia Subregional Economic Cooperation (SASEC) program has been pivotal in fostering regional prosperity through enhanced cross-border connectivity, infrastructure development, and trade facilitation. Energy cooperation is a crucial component of SASEC, particularly for Bangladesh, which has benefitted significantly from various investments and collaborative projects aimed at strengthening its energy infrastructure and interconnectivity with neighboring countries.
Established in 2001, the South Asia Subregional Economic Cooperation (SASEC) program unites Bangladesh, Bhutan, India, Maldives, Myanmar, Nepal, and Sri Lanka in a collaborative partnership aimed at fostering regional prosperity, enhancing economic opportunities, and improving the quality of life for people in the subregion. The member countries of SASEC share a vision of increasing intraregional trade and cooperation within South Asia, while also enhancing connectivity and trade with Southeast Asia via Myanmar, the People’s Republic of China, and the global market.
The SASEC Operational Plan outlines the strategic objectives of this partnership, focusing on the four main sectors: transport, trade facilitation, energy, and economic corridor development. This plan is supported by a list of potential projects, which is regularly updated by the member countries for implementation between 2016 and 2025. As of February 2023, SASEC countries have signed and executed 79 investment projects financed by the ADB, totaling approximately $18.41 billion. These projects span various sectors, including transport, trade facilitation, energy, economic corridors, and health. The transport sector dominates with 46 projects worth over $13.17 billion, followed by the energy sector with 16 projects amounting to over $2.92 billion. Economic corridor development has 8 projects valued at over $1.94 billion, trade facilitation includes 5 projects worth around $328.15 million, and the ICT sector comprises 2 projects totaling $20.80 million. In 2022, the health sector was added to SASEC’s operational priorities, contributing $25.92 million through two regional cooperation projects aimed at strengthening COVID-19 recovery efforts.
Notably, energy cooperation within SASEC encompasses a range of projects focused on improving electrical grid interconnections, expanding transmission capacities, and promoting renewable energy development. These efforts are vital for Bangladesh, a country experiencing rapid economic growth and a corresponding increase in energy demand.
In 2019, the Dhaka and Western Zone Transmission Grid Expansion Project was launched with a funding of $750 million from the ADB, AIIB, the Government of Bangladesh, and PRCF. This project is aimed at enhancing the transmission capacity in Dhaka and the western zone by addressing bottlenecks in the existing grid. This involves constructing new transmission lines and substations to support a reliable electricity supply, crucial for meeting the increasing energy needs in these regions and supporting economic activities and improving living standards.
Several interconnection projects between Bangladesh and India under the SASEC framework have been undertaken over the years, starting from 2010. These projects include various phases and types of financial assistance totaling over $382.51 million. The initial Bangladesh-India Electrical Grid Interconnection project in 2010 received a $159 million loan from ADB and the Government of Bangladesh, and an additional $285,000 in technical assistance. In 2013, an additional financing of $40 million in loans was secured for the project.
In 2014, the second phase of the interconnection project received $200,000 in technical assistance, followed by the SASEC Second Bangladesh-India Electrical Grid Interconnection Project in 2015, which had a loan of $183 million from ADB, ADF, and the Government of Bangladesh. In 2017, the SASEC Bangladesh-India Electrical Grid Interconnection Project received $225,000 in technical assistance. These projects have significantly enhanced cross-border electricity trade between Bangladesh and India by facilitating the construction and upgrading of transmission lines and substations, which increased the power exchange capacity. This cross-border electricity trade has been pivotal in bolstering energy security and economic ties between the two countries.
In 2016, the Rupsha 800 MW Combined Cycle Power Plant Project received technical assistance valued at $425,000 from TASF. This project was designed to support the development of a substantial combined cycle power plant in Rupsha, which would notably boost Bangladesh’s power generation capacity. The technical assistance provided crucial feasibility studies and project design, ensuring the successful implementation of the project, which has since been completed.
On a regional scale, several initiatives under SASEC have aimed to promote energy transition through enhanced cooperation and integration among South Asian countries. A notable project is the Regional: Promoting Energy Transition through Regional Cooperation and Integration in South Asia, launched in 2023 with a funding of $3.7 million from CEF and TASF. This project aims to harmonize policies, develop infrastructure, and build capacity to support the energy transition in the region.
Another significant regional initiative is the SASEC Green Fuel Development Initiative, which started in 2022 with $2 million in funding from JFPRAP. This project focuses on developing green fuel alternatives to reduce the region’s carbon footprint and promote sustainable energy sources. Additionally, the Regional: Deploying Solar Systems at Scale project, initiated in 2019 with $3.5 million from CEF and HLTF, aims to accelerate the deployment of solar energy systems across South Asia, leveraging economies of scale to reduce costs and enhance the region’s renewable energy capacity.
The SASEC Regional Energy Cooperation project, funded with $3 million from JFPR and TASF in 2018, supports regional energy cooperation through technical assistance, promoting cross-border energy trade and integration.
Other regional initiatives include the South Asia Economic Integration Partnership – Power Trading in Bangladesh and Nepal (Subproject 1) in 2014, which received $1 million from ATF UK, and the SASEC Cross-Border Power Trade Development project in the same year, which was supported by $500,000 in technical assistance from RCIF. These projects supported cross-border power trade development. Additionally, the Study on a South Asia Regional Power Exchange in 2010, funded with $750,000 from RCIF, focused on studying the feasibility of a regional power exchange.
The impact of these SASEC energy cooperation projects on Bangladesh has been profound. The enhanced energy security resulting from the interconnection projects with India has allowed Bangladesh to better manage its energy shortages and reduce its dependency on single sources. The modernization of energy infrastructure through projects like the Dhaka and Western Zone Transmission Grid Expansion has ensured a stable and efficient power supply, supporting industrial growth and improving the quality of life for residents.
Furthermore, regional initiatives under SASEC, such as the Green Fuel Development Initiative and solar system deployment, have supported Bangladesh’s transition to sustainable energy sources. These projects align with global efforts to combat climate change and reduce carbon emissions, contributing to the sustainability of the energy sector in Bangladesh and the broader region.
Energy cooperation under SASEC has not only supported Bangladesh’s domestic needs but also strengthened regional economic integration. Improved energy infrastructure and interconnectivity have fostered trade and investment, contributing to the broader economic growth of the region. Additionally, SASEC projects have provided vital technical and financial assistance, helping Bangladesh overcome challenges related to energy infrastructure development and ensuring the successful implementation and sustainability of energy projects.
Despite these significant achievements, several challenges remain. Continuous investment is needed to maintain and expand energy infrastructure. Attracting private sector investment and exploring alternative financing mechanisms will be crucial for future projects. Keeping pace with technological advancements in the energy sector is also essential. Investments in smart grids, energy storage, and advanced renewable technologies can further enhance the efficiency and reliability of the energy system.
Harmonizing policies and regulatory frameworks across the region is vital for seamless energy cooperation. Collaborative efforts to streamline regulations and promote cross-border investments can address existing barriers. Additionally, ensuring that energy projects align with sustainability goals and minimize environmental impacts is critical. Emphasizing green energy solutions and implementing robust environmental safeguards are necessary for long-term sustainability.
Developing local expertise and capacity in the energy sector is also crucial. Training programs, knowledge exchange initiatives, and partnerships with academic institutions can build a skilled workforce to support the energy transition. These efforts will help Bangladesh and other SASEC member countries achieve their energy goals and contribute to global sustainability efforts.
SASEC’s energy cooperation initiatives have played a pivotal role in transforming Bangladesh’s energy landscape. Through a series of strategic projects, Bangladesh has enhanced its energy security, modernized its infrastructure, and made significant strides towards sustainable energy. Continued collaboration, investment, and innovation will be key to addressing the remaining challenges and ensuring that Bangladesh and the broader South Asian region can achieve their energy goals and contribute to global sustainability efforts. The future of SASEC energy cooperation looks promising, with ongoing projects and new initiatives set to further strengthen regional ties and support economic growth. As Bangladesh continues to develop its energy sector, the lessons learned and successes achieved through SASEC cooperation will serve as a model for other regions seeking to enhance their energy systems through collaborative efforts.