Bangladesh’s Prime Minister Sheikh Hasina, who was in India only a fortnight in the past to attend the swearing-in of the Narendra Modi authorities, was again in New Delhi on June 21-22 on a bilateral state go to, which was the primary by a overseas chief after the inauguration of Modi’s third time period as prime minister.

In a press convention on the finish of her go to, Hasina described it as “temporary however fruitful.” The go to seems to have cleared the air in New Delhi relating to hypothesis about Bangladesh’s much-talked-about tilt in direction of China, supposedly undermining Indian pursuits within the area.

Essentially the most notable consequence of the go to was a rail connectivity settlement between the 2 nations that can permit India to make use of Bangladesh’s rail community to move items to its northeast. India has additionally agreed to increase transit amenities to Nepal and Bhutan for Bangladeshi items by means of its railway networks.

Bangladesh additionally has given its approval for India to ship its specialists to judge the Teesta River Challenge. China submitted a proposal to develop the undertaking, which has raised issues in India.

Whereas some commentators predicted a tug-of-war between India and China over the undertaking, Hasina noticed in her post-India go to feedback that India has a good likelihood of successful this bid since that can clear up the longstanding water-sharing challenge with India across the river.

Whereas most different agreements and mutual understandings revolve round capability constructing in numerous sectors, Bangladesh has an enormous alternative to achieve from one deal specifically: the opening up of vitality connectivity with Nepal and Bhutan through India.

In response to the joint assertion issued on the finish of the go to, India and Bangladesh have dedicated to increasing “energy and vitality collaboration” and growing “intra-regional electrical energy commerce.” It will begin with expediting the development of a 765 kV high-capacity grid with appropriate Indian monetary help.

As a result of unstable situation of gas and vitality markets because the Russian invasion of Ukraine, fossil gas costs have confronted a lot tumult, usually rising past anticipated limits. Because of Bangladesh’s subsequent vitality insurance policies, the nation’s efforts to affect all households by 2021 resulted in a heavy reliance on imported fossil fuels, primarily fuel and coal.

Bangladesh’s import funds knowledge exhibits a leap in petroleum product imports. The World Financial institution recognized petroleum merchandise as a driver of Bangladesh’s surging imports in April 2023. This, together with different principal commodities, created strain on the nation’s stability of funds, forcing Bangladesh to impose import restrictions and slowing down the economic system.

Excessive gas prices and imports are additionally driving electrical energy era prices in Bangladesh, which grew from 7 cents/kWh in 2020 to round 11 cents/kWh in 2023. Greater than half of all electrical energy produced in 2022-23 FY in Bangladesh got here from gas-fired energy crops. The common electrical energy era value from fuel remained a lot decrease for many years because of the pure fuel reserves. Nevertheless, Bangladesh turned to importing LNG because the pure fuel reserves are depleting on account of rising calls for.

In response to Bangladesh’s energy division estimates, the price of producing electrical energy from LNG stood at round 15 cents/kWh. On this context, the price of producing electrical energy is anticipated to develop with the present energy combine except the value of imported fuels drops drastically.

That is the place the vitality connectivity with Nepal and Bhutan can present Bangladesh with a respite.

Nepal and Bhutan are among the many few nations that produce nearly 100% electrical energy from renewables. Nepal alone has an economically viable hydroelectricity potential of round 40,000 MW. Its energy demand is estimated to be round 13,000 MW in 2035. It plans to improve its era capability by using its full potential and exporting the surplus electrical energy to neighboring nations.

Bangladesh, Nepal, and India have been in talks over energy transmission from Nepal to Bangladesh by means of India for the previous couple of years. In response to Every day Observer, a pro-government day by day in Bangladesh, the tariff is under 7 cents/kWh. Though it’s unclear whether or not the tariff contains India’s service cost, this determine is considerably decrease than Bangladesh’s common energy era value and half of the price of electrical energy coming from LNG-fired energy crops.

Therefore, the vitality connectivity cope with India will permit Bangladesh to import cheaper and cleaner electrical energy produced from renewable sources in Nepal and Bhutan, thus lowering their dependency on imported fossil fuels for energy manufacturing. Bangladesh already has a plan in place to import 9,000 MW of electrical energy from neighboring nations.

Nonetheless, some important challenges persist.

Bangladesh has dozens of energetic, long-term energy buy agreements with energy crops commissioned within the final decade. If Bangladesh plans to import a big a part of its electrical energy from neighboring nations – Nepal, Bhutan, and India – the Bangladeshi energy crops are anticipated to take a seat idle, and Bangladesh shall be compelled to pay a big sum of cash in capability modifications to them.

For Nepal, the problem is round accumulation of sources and funding for energy era and transmission, because the nation goals to provide round 30,000 MW by 2035 and export a big portion of it.

With India’s energetic help, a collaboration between the private and non-private sectors in Nepal and Bangladesh, backed by the event monetary establishments (DFI), may also help overcome the challenges. International hydropower giants may also be invited to spend money on these initiatives.

In the meantime, to scale back the burden of capability expenses and gas imports, Bangladesh can take into account getting into right into a discount with the present fossil gas energy crops to plan for early phase-out.