Breaking Barriers: Sri Lanka’s Ambitious Vision for Regional Energy Integration and Grid Connect...
by Y P Prakash
The Sri Lankan government, led by Power & Energy Minister Kanchana Wijesekara, has placed significant emphasis on regional energy integration and grid connectivity between Sri Lanka and India. The target for implementing this initiative is 2030. Discussions regarding regional energy integration have been ongoing for more than two decades, and the government is fully committed to achieving the India-Sri Lanka grid connection within the specified timeframe. Sri Lanka can take inspiration from the tripartite agreement between India, Nepal, and Bangladesh as a framework for establishing similar agreements with neighbouring countries in the region.
To facilitate this endeavour, the World Bank has been providing support to the state-run Ceylon Electricity Board (CEB) in comprehending the technical requirements and business models associated with the project. Following a meeting between Minister Wijesekara, World Bank Director of Regional Integration Cecile Fruman, and Country Manager Chiyo Kanda, it was reaffirmed that the World Bank’s assistance aligns with India’s efforts to enhance energy connectivity with Bangladesh, Bhutan, Nepal, and Sri Lanka. This collaboration includes the establishment of electricity transmission networks and petroleum pipelines. If Nepal succeeds in exporting electricity to Bangladesh, it will mark its first-ever power export beyond India.
Sri Lanka is committed to following a similar path by implementing its proposed renewable energy projects within the next decade. The objective is to provide affordable electricity to all developing countries in the region, thus revitalizing their economies. As part of this comprehensive plan, the possibility of constructing an overhead power grid link with Sri Lanka is being explored as an alternative to the challenges faced in building an underwater transmission line. Similar to Nepal, Sri Lanka’s state-run power companies are encouraged to undertake projects in the country.
President Ranil Wickremesinghe’s visit to India holds great significance across various domains, including development initiatives and the strengthening of strategic partnerships with Sri Lanka’s immediate neighbour.
Furthermore, India, Nepal, and Bangladesh, the three nations on the Indian Subcontinent, have already concluded an agreement for a tripartite power trade. This agreement aims to facilitate the sharing of energy resources among these countries and meet their increasing energy demands. By reducing dependence on imported power sources, it will enable the region to export energy to neighboring nations, fostering greater energy self-sufficiency and cooperation.
India, Nepal, and Bangladesh have reached a significant milestone by finalizing the draft of a tripartite power trade agreement. This development aligns with New Delhi’s ongoing endeavors to strengthen energy connectivity within the region. According to individuals familiar with the matter, the proposed pact, the first of its kind, has been agreed upon by all three countries and will take effect shortly. The agreement will address a longstanding demand from Nepal and Bangladesh, allowing them to engage in power trading through the Indian grid.
During the visit of Nepal’s Prime Minister Pushpa Kamal Dahal to New Delhi in early June, both he and his Indian counterpart, Narendra Modi, unveiled plans for India to facilitate the export of hydropower from Nepal to Bangladesh. As a starting point, Dahal mentioned the export of 50 MW, but there is significant potential for scaling up the export once the agreement is formally established, as per the sources.
This initiative is in line with India’s recent efforts to enhance energy connectivity with neighbouring countries such as Bangladesh, Bhutan, Nepal, and Sri Lanka. These efforts include the development of electricity transmission networks and petroleum pipelines. Additionally, it is understood that reducing the dependence of neighbouring countries on China is an unstated objective behind these efforts, as mentioned by the sources.
In the past, electricity trade with neighbouring countries was conducted through bilateral agreements. However, in recent years, new guidelines for Cross-Border Trade of Electricity (CBTE) have been finalized, laying the foundation for new arrangements. These guidelines have been developed through consultations with all relevant stakeholders and enable neighbouring countries to purchase and sell power through the Indian grid, as well as participate in Indian power exchanges, according to insiders.
The implementation of these guidelines allows neighbouring countries to feed power into the Indian grid at one location and withdraw it at another, creating opportunities for countries like Nepal to efficiently transfer surplus power from one region to another through India. This increased flow of energy fosters greater connectivity and cooperation among the countries involved.
Notably, the guidelines have been designed to prevent power generated from any Chinese-funded power plant in a neighbouring country from being traded through the Indian grid, as per the sources.
By acting as a central hub, India provides the framework for cross-border electricity trade, with the modalities determined by market forces. In addition to the benefits derived from facilitating power trade, India also receives transit fees for the services provided, as highlighted by one of the individuals quoted above.
Furthermore, India has undertaken initiatives to develop electricity transmission infrastructure in Nepal and Bangladesh, while also collaborating on cross-border pipelines with these countries. An example of this is the launch of South Asia’s first trans-border petroleum pipeline in 2019, connecting Motihari in Bihar to Amlekhgunj in Nepal. With an investment of ₹324 crore, the pipeline has successfully supplied 2.8 million metric tonnes of diesel to Nepal, strengthening energy cooperation in the region.
During Prime Minister Dahal’s visit, both India and Nepal initiated the second phase of the pipeline project, which will be constructed at a cost of ₹183 crore. Additionally, the two sides reached an agreement to construct a second pipeline connecting Siliguri in India and Jhapa in Nepal.
In March of this year, India and Bangladesh jointly inaugurated a cross-border pipeline project worth ₹377 crore. This pipeline is expected to annually supply one million metric tonnes of diesel from Assam’s Numaligarh refinery to northern regions of Bangladesh. The pipeline stretches over 132 km in length, with a 127 km section within Bangladesh built with the assistance of an Indian grant.
During Sri Lanka’s economic crisis, India extended support worth $4 billion, which included lines of credit to help address Colombo’s fuel and LPG requirements. In June of the previous year, state-run Indian Oil Corporation, through its subsidiary Lanka IOC, provided fuel supplies when petrol pumps in Sri Lanka were facing shortages. Furthermore, Sri Lanka and India have agreed to collaborate on the development of oil tank farms in Trincomalee, reflecting increasing concerns over China’s influence in the country.
During Prime Minister Modi’s first foreign visit to Nepal in 2014, a mere three months after assuming office, he introduced the “HIT” formula, which focused on establishing connectivity through highways, i-ways (digital connectivity), and trans-ways (transportation links). During this visit, he addressed Nepal’s key concerns, including the need for oil exports through pipelines instead of trucks, the construction of bridges over shared rivers, and the development of facilities for electricity exports.
As a result of these diplomatic efforts, India is currently importing over 450 MW of power from Nepal, with a target of reaching 10,000 MW, according to another source. Additionally, India engages in the purchase of hydropower from Bhutan, highlighting the significance of energy cooperation in India’s “Neighbourhood First” policy.
Following challenges encountered in constructing an underwater transmission line, there are now plans to establish an overhead power grid link with Sri Lanka. Similarly, state-run power companies have been encouraged to explore project development opportunities in Sri Lanka, similar to the approach taken in Nepal.
Moreover, the upcoming G20 summit in September is expected to pass a declaration supported by India, emphasizing supply chain security and regional cooperation. As part of these initiatives, there are proposals to establish a regional power grid encompassing Myanmar, Bhutan, Bangladesh, Nepal, and Sri Lanka.
