The Surge Of Geopolitics In South Asia’s Power Trade

Context: Highlighting concerns in India’s newly released rules governing trade of electricity across its borders.

Background: The guidelines place clear limits on who can buy from and sell into India. This is supposed to be because of India’s attempt to neutralise China’s influence in the South Asian region.

• They discourage participation of plants owned by a company situated in “a third country with whom India shares a land border” (read China) and “does not have a bilateral agreement on power sector with India.”

Key concerns with the guidelines

• Exclusive Rules on ownership: The rules place the same security restrictions on tripartite trade, say from Bhutan to Bangladesh through Indian territory.
• The rules establish elaborate surveillance procedures to detect changes in the ownership patterns of entities trading with India.
• Undermines private sector partnerships and joint venture across the region, including Nepal and Bangladesh.

• Unpredictability in the electricity politics of the region: India used the framework of the South Asian Association for Regional Cooperation (SAARC)  in 2014 to move towards liberalising electricity trade.

• However, as China began to make its presence felt in the region, and India responded by walking back its free­market impulses.
• Policy gaps:
• Lack of independent regulator: would lead to India-centric policy-making, denting the trust factor.
• An ad hoc design also makes the Indian project less attractive to countries looking to sign up for a power trading project.

Way Forward:

• Expand borderless trade of electricity: which fulfils India’s ambition of anchoring a global super­grid called One Sun One World One Grid, or OSOWOG.
  • Impartial institutions for planning, investments and con?ict,, resolution are crucial to multi-country power pools. 
  • Multicountry grids allow for renewable energy plants to be balanced across countries, thus avoiding expensive country-speci?c balancing technologies such as hydropower and gas plants.
• Countering China: A stable, independent institutional rule-based model with the scope to expand to other arenas will likely surpass anything China has to offer.