South Asia has witnessed a growing imbalance between energy demand and its supply from indigenous sources resulting in increased import dependence. Greater cooperation within South Asia is one of the most effective ways to deal with the rapidly growing regional energy deficit and to ensure energy security.

Given this backdrop, the Confederation of Indian Industry (CII) and USAID/SARI Energy organised a Round Table Conference on "Promoting Investment Opportunities in the Power Sector in South Asia: Leveraging Cross Border Power Trading" on April 27, 2011 at the Lalit New Delhi.

The conference provided a platform for key stakeholders-developers, investors and traders - to deliberate on the major opportunities and challenges in promoting investments in cross border power trading.

While delivering the keynote address at the conference, KC Venugopal, Minister of State for Power, emphasised on the need to integrate the entire region by a robust power grid for exchange of power since no South Asian country will be able to meet its energy needs entirely from its own domestic resources.

Encouraging large scale trading of power will bring in the requisite market mechanism to utilise the valuable resources of one country at the most optimal cost for another country in the region.

However, he also mentioned that the issue of cross border trading is complex and involved market, technology, finance and most importantly geopolitical issues.

Electricity is the most convenient form of commercial energy that is required to fuel economic growth, he said adding that with the South Asian market witnessing huge electricity demand and facing shortages both in terms of energy and peak demand, economic growth in the region had been constrained.

India, despite having reached a significant installed capacity of over 172,000 MWs, the shortages have been in the range of 10% during peak hours, he pointed out.

It is estimated that a SAARC powergrid linking Bangladesh, Nepal, Pakistan, India and Sri Lanka has the potential to install at least 100,000 MW in the region for common use among its member countries. The problem of acute energy deficit especially power in South East Asian countries can be addressed by promoting investment in the power sector in these countries and also integrating the region by a SAARC grid to leverage cross border trading.

He cited the example of cross border trading between Bhutan and India with Bhutan supplying between 1,200-1400 MW to India. The success of power trading between the two countries has encouraged them to take up more hydro projects through cooperative ventures and many Indian public sector companies are engaged in collaboration to add 10,000 MW capacity by 2020.

Of the more than 58,000 MW of power projects under construction, private developers are supporting about 32,339 MW of new capacity, he stated. But there was an urgent need to further increase the role of private sector, he pointed out.

He also reiterated that energy sharing was the way forward for countries of South Asia. This would enable them to encash the latent energy potential, which has not been fully tapped.

Delivering the special address at the conference, Jayant Prasad, Special Secretary, Ministry of External Affairs also reiterated the importance of cross border trading. He said: "South Asia energy trade is an idea whose time has clearly come. There is growing support in the contiguity for regional energy trade from central Asia to South Asia."

Remunerating the advantages of cross border trading he said "Cross border interconnectivity will promote supply reliability, peak load control and create opportunities for capturing economies of scale. Significant first steps for intra-regional connectivity have been implemented already."

He concluded by saying that there was inevitability about the positive direction in which the South Asia energy trade was moving.