Electricity Cooperation in South Asia: Barriers to Cross-Border Trade

Abstract

The South Asia Region (SAR) continues to face electricity shortages, underinvestment and challenges to improve energy access. Strengthening cooperation for cross-border electricity trade in South Asia makes it possible for the region to take advantage of significant benefits from greater regional coordination in capacity investments. Trade can complement domestic investment to increase the availability and reliability of supply, bringing economies of scale in investments and more cost-effective expansion of renewable electricity. Efforts to expand cross-border electricity cooperation and trade in SAR need to address not only regional barriers, but also barriers stemming from domestic electricity sector policies in the region. Expanding the scope of bilateral electricity cooperation in the short- and medium-term, and especially opening up to commercial as well as government-to-government projects, can build confidence in the process of cross-border trade and the potential benefits it can provide. The longer-term desirable goal is emergence of a well-functioning regional market for electricity, supported by a regional organization or forum for cross-country coordination.