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Harmonizing Electricity Laws in South Asia HARMONIZING ELECTRICITY LAWS IN SOUTH ASIA Recommendations to Implement the South Asian Association for Regional Cooperation Framework Agreement on Energy Trade (Electricity) Electricity shortages in South Asia are adversely impacting the region’s socioeconomic development. Energy trade is seen as a solution to this challenge. The South Asian Association for Regional Cooperation (SAARC) Recommendations to Implement the South Asian Association for Regional Cooperation Framework Agreement on Energy Trade (Electricity) Trade on Energy Agreement Framework Cooperation Regional for Association the South Asian to Implement Recommendations Framework Agreement for Energy Cooperation (Electricity) is a key step in realizing regional trade in energy. To support implementation of the framework agreement, ADB and SAARC in Law are working to improve legal and regulatory harmonization in the energy sector. This report identifies the legal, regulatory, technical, and commercial requirements for energy trade, and what each country in South Asia needs to do to make the framework agreement a reality. The recommendations, summarized in tables, provide an easy reference for policy makers and energy stakeholders in the region. About the Asian Development Bank ADB’s vision is an Asia and Pacific region free of poverty. Its mission is to help its developing member countries reduce poverty and improve the quality of life of their people. Despite the region’s many successes, IN SOUTH ASIA ELECTRICITY LAWS HARMONIZING it remains home to a large share of the world’s poor. ADB is committed to reducing poverty through inclusive economic growth, environmentally sustainable growth, and regional integration. Based in Manila, ADB is owned by 67 members, including 48 from the region. Its main instruments for helping its developing member countries are policy dialogue, loans, equity investments, guarantees, grants, and technical assistance. HARMONIZING ELECTRICITY LAWS IN SOUTH ASIA Recommendations to Implement the South Asian Association for Regional Cooperation Framework Agreement on Energy Trade (Electricity) ASIAN DEVELOPMENT BANK 6 ADB Avenue, Mandaluyong City 1550 Metro Manila, Philippines www.adb.org ASIAN DEVELOPMENT BANK HARMONIZING ELECTRICITY LAWS IN SOUTH ASIA Recommendations to Implement the South Asian Association for Regional Cooperation Framework Agreement on Energy Trade (Electricity) ASIAN DEVELOPMENT BANK Creative Commons Attribution 3.0 IGO license (CC BY 3.0 IGO) © 2017 Asian Development Bank 6 ADB Avenue, Mandaluyong City, 1550 Metro Manila, Philippines Tel +63 2 632 4444; Fax +63 2 636 2444 www.adb.org Some rights reserved. Published in 2017. ISBN 978-92-9257-967-8 (Print), 978-92-9257-968-5 (e-ISBN) Publication Stock No. TCS179071-2 DOI: http://dx.doi.org/10.22617/TCS179071-2 The views expressed in this publication are those of the authors and do not necessarily reflect the views and policies of the Asian Development Bank (ADB) or its Board of Governors or the governments they represent. ADB does not guarantee the accuracy of the data included in this publication and accepts no responsibility for any consequence of their use. The mention of specific companies or products of manufacturers does not imply that they are endorsed or recommended by ADB in preference to others of a similar nature that are not mentioned. By making any designation of or reference to a particular territory or geographic area, or by using the term “country” in this document, ADB does not intend to make any judgments as to the legal or other status of any territory or area. This work is available under the Creative Commons Attribution 3.0 IGO license (CC BY 3.0 IGO) https://creativecommons.org/licenses/by/3.0/igo/. By using the content of this publication, you agree to be bound by the terms of this license. For attribution, translations, adaptations, and permissions, please read the provisions and terms of use at https://www.adb.org/terms-use#openaccess This CC license does not apply to non-ADB copyright materials in this publication. If the material is attributed to another source, please contact the copyright owner or publisher of that source for permission to reproduce it. ADB cannot be held liable for any claims that arise as a result of your use of the material. Please contact [email protected] if you have questions or comments with respect to content, or if you wish to obtain copyright permission for your intended use that does not fall within these terms, or for permission to use the ADB logo. Notes: In this publication, “$” refers to US dollars. Corrigenda to ADB publications may be found at http://www.adb.org/publications/corrigenda Contents Tables and Figures v Acknowledgments vi Foreword vii Abbreviations ix Executive Summary xi 1 South Asian Association for Regional Cooperation and ADB’s Support for the South Asian Association for Regional Cooperation in Law 1 1.1 South Asian Association for Regional Cooperation 1 1.2 South Asian Association for Regional Cooperation’s Initiatives on Energy Cooperation 2 1.3 ADB’s Support to South Asian Association for Regional Cooperation in Law 2 2 Energy Scenario and Institutional Framework 4 2.1 Energy Scenario in the South Asian Association for Regional Cooperation Region 4 2.2 Demand and Supply Scenario of Electricity in South Asia 5 2.3 Access to Electricity in South Asia 5 2.4 Impact of Electricity Shortage on Business 6 2.5 Institutional Framework of the Power Sector in South Asia 7 3 South Asian Association for Regional Cooperation Framework Agreement for Energy Cooperation (Electricity) 19 3.1 Emphasis on Electricity Cooperation in the Framework Agreement 19 3.2 South Asian Association for Regional Cooperation Framework Agreement for Energy Cooperation (Electricity) 20 4 Review of Electricity Laws, Regulations, and Policies 22 4.1 Legal, Regulatory, and Policy Framework of Afghanistan 22 4.2 Legal, Regulatory, and Policy Framework of Bangladesh 22 4.3 Legal, Regulatory, and Policy Framework of Bhutan 24 4.4 Legal, Regulatory, and Policy Framework of India 25 4.5 Legal, Regulatory, and Policy Framework of Maldives 28 4.6 Legal, Regulatory, and Policy Framework of Nepal 29 4.7 Legal, Regulatory, and Policy Framework of Pakistan 29 4.8 Legal, Regulatory, and Policy Framework of Sri Lanka 32 4.9 Findings of the Review by Country 34 4.10 Summary of Findings of the Review 37 iii iv Contents 5 Requirements for Cross-Border Electricity Trade 38 5.1 Requirements for Regional Power Trade 38 5.2 Legal 39 5.3 Regulatory 40 5.4 Technical 41 5.5 Commercial 41 6 Harmonizing Electricity Laws and Regulations of South Asian Association for Regional Cooperation Member States 42 7 Conclusions and Recommendations 47 7.1 Conclusions 47 7.2 Recommendations 48 Appendixes 1 South Asian Association for Regional Cooperation Framework Agreement for Energy Cooperation (Electricity) 51 2 List of Laws and Regulations Reviewed 56 Tables and Figures Tables 1 Human Development Index Ranking of South Asian Association for Regional Cooperation Member States 1 2 Conventional Energy Reserves of South Asian Association for Regional Cooperation Member States 4 3 Installed Capacity, Generation, and Demand for Electricity (2013–2014) 5 4 Electricity Access in South Asia, 2013 6 5 Business Opportunities Lost Due to Electricity Shortages 6 6 Legal Requirements for Cross-Border Electricity Trade 39 7 Regulatory Requirements for Cross-Border Electricity Trade 40 8 Technical Requirements for Cross-Border Electricity Trade 41 9 Commercial Requirements for Cross-Border Electricity Trade 41 10 Suggested Changes to Policies, Laws, and Regulations 43 Figures 1 Institutional Framework of the Afghanistan Power Sector 8 2 Structure of the Bangladesh Energy Sector 9 3 Institutional Arrangement of the Bhutan Energy Sector 11 4 Institutional Framework of the India Central Power Organization 12 5 Institutional Structure of the Maldives Power Sector 13 6 Institutional Structure of the Nepal Power Sector 14 7 Institutional Framework of the Pakistan Power Sector 16 8 Institutional Framework of the Sri Lanka Power Sector 18 9 Existing Energy Sector Laws and Regulations of Bangladesh 22 v Acknowledgments This report is a collaboration between the Office of the General Counsel of the Asian Development Bank (ADB) and the South Asian Association for Regional Cooperation in Law (SAARCLAW). It would not have been possible without the strong support and commitment of SAARCLAW’s leadership led by its former president, Chief Justice Kalyan Shrestha (retired) of Nepal, and its former secretary general, Hemant Batra. We appreciate the efforts of the principal author of the report, D. N. Raina, who put together the recommendations from the country reports and provided valuable recommendations for the South Asian Association for Regional Cooperation (SAARC) member countries to implement. The efforts and contribution of the national consultants and their teams, who prepared country studies that provided the basis for this report, are recognized. For the Bangladesh report: Muhammad Zeeshan Mohsen, ASM Monirul Alam, and Nafees Mohammed Badruddin of Fillip Consulting Limited; for the Bhutan report: Druk Green Consulting; for the India report: Swati Sharma (consultant), Nikita Sayam (joint consultant), Vedant Batra (principal research and analysis assistant), Jayashree Nayak (technical advisory assistant), Manas Pandey (research intern), and Bhavya Bishnoi (virtual research assistant); for the Nepal report: Justice Anil Kumar Sinha, judge, Supreme Court of Nepal; and for the Sri
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