Policy Brief on BIMSTEC Energy Cooperation
Citation: Raihan, S., Hasan, E., (2024). BIMSTEC Energy Cooperation. SANEM Publications. Dhaka.
The Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) was established in 1997 to promote cooperation among South and Southeast Asian countries. As a sector-driven regional organization, BIMSTEC initially focused on six priority sectors, including energy, which is essential for the region’s economic growth and stability. While BIMSTEC nations represent some of the world’s fastest-growing economies, they are all energy-deficit and rely on imports of various energy resources to meet their needs. India, the largest country in the region with substantial natural resource reserves, also depends on imports to meet its energy demands due to its scale of consumption. Thus, the countries in the region could mutually benefit from promoting energy and electricity trade among themselves.
A prime example of such cooperation is the hydropower trade between Bhutan and India, which has significantly contributed to Bhutan’s GDP, accounting for 6-10 percent between 2012 and 2019. This collaboration not only stimulates economic growth but also attracts foreign direct investment, such as India’s major stake in Nepal’s 900 MW Arun-III hydropower project. These investments boost power generation capacity while freeing up capital in host countries for broader development initiatives (SARI/EI-IRADe, 2021). Energy cooperation is also vital for ensuring energy security, a key factor in industrial growth and socioeconomic stability. By providing a buffer against supply disruptions, energy trade enhances national security and supports sustained economic progress through a reliable energy supply for industries and households. Furthermore, such cooperation fosters economic integration by reducing energy costs and improving efficiency, strengthening political and economic ties within the region, and creating a more cohesive and attractive market for investment.
On the environmental front, the emphasis on renewable energy projects within these cooperative efforts is crucial for reducing the region’s carbon footprint. This approach not only helps mitigate climate change but also promotes environmental sustainability, aligning with global efforts to transition to cleaner energy technologies.
