Energy Security and Regional Power Sector ...
Del-Barrio Alvarez & Horii
a study to propose a Power Trade Strategy for GMS. A key output of this study was the identification of the main barriers, which included: (i) policy barriers, (ii) technical barriers, (iii) institutional barriers, and (iv) commercial and financial barriers. In particular, it stated an absence of leadership “within the region to facilitate and promote greater regional trade”. It also developed a number of recommendations, such as the preparation of a policy protocol which could include “principles ruling the agreement, like competition, gradually, reciprocity”. In addition, the ADB approved the RETA 5920 for the development of a Regional Indicative Master Plan. This was conducted between 2000 and 2002, to “identify levels of energy demand the priority interconnection projects up to 2020 necessary to support regional power trade” (ADB 2012). The Experts Group on Power Interconnection and Trade (EGP), created in 1998, was in charge of overseeing this study and drafting the Policy Statement on Regional Power Trade in Greater Mekong Sub-region. This was first adopted by the 6th Electric Power Forum in December 1999 and endorsed by the GMS Ministers during the 9th GMS Ministerial meeting in Manila in January 2000. Ultimately, the highest level political support was obtained with the sign of the Inter-Governmental Agreement on Regional Power Trade in the GMS (IGA). At the Joint GMS Summit Declaration, this was acknowledged with a commitment to “accelerate development through mutually beneficial initiatives” (ADB IGA). The IGA recognizes three principles to guide the process: (i) cooperation, (ii) gradualism, and (iii) environmentally sustainable development. It is interesting to note that, although the Policy Statement included references to market reform and private sector participation, these do not explicitly appear in the IGA. The only mention of the main actors is “their respective appropriate national authorities and government-designated electric utilities”. This appears to represent a ratification of the role of the state-owned national utilities in the process. IGA also includes the following three objectives: a) Coordinate and cooperate in planning and operation of their systems to minimize costs while maintaining satisfactory reliability; b) Fully recover their costs and share equitably in the resulting benefits, including reductions in required generation and transmission capacity, reductions in fuel costs and improved use of low-cost electricity sources; and c) Provide reliable and economic electric service to the customers of each Party In parallel to the regional power trading studies and agreements, bilateral power trade has been developed through a memorandum of understanding (MOU) between the governments or long-term power purchase agreements (ADB, 2003). Thailand, for example, has already signed MOUs and frameworks for their development with Lao PDR (7,000 MW) and PRC (3,000 MW), and MOUs but without a framework for their development with Myanmar and Cambodia. This process has followed a pragmatic approach focusing on the bankability of each independent project, rather than a long-term vision for the creation of a regional power grid. This has delayed the final goal of creating a regional electricity market, and therefore, as will be explained in the following section, slowed down the process with some negative consequences for the member countries. For example, an agreement for the approval of third country access has not been developed, this has ended in the blockade for the development of the bilateral trade between PRC and Thailand (due to the necessity of crossing Lao PDR). On the positive side, this has allowed the construction of a large number of generation plants, especially hydropower plants, commonly with dedicated transmission 32
Asian Journal of Public Affairs | 2017