India, Nepal plan power grid to tap region's riches

India and its Himalayan neighbour Nepal are set to build a huge power transmission line across their border, a step towards addressing rising energy needs in a region that analysts say has been held back economically by political distrust.

The two countries will meet later this month to finalise a deal in which India will export electricity to Nepal over 140 kilometres of new power lines.

The countries of South Asia, which have historically watched one another with suspicion, also plan to set up a regional power grid as a severe energy shortage drags on the economies of more than 1.4 billion people.

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''South Asia is a major hub of fast-growing economies with 25 per cent of the world's population. There is an ongoing shift in focus from agriculture to manufacturing,'' India's deputy power minister, KC Venugopal, said at a conference in New Delhi.

As a model, power officials are studying a regional grid connecting Norway, Denmark, Sweden and Finland and another that connects South Africa, Botswana and Zimbabwe.

India will need to add about 250,000 megawatts of power by 2017, a fivefold increase, to sustain its economic growth.

''What is happening in South Asia mirrors the larger trends occurring across the continent.

Nepal and Bangladesh, wary of India's tendency to play the bullying big brother, have feared that it might exercise control over them through such alliances.

For regional energy co-operation to fully take off, Pakistan's role as a supply route for gas is pivotal.

The $7.6 billion pipeline, financed by the Asian Development Bank, is expected to be completed by 2016, and fuel prices, transit fees, gas sales and purchases are being negotiated.

''The geopolitical challenges in the region are tremendous, but they will have to be overcome because of the sheer demand for electricity.

Plans are also under way to set up a $450 million undersea power transmission link between India and Sri Lanka, and Indian companies hope to help build hydropower plants in those countries.

Only 9 per cent of the total hydropower potential of South Asia, rich with Himalayan rivers, has been tapped, according to the US Agency for International Development and the Confederation of Indian Industry.