infrastructure development: a regional perspective

Session: Planning & PolicyTopic 1.6. Infrastructure Development: A Regional Perspective

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The views expressed here are those of the presenter and do not necessarily reflect the views or policies of the Asian Development Bank (ADB), or its Board of Directors, or the governments they represent.

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Session on Planning & Policy

Rita NangiaAsian Development Bank

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Session Description

• The session covers:

Cross-border initiatives in Asia

Important challenges and opportunities facing the GMS region

Examples of well-known initiatives


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Overview of the Session

• Asian Highway Network

• Mekong river

• GMS power trading

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Asian Highway Network

• UNESCAP as lead agency Helping address the region’s transport needsConceived in 1959To promote regional cooperation and tradeBecoming an integrated, international transport systemProvides transport to all

• Criteria for identification of routes Maximize use of the existing networksCapital to capital linksIndustrial and agricultural centersSea, river and air ports Container terminals & depotsTourism attractions


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Formalization of Asian Highway

• Intergovernmental agreement Seoul Ministerial Declaration, 17 November 2001

1st Regional drafting meeting,11-12 November 2002

Subregional seminars to review draft

Intergovernmental meeting adopts on 18 November 2003

Open for signature at 60th session of UNESCAP Commission (26 April 2004, Shanghai)

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Formalization of Asian Highway (continued)

• Contracting partiesAdopt AH network

Negotiating procedures

Conform to AH design standards

Display AH signs

• Working group on the Asian Highway Provides negotiating forum


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Source: UNESCAP

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Conformity to Asian Highway Standard

Unreported 2%

2,700 km

Class III 29%

41,600 km

Class II - 30%

42,900 km

Class I - 8%

11,000 km

Below III 17%

23,700 km

Primary - 14%

19,600 km

Source: UNESCAP, Presentation on Asian Highway Projects


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Investment Costs - Asian Highway Priority Projects

17,42525,587Total

2,2513,434South Asia

7,30112,038Central & South West Asia

3,2356,546North East Asia

4,6383,569South East Asia

Cost in US $ millionsKilometers of road covered

Countries covered:South East Asia = Cambodia, Indonesia, Lao PDR, Myanmar, Philippines, Viet NamNorth East Asia = PRC, Mongolia, Russian FederationCentral & South West Asia = Afghanistan, Armenia, Azerbaijan, Georgia, Iran, Kazakhstan, Kyrgyzstan, Tajikistan, Turkey, UzbekistanSouth Asia = Bangladesh, Bhutan, India, Nepal, Pakistan, Sri Lanka

Source: Asian Highway Network, UNESCAP

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Source: UNESCAPSource: UNESCAP

To Europe

To East Asia and beyond


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Trans-Asian Railway

• Formalization of TAR network Focus on collaboration and combined transport

• Demonstration runs of container block trains along the TAR Northern Corridor

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To Europe

Source: UNESCAPSource: UNESCAP


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Future Collaboration on AHN

• Asian Highway/Trans-Asian Railway

• Intermodal connections

• Harmonization of facilitation agreements

• Trade/transport facilitation committees

• Forecasting traffic demands

Data collection/sharing

Identification of bottlenecks

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ECONOMIC INTEGRATION IMPROVED MEKONG NAVIGATION


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Mekong Navigation

• The countries of the Mekong are increasingly inter-dependent in terms of trade, economic development and political cooperation. Regional initiatives for cooperation in economic development in the Greater Mekong Basin:

ADB sponsored Greater Mekong Sub-region (GMS) initiative; Programs under ASEAN (Association of South-East Asian Nations)Mekong River Commission (members: Cambodia, Lao PDR, Thailand and Viet Nam)

• Bilaterally, China is an important economic partner for all the Lower Mekong countries

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Mekong River Commission

• According to the 1995 Agreement, MRC’s role is to promote -“Cooperation in all fields of sustainable development, utilisation, management and conservation of water and

related resources of the Basin.”

• The population in the basin is growing rapidly, at 2% per year. It will increase from 73 million at present to 120 million in 2025.


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Mekong River CommissionArticle 9: Freedom of Navigation

• “ On the basis of equality of right, freedom of navigation shall be accorded throughout the mainstream of the Mekong river without regard to the territorial boundaries, …”

• “ The Mekong river shall be kept free from obstructions, measures, conduct and actions that might directly or indirectly impair navigability, interfere with this right or permanently make it more difficult.”

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Energy Efficiency and Pollution

• Distance in miles to move 1 ton of freight with 1 liter of fuel and pollution in terms of CO2

71 km 41 g t/km

182 km 42 g t/km

(Source: 3rd World Water Forum – Water and Transport, MTS, US Department of Transportation

21 km 207 g t/km


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New Trends

• In 2000, the Governments of China, Lao PDR, Myanmar, and Thailand have signed an agreement for commercial navigation for the stretch between Simao(China) and Luang Prabang (Lao PDR)

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Simao

Tachilek

Chian Saen

Chiang Khong

Houay Say

Jing Hong

Pak Beng Louang PrabangChiang Rai

Boten

Muang Xai

MYANMARMYANMAR

CHINA

VIET NAM

THAILAND

LAO PDR


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Challenges to Enhanced Mekong River Navigation

• Physical and non-physical impediments for regional trade

• Lack of awareness of potential and possibilities

• No regional transport planning In cases, no national planning Poor regional navigation agreements - no frameworks

• Limited human capacity for water resource planning

• Training provided only in Vietnam

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Challenges to Enhanced Mekong River Navigation (continued)

• No safety regulations either - more than 3400 lives lost in last ten years

• Need simultaneous work on safety regulations, legal framework and environmental regulations

• Large investments needed


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Building the Mekong Power Market

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Regional Power Market

• Through power trade, GMS countries will be able to:

Reduce investments in power reserves to meet peak demand

Achieve more reliable supply

Reduce operating costs

Reduced greenhouse gas emission and pollutants

Increase consumer access to the cheapest power sources available


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Current Physical Status

• Big disparity in the size countries’ markets.

• Four countries (PRC, Thailand, Vietnam and Myanmar) have transmission systems that interconnect most of their internal demand centres. Two countries currently have no nationwide transmission systems (Lao PDR and Cambodia).

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Current Physical Status (continued)

• Three countries (Myanmar, Lao PDR and Cambodia) have internal demand levels that do not allow for the development of large-scale generation projects that are only based on internal load. Therefore the possibilities of obtaining energy at low (competitive) prices are linked to cross-border trading.

• Constraints to develop new hydro power in Thailand and there is a growing concern that natural gas reserves are not sufficient to satisfy future load growth. Coal resources are also limited to lignite, which has historically been associated with significant environmental problems.


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Current Regulatory Status

• Power sector structures: All GMS countries are organized wherein there is a single buyer (implicit or explicit) in their generation and transmission activities.

• Transmission ownership: The single buyer is usually the Transmission Facilities Owner (TFO), which operates and maintains the national transmission network.

• Independent power producers: All GMS countries allow for the development of stand-alone privately owned IPPs.

• No direct sale to large consumers: possible exception of PRC and some industrial zones within Thailand.

• Centralized government power sector planning

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Current Regulatory Status (continued)

• IPP framework through power purchase agreements

• International transmission interconnectors: Construction of international transmission lines also requires case-by-case negotiations between the governments and domestic TFO and single buyer of the GMS countries.

• Absence of transmission access regime

• Formal regulatory regimes: There are therefore no formal legal and regulatory frameworks for the power sectors in the GMS countries.

• No congestion management


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Institutional Arrangements

• Providing the policy and institutional framework to promote opportunities for extended cooperation in power trade

• Developing the grid interconnection infrastructure through a building block approach allowing cross-border dispatch of power

• Undertaken through: Electric Power Forum (EPF) Experts Group on Power Interconnection and Trade (EGP)

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Stages of the GMS Power Market

Integrated Operation

Regional Coordinated Operation

Regional Coordination by RTC

Coordination Inter-TSO

Operation Security

Independent Regulator

Limited Independent Regulator

Extended Consensus

ConsensusRegulator

Full Competition Limited Competition

Share of BenefitsShare of Limited Benefits

RPTOA

Central America by 2007

Continental Europe

Central America/ South Africa

Argentina- BrazilInternational Experience

Fully Functional Regional Network

Regional Network: Higher Cap.

Regional Network: Limited Capacity

Country to CountryCross-Border Transmission

Stage 4Stage 3Stage 2Stage 1


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Next Steps:ADB Technical Assistance for Regional Power

Trade Coordination and Development

• Develop action plan on regional power trade (2005-2006)

• Create institutions for initial stages of power trade (2005-2007)

• Undertake capacity building / human resource development (2005-2007)

• Develop platform and database for information exchange and communication (2006-2007)

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Source: ADB Regional Indicative Master Plan on Power Interconnection in the GMS

Possible Regional Master Plan on Power

Interconnection

• “Blocks” of power interconnection lines that can stand on their own merits

• Phased cross-border connections to meet power demand forecasts and generation system planning scenarios


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Financing GMS Grid InterconnectionInfrastructure: A Challenge

• Investment needGrid interconnections - part of overall infrastructure requirements of the GMSGMS power infrastructure investment need - $10-15 billion over next 5-10 years

• Financing sourcesGovernment budget - not sufficientMultilaterals and bilateral - for high priority projects; include policy advice, capacity building, and guarantees

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Financing GMS Grid InterconnectionInfrastructure: A Challenge (continued)

• Financing sourcesPrivate sector (developers and lenders) - can fill the financing gap and provide technology and management

• Environment conducive to private sector participationEnabling policy, legal and regulatory frameworks

Transparency and predictability


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ADB & Regional Cooperation

• Honest broker - bringing together various countries and getting involved in a neutral way

• Technical advisor - providing knowledge and expertise to ensure effective implementation of projects

• Financier - providing loans and technical assistance for high priority projects

• Coordinator - facilitating the involvement of other development partners

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Key Messages

• Borders can divide or expand opportunities. Overall outcomes depend on the ability of the leadership of the region to overcome challenges and enable communities to gain from the economic expansion through cross-border infrastructure

• GMS experience and vision of three Cs: about greater connectivity to enhance competitiveness that will help build a prosperous, cohesive community.

infrastructure development: a regional perspective

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