This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS SECTION 01 OF 04 DHAKA 006292 
 
SIPDIS 
 
AIDAC 
 
MISSIONS FOR ECON OFFICERS, POL OFFICERS AND USAID 
DIRECTORS 
SECSTATE WASHDC FOR USAID/ANE BUREAU/AA, JIM KUNDER AND 
MARK WARD; SAA/DIR, KAY FREEMAN, RICHARD STEELMAN, EBONY 
BOSTIC, MICHAEL METZLER, ERIC PICARD, NITIN MADHAV; 
SPO/DIR SUSAN FINE, REBECCA MAESTRI;  TS/DIR TONY CHAN, 
JOHN WILSON, CINDY LOWRY; EGAT/I&E/DIR JUAN BELT, GORDON 
WEYNAND, ELLEN DRAGOTTO; E&E/EG/EI ROBERT ICHORD; 
NSC/SA DIR CLAUDIO LILIENFELD; STATE/SA DAS JOHN 
GASTRIGHT, PDAS DON CAMP, DIR JOHN SCHLOSSER, ANISH GOEL; 
DEPT. OF ENERGY/INTERNATIONAL ENERGY COOPERATION/EUROPEAN 
AND ASIAN AFFAIRS DIR ROBERT PRICE, TOM CUTLER; AND DEPT. 
OF COMMERCE/INTERNATIONAL TRADE/PAUL HUEPER; WORLD BANK 
GROUP/USED MUNEERA SALEM-MURDOCK. 
BANGKOK PLEASE PASS TO RDMA DIR RICHARD WHELDEN 
 
E.O. 12958: N/A 
TAGS: ENRG US IN NP CE PK AF TH
SUBJECT: SOUTH ASIA REGIONAL ENERGY MEETING, DHAKA, 
BANGLADESH, DECEMBER 6-7, 2005 
 
 
SUMMARY 
 
¶1.   THE EIGHTH MEETING OF THE USAID SOUTH ASIA REGIONAL 
INITIATIVE FOR ENERGY (SARI/ENERGY) WAS HELD IN DHAKA, 
BANGLADESH ON DECEMBER 6-7, 2005. THE FOCUS OF THE MEETING 
WAS REGIONAL ENERGY SECURITY THROUGH TRADE, INVESTMENT AND 
ACCESS. THE MEETING WAS ATTENDED BY 115 PERSONS FROM THE 
PRIVATE AND PUBLIC SECTORS OF THE EIGHT COUNTRIES OF SOUTH 
ASIA, USAID SOUTH ASIA MISSIONS, USAID/ANE, USAID/E&E AND 
USAID/EGAT. PRESENTATIONS WERE MADE ON ENERGY SECURITY AND 
REGIONAL TRADE OPTIONS BY PRIVATE AND PUBLIC SECTOR LEADERS 
FROM THROUGHOUT THE REGION. SEVERAL SARI/E PROGRAM 
ANNOUNCEMENTS WERE MADE INCLUDING REDIRECTION OF THE 
PROGRAM TO ENERGY SECURITY IN SOUTH ASIA, THE IMPENDING 
LAUNCH OF A REGIONAL ENERGY MARKETS INITIATIVE, LAUNCH OF 
THE WIND AND SOLAR MAPPING OF AFGHANISTAN AND PAKISTAN, AND 
THE RELEASE OF THE REGIONAL ENERGY SECURITY REPORT. A USG 
ONLY MEETING WAS HELD AT WHICH THERE WAS A STRONG 
ENDORSEMENT FOR THE OUTCOMES OF THIS MEETING AND THE 
REDIRECTION OF SARI/E, A REQUEST FOR A FORMAL SARI/E 
ADVISORY BOARD MEETING AS PART OF A MISSION DIRECTORS 
MEETING, A REQUEST TO REVISIT THE PROPOSED BUDGET REDUCTION 
FOR SARI/E IN FY06. END SUMMARY 
 
OVERVIEW 
 
¶2.   THE EIGHTH USAID SARI/ENERGY SEMI-ANNUAL REVIEW 
MEETING WAS HELD IN DHAKA, BANGLADESH ON DECEMBER 6-7, 
¶2005. IN TOTAL 115 PARTICIPANTS ATTENDED OF WHICH 82 WERE 
HOST COUNTRY STAKEHOLDERS FROM AFGHANISTAN, BANGLADESH, 
BHUTAN, INDIA, MALDIVES, NEPAL, PAKISTAN AND SRI LANKA. 
OTHER ATTENDEES INCLUDED REPRESENTATIVES FROM USAID 
WASHINGTON AND FIELD MISSIONS, IMPLEMENTING CONTRACTORS 
AND GRANTEES. 
 
¶3.   BEGUN IN 2000, THE USAID SARI/ENERGY PROGRAM FOCUSES 
ON REGIONAL APPROACHES TO MEET SOUTH ASIA'S ENERGY 
SECURITY NEEDS.  THE OBJECTIVE OF THE PROGRAM IS TO 
PROMOTE ENERGY SECURITY IN SOUTH ASIA, WORKING TOWARD 
HARMONIZED MARKETS FOR REGIONAL ENERGY TRADE AND 
INVESTMENT, AND INCREASE ACCESS TO DIVERSIFIED CLEAN 
ENERGY SUPPLY. 
 
¶4. THE PRIMARY THEME OF THIS MEETING WAS REGIONAL ENERGY 
SECURITY THROUGH CROSS BORDER TRADE AND INVESTMENT. 
LEADING POWER COMPANIES AND KEY PUBLIC SECTOR 
REPRESENTATIVES FROM INDIA, BANGLADESH, BHUTAN OTHER 
SOUTH ASIAN COUNTRIES AS WELL AS CENTRAL ASIA, SAARC, AND 
ASEAN GAVE PRESENTATIONS ON THE NEEDS AND ISSUES FOR 
REGIONAL ENERGY SECURITY AND CROSS-BORDER TRADE AND 
INVESTMENT. A HIGHLY ENGAGED AND OPEN DIALOGUE ON OPTIONS 
FOR TRADE TOOK PLACE BETWEEN ALL PARTICIPANTS WITH ACTIVE 
QUESTIONING FROM THE NEPAL AND PAKISTANI DELEGATES. USG 
PARTNERS OBSERVED A NEW AND STRONG LEVEL OF ENTHUSIASM 
FOR ENERGY MARKETS AND TRADE BY THE REGIONAL 
PARTICIPANTS. IN ADDITION, THE PARTICIPANTS ENDORSED THE 
SARI/E PROGRAM STRATEGIC OBJECTIVE. 
 
¶5. THE PARTICIPANTS EXPRESSED STRONGLY THAT SOUTH ASIA 
PROVIDES SIGNIFICANT OPPORTUNITIES FOR ENERGY INVESTMENT, 
DEVELOPMENT AND TRADE. THE INDIGENOUS RESOURCES ARE 
SIGNIFICANT AT APPROXIMATELY 47,000 MILLION TONS OF OIL 
EQUIVALENT (MTOE), OF WHICH SOME 800 MTOE IS ANNUALLY 
RENEWABLE.  YET ACCESS TO ENERGY IS AT LESS THAN 50% ON 
AVERAGE WITH AN ANNUAL TOTAL CONSUMPTION OF APPROXIMATELY 
600 MTOE. CRITICALLY, THE ENERGY RESOURCES ARE INEQUITABLY 
DISTRIBUTED AMONG THE COUNTRIES. THUS THE OPPORTUNITIES FOR 
COST-EFFECTIVE CROSS-BORDER TRADE AND INVESTMENT TO DEVELOP 
RESOURCES AND FOSTER ENERGY SECURITY IS IMMENSE, BUT AT 
PRESENT ONLY ABOUT 0.1 PERCENT OF TOTAL ENERGY IMPORTS ARE 
INTRA-REGIONAL. INDIA IS LEADING THE WAY WITH THE CREATION 
OF NATIONAL ENERGY MARKETS, AND WILL SERVE AS THE KEY 
REGIONAL MARKET. YET PROGRESS MUST BE MADE IN ORDER TO 
BRIDGE GAP BETWEEN MACRO-LEVEL INTENTIONS FOR ENERGY 
SECURITY, AND MICRO-LEVEL IMPLEMENTATION OF INTRA-REGIONAL 
TRADE AND INVESTMENT. 
 
¶6. GOING FORWARD, USAID'S SARI/ENERGY PROGRAM WILL LAUNCH A 
REGIONAL ENERGY MARKETS INITIATIVE TO IDENTIFY AND ADDRESS 
KEY OBSTACLES TO FORMATION OF REGIONAL ENERGY MARKETS TO 
SUPPORT BILATERAL AND REGIONAL ENERGY TRADE AND INVESTMENT. 
SARI/ENERGY WILL LOOK TO SUPPORT SAARC ENERGY CENTER AND 
SOUTH ASIA ENERGY SECURITY INITIATIVES. THE PROGRAM WILL 
CONTINUE TO PROMOTE IMPROVED CLEAN ENERGY ACCESS, AND 
LEVERAGE SARI/ENERGY PROGRAM RESOURCES AND LESSONS LEARNED 
TO MEET US OBJECTIVES IN AFGHANISTAN AND PAKISTAN. 
PARTICULAR EMPHASIS WILL CONTINUE ON THE CENTRAL ASIA TO 
SOUTH ASIA ENERGY CONNECTION THROUGH AFGHANISTAN AND 
PAKISTAN. 
 
USAID SARI/ENERGY INITIATIVES FOR ENERGY SECURITY 
 
¶7.   CONTRACTORS AND GRANTEES OF SARI/E INCLUDE NEXANT, 
INC., U.S. ENERGY ASSOCIATION, U.S. CHAMBER OF COMMERCE, 
WINROCK INTERNATIONAL, AND U.S. NATIONAL RENEWABLE ENERGY 
LABORATORY.  EACH OF THE SARI/E IMPLEMENTING PARTNERS 
PRESENTED THEIR ACCOMPLISHMENTS AND PROPOSED FOLLOW-ON 
ACTIVITIES. 
 
¶8.   RECENT SARI/E RESULTS AND ONGOING ACTIVITIES TOWARD 
ACCOMPLISH THE US OBJECTIVES OF REGIONAL ENERGY SECURITY 
INCLUDE A NUMBER OF ACTIVITIES, THE FOLLOWING OF WHICH ARE 
EXAMPLES: 
 
¶9. REGIONAL ENERGY SECURITY - SARI/ENERGY RELEASED ITS 
REGIONAL ENERGY SECURITY REPORT, AUTHORED BY LEADING SOUTH 
ASIAN EXPERTS.  THESE SARI/E CHAMPIONS PRESENTED THE 
FINDINGS OF THE REPORT AT THE FIRST MEETING OF SAARC ENERGY 
MINISTERS IN OCTOBER OF 2005. THE PRINCIPLES WERE ENDORSED 
BY THE SAARC ENERGY MINISTERS AND FORWARDED TO THE SAARC 
SUMMIT. THE SAARC DHAKA DECLARATION ALSO INCLUDED THE 
ESTABLISHMENT OF A SAARC REGIONAL ENERGY CENTER IN 
ISLAMABAD. 
 
¶10. CROSS-BORDER TRADE AND INVESTMENT - SARI/ENERGY IS 
PROVIDING SUPPORT TO THE GOVERNMENT OF AFGHANISTAN, WORKING 
WITH USAID/KABUL, ON POWER IMPORT NEGOTIATIONS FROM 
NEIGHBORING CENTRAL ASIAN COUNTRIES. THE PROGRAM ALSO 
PROVIDED SUPPORT TO THE BANGLADESH-INDIA TATA GROUP CROSS- 
BORDER POWER SECTOR INVESTMENT CURRENTLY UNDER NEGOTIATION. 
SARI/E IS RAMPING UP SUPPORT ON THE JOINT VENTURE PROPOSAL 
BETWEEN NEPAL OIL CORPORATION AND THE INDIA OIL 
CORPORATION. RECENTLY, THE PROGRAM COMPLETED AN LNG IMPORT 
POLICY FRAMEWORK FOR PAKISTAN BASED ON REGIONAL 
EXPERIENCES. SARI/E ALSO WORKS TOWARD IMPROVED ENERGY 
REPORTING AND COVERAGE, WITH OVER 285 ARTICLES ON REGIONAL 
ENERGY COOPERATION AND DEVELOPMENT PUBLISHED IN LEADING 
NEWSPAPERS AND MAGAZINES. 
 
¶11. CLEAN ENERGY ACCESS - SARI/ENERGY LAUNCHED THE WIND AND 
SOLAR RESOURCE MAPPING FOR AFGHANISTAN AND PAKISTAN. THIS 
HAD BEEN DONE PREVIOUSLY FOR SRI LANKA AND THE MALDIVES, 
WITH DEVELOPMENT OF A GEOSPATIAL TOOLKIT TO ANALYZE COST- 
EFFECTIVE SYSTEM OPTIONS FOR ANY SITE. THE DECISION SUPPORT 
TOOLS ARE NOW BEING ADAPTED FOR AFGHANISTAN AND PAKISTAN. 
THE SMALL GRANTS PROGRAM PROVIDED SUPPORT IN BANGLADESH 
THAT LED TO CONSTRUCTION OF 27 BIOGAS PLANTS. THE PROGRAM 
ALSO FACILITATED CREATION OF A RURAL ENERGY CENTER IN 
INDIA. 
 
¶12. REGIONAL HARMONIZATION - THROUGH THE GRANTS PROGRAM A 
SET OF HARMONIZED STANDARDS FOR MICRO-HYDRO IN INDIA, NEPAL 
AND SRI LANKA HAS BEEN DEVELOPED. THE PARTNERSHIP PROGRAM 
RESULTED IN SHARING OF INDIA AND BANGLADESH TRANSMISSION 
GRID CODES WITH AFGHANISTAN AND PAKISTAN, ASSESSMENT OF 
RETAIL PRICING BETWEEN INDIA AND PAKISTAN, AND 
STRENGTHENING OF A POTENTIAL INDEPENDENT REGIONAL 
REGULATORY ASSOCIATION. 
 
¶13. PRIVATE SECTOR VOICES FOR REGIONAL ENERGY TRADE AND 
INVESTMENT - THE SARI/E SPONSORED SOUTH ASIA REGIONAL 
ENERGY COALITION, COMPOSED OF REGIONAL BUSINESS LEADERS AND 
ASSOCIATION EXECUTIVES, BOARD OF DIRECTORS AGREED TO 
CONSTITUTE A MARKET POLICY FORUM IN EARLY 2006 TO IDENTIFY 
REGIONAL ENERGY MARKET DEVELOPMENT IMPEDIMENTS, AND TO 
DEVELOP AND INITIATE A POLICY ROAD MAP TO ADDRESS THESE 
IMPEDIMENTS.  THE REGIONAL BOARD ALSO AGREED TO INCREASE 
ITS AMERICAN COMPANY MEMBERSHIP IN ORDER TO BETTER 
REPRESENT THE NEEDS OF FOREIGN INVESTORS IN THE SOUTH ASIA 
ENERGY SECTOR. 
 
RECOMMENDATIONS OF REGIONAL WORKING GROUPS 
 
¶14. DURING THE MEETING THREE WORKING GROUPS WERE 
ESTABLISHED TO IDENTIFY CRITICAL OPPORTUNITIES AND NEEDS 
IN EACH OF THE FOCAL AREAS OF ENERGY SECURITY. COMPRISED 
OF REGIONAL ENERGY SECTOR LEADERS AND SARI/ENERGY 
PARTNERS, THE GROUPS RECOMMENDED AND COMMITTED TO WORKING 
TOWARD THE FOLLOWING: 
 
¶15. REGIONAL ENERGY SECURITY - SUPPORT THE NEW SAARC 
ENERGY CENTER IN PAKISTAN TO MAKE IT OPERATIONAL; DEVELOP 
A REGIONAL ENERGY MASTER PLAN WITH GUIDANCE FROM REGIONAL 
EXPERTS; PREPARE A CONCEPT PAPER FOCUSING ON A PROPOSED 
SOUTH ASIA INFRASTRUCTURE DEVELOPMENT FINANCIAL 
INSTITUTION. THERE WAS RECOGNITION THAT AT PRESENT SARI/E 
IS THE ONLY REGIONAL ENERGY PROGRAM IN SOUTH ASIA. 
 
¶16. REGIONAL MARKETS FOR TRADE AND INVESTMENT - A 
WORKSHOP ON HOW SHORT- AND LONG-TERM ENERGY MARKETS CAN 
WORK IN SOUTH ASIA; WORK ADDRESSING THE ROLE OF INDIA IN 
INTEGRATING A REGIONAL GRID; EMPHASIZED NEED TO TAKE 
SMALL, REALISTIC INITIATIVES TO DEMONSTRATE CROSS-BORDER 
ENERGY TRADE; HOLD DISCUSSIONS HIGHLIGHTING CROSS-BORDER 
INVESTMENTS AND TRADES UNDERWAY; AND IDENTIFY STRATEGIC 
PUBLIC-PRIVATE PARTNERSHIP OPPORTUNITIES FOR ADDITIONAL 
CROSS-BORDER TRADES. THESE ARE AREAS IN WHICH THE 
SARI/ENERGY REGIONAL ENERGY MARKETS INITIATIVE WILL WORK. 
 
¶17. INCREASED ACCESS TO CLEAN ENERGY SUPPLY - RECOGNITION 
OF NEED FOR TRAINING, CAPACITY BUILDING AND INFORMATION 
SHARING IN OFF-GRID AND GRID-BASED SOLUTIONS, INCLUDING 
LNG, CNG, WIND, SOLAR AND HYDROGEN; ENDORSED THE USE OF 
THE SARI/ENERGY RURAL ENERGY NETWORK AS A BASIS FOR 
PROMOTING CLEAN ENERGY ACCESS THROUGHOUT THE REGION. 
 
USG MEETING 
 
¶18.  THE USG PARTNERS MEETING TOOK PLACE AT THE END OF 
THE FULL REGIONAL STAKEHOLDERS MEETING. THE MEETING WAS 
FOCUSED ON IMPLEMENTATION OF THE CHANGES SET FORTH IN THE 
SARI/E DECISION MEMO SIGNED BY ANE/AA IN SEPT 2005, WHICH 
REDIRECTED THE PROGRAM TOWARD REGIONAL ENERGY SECURITY 
AND ESTABLISHED A MISSION DIRECTOR LEVEL ADVISORY BOARD. 
 
¶19. THE USG PARTICIPANTS, MANY OF WHO HAVE BEEN INVOLVED 
WITH SARI/E IN PAST YEARS, NOTED THE POSITIVE SHIFT THAT 
HAS OCCURRED IN THE PROGRAM. THEY NOTED THAT THE REGIONAL 
PARTICIPANTS DEMONSTRATED A GREAT DEGREE OF POSITIVE 
MOMENTUM AND DIRECT DISCUSSIONS ON HOW TO IMPLEMENT 
CROSS-BORDER TRADES.  INDIA WAS REPRESENTED IN STRENGTH 
AND LED THE DISCUSSIONS ON TRADE AND INVESTMENT 
OPPORTUNITIES WITH THEIR NEIGHBORS IN THE REGION. THERE 
WAS A POSITIVE RECIPROCAL RESPONSE AMONG THE SOUTH ASIAN 
COUNTRIES, PARTICULARLY PAKISTAN AND NEPAL. THE 
PARTICIPANTS FROM THROUGHOUT THE REGION DEMONSTRATED A 
HIGH LEVEL OF PERSONAL COMMITMENT AND SHARED A SENSE OF 
MOMENTUM TOWARD CROSS-BORDER TRADE AND COOPERATION IN THE 
REGION. THE COMMENT WAS RAISED THAT THIS WAS A VENUE THAT 
HAD NOT EXISTED IN THE PAST. 
 
¶20. THE USG PARTICIPANTS EXPRESSED GREAT CONCERN THAT THE 
REDUCTION IN THE FY06 BUDGET LEVEL FOR SARI/E OF 2.252 
MILLION DOLLARS WILL SIGNIFICANTLY IMPACT THE ABILITY OF 
THE PROGRAM TO IMPLEMENT THE OBJECTIVES APPROVED IN THE 
DECISION MEMO.  A LEVEL SHOULD BE ESTABLISHED ON A 
CONTINUAL ANNUAL BASIS BY ANE THAT MEETS THE NEEDS OF THE 
PROGRAM TO IMPLEMENT THE APPROVED OBJECTIVES.  THIS 
LEVEL, IN PAST, HAS BEEN BETWEEN 5 TO 7 MILLION DOLLARS A 
YEAR. 
 
¶21. OF THE NINE USAID ADVISORY BOARD MEMBERS, TWO MISSION 
DIRECTORS AND FOUR TECHNICAL DESIGNEES WERE PRESENT. TWO 
ADDITIONAL USAID TECHNICAL OFFICES, EGAT AND E&E, WERE 
ALSO PRESENT. THOUGH THERE WAS A MAJORITY BOARD 
REPRESENTATION, IT WAS STRONGLY FELT THAT THE FIRST 
ADVISORY MEETING SHOULD BE HELD AT THE PRINCIPAL LEVEL. 
THE CONSENSUS WAS THAT A MEETING OF USAID MISSION 
DIRECTORS AND ANE OFFICE DIRECTORS WOULD BENEFIT THE 
REGION ON A NUMBER OF AREAS BEYOND JUST ENERGY.  AS SUCH 
THEY SUGGEST THE CONVENING OF SUCH A MEETING IN MAY/JUNE 
OF 2006 IN THE REGION.  AT THAT MEETING THE SARI/E 
ADVISORY BOARD WOULD FORMALLY MEET FOR THE FIRST TIME AND 
WOULD BE ABLE TO EFFECTIVELY FUNCTION AS INTENDED IN THE 
DECISION MEMO. IN THE MEANTIME A VIRTUAL SARI/E BOARD 
APPROACH WILL BE NECESSARY.  THIS VIRTUAL APPROACH WILL 
BE USED TO FINALIZE THE RESULTS FRAMEWORK BY THE TIME OF 
THE FIRST FULL BOARD MEETING. 
 
¶22.       THIS CABLE HAS BEEN CLEARED BY USAID FROM ALL 
PARTICIPATING POSTS. 
 
CHAMMAS