US embassy cable - 05COLOMBO1050

UNCLAS SECTION 01 OF 03 COLOMBO 001050 
 
SIPDIS 
 
AIDAC 
 
 
MISSIONS FOR ECON OFFICERS AND USAID DIRECTORS 
SECSTATE WASHDC FOR USAID/ANE BUREAU/DAAs, WALTER NORTH 
AND MARK WARD; SA/DIR, ALONZO FULGHAM; SPO/DIR/LARRY 
BRADY AND SUSAN FINE; DIR/TS, ANTHONY CHAN AND CINDY 
LOWRY; EGAT/EIT/E GORDON WEYNAND; 
STATE/SA/RA/DON CAMP; JOHN GASTRIGHT; AND ANISH GOEL; 
DEPT. OF ENERGY/TOM CUTLER; AND DEPT. OF 
COMMERCE/INTERNATIONAL TRADE 
MANILA PLEASE PASS TO USED AT ASIAN DEVELOPMENT BANK 
 
E.O. 12958: N/A 
TAGS: PREL, ENRG, KSCA, XD, ECONOMICS, External Relations 
SUBJECT:  SEVENTH SEMI-ANNUAL MEETING OF SOUTH ASIA 
REGIONAL INITIATIVE FOR ENERGY (SARI/ENERGY) 
CORRECTED COPY - PARAGRAPH NUMBERING 
 
1. SUMMARY.  THE SEVENTH SARI/ENERGY SEMI-ANNUAL REVIEW 
MEETING WAS HELD IN COLOMBO, SRI LANKA ON JUNE 1-3, 2005. 
A SARI/ENERGY SPONSORED REGIONAL ENERGY SECURITY REPORT 
PREPARED BY INDEPENDENT EXPERTS IN THE REGION LAID OUT 
RECOMENDATIONS AND ACTIONS FOR ADDRESSING REGIONAL ENERGY 
SHORTAGES AND HEDGING THE RESULTING RISKS TO ECONOMIES. 
ACTIONS INCLUDE BUILDING AND STRENGTHENING REGIONAL 
COOPERATION AND TRADE, AND CREATING REGIONAL 
INFRASTRUCTURE LINKAGES AS SUPPORTED BY THE SARI/ENERGY 
PROGRAM.  THE SARI-ENERGY COALITION, COMPOSED OF REGIONAL 
BUSINESS LEADERS, LAUNCHED A FAVOURABLY-RECEIVED MEDIA 
ROUND TABLE PROMOTING ENERGY REFORMS DEDICATED TO NEEDS 
IN SRI LANKA.  TOOLKITS THAT INCORPORATE WIND, SOLAR AND 
MICRO-HYDRO RESOURCE INFORMATION ARE USED IN SRI LANKA 
AND THE MALDIVES FOR PLANNING AND PROJECT PREPARATION 
PURPOSES. THIS EXPERIENCE AND APPROACH WILL BE REPLICATED 
IN AFGHANISTAN AND PAKISTAN. FIVE SARI/ENERGY SMALL 
GRANTS RESULTED IN MODELS FOR ENERGY SAVINGS IN RICE 
MILLING, CREATION OF TWO REGIONAL RESOURCE CENTERS, 
RENEWABLE ENERGY OPTIONS AND COST-EFFECTIVE COMMUNITY 
DISSEMINATED ENERGY/WATER CONSERVATION. 
 
END SUMMARY. 
 
2. THE SEVENTH SARI/ENERGY SEMI-ANNUAL REVIEW MEETING 
WAS HELD IN COLOMBO, SRI LANKA ON JUNE 1-3, 2005. IN 
TOTAL 68 PARTICIPANTS ATTENDED OF WHICH 28 WERE HOST 
COUNTRY STAKEHOLDERS FROM AFGHANISTAN, BANGLADESH, 
BHUTAN, INDIA, MALDIVES, NEPAL, PAKISTAN AND SRI LANKA. 
OTHER ATTENDEES WERE REPRESENTATIVES FROM USAID 
WASHINGTON AND SOUTH ASIA FIELD MISSIONS, STATE 
DEPARTMENT AND U.S. EMBASSIES IN SOUTH ASIA, U.S. 
DEPARTMENT OF ENERGY, WORLD BANK, AND IMPLEMENTING 
CONTRACTORS AND GRANTEES. 
 
3. THE MAIN THEMES OF THIS MEETING INCLUDED; 
(A) REVIEW OF IMPLEMENTATION PROGRESS UNDER PARTNER 
WORK PLANS 
(B) STATUS OF PROGRAM EXPANSION TO PAKISTAN AND 
        AGHANISTAN 
(C)FUTURE DIRECTIONS IN PROGRAM PLANNING AND 
        GOVERNANCE 
 
4. HOST COUNTRY STAKEHOLDERS IN THEIR FEEDBACK REGARDING 
PROGRAM ACHIEVEMENTS OF SARI/ENERGY WERE UNANIMOUS THAT 
THEIR COUNTRIES NOW ENJOY MORE OPEN, COLLEGIAL AND 
AND 
PRODUCTIVE DIALOGUES ON ENERGY TRADE, SECURITY, AND 
REFORM. STAKEHOLDERS BETTER UNDERSTAND THE FACTS AND 
ISSUES NOW AND ARE TAKING OWNERSHIP OF, AND 
RESPONSIBILITY FOR, THE PROBLEMS THAT THE REGION FACES IN 
MOVING FORWARD WITH ENERGY COOPERATION AND DEVELOPMENT. 
 
5. ILLUSTRATIVE EXAMPLES OF RESULTS THAT WERE DIRECTLY 
LINKED TO SARI/ENERGY INTERVENTION INCLUDED THE SIGNING 
OF A MEMORANDUM OF UNDERSTANDING BETWEEN BANGLADESH AND 
INDIA ON TRANSIT OF NATURAL GAS, IN WHICH INDIA AGREED TO 
ALLOW BANGLADESH THE ACCESS TO BHUTAN AND NEPAL 
HYDROPOWER SUPPLIES THROUGH ITS TERRITORY - A WIN-WIN 
STRATEGY FROM AN EARLIER SARI/ENERGY PRE FEASIBILITY 
REPORT. ANOTHER EXAMPLE WAS THE ACCEPTANCE AND 
IMPLEMENTATION BY THE SRI LANKAN GOVERNMENT OF A 
SUSTAINABLE GUARANTEE FUND FOR ENERGY EFFICIENCY 
PROMOTION BY THE PRIVATE SECTOR AS RECOMMENDED BY A 
SARI/ENERGY REPORT. THE GOVERNMENT OF SRI LANKA ALREADY 
PROVIDED INITIAL FUNDING AND OTHER DONORS ARE CONSIDERING 
CONTRIBUTIONS. THERE WERE MANY OTHER RESULTS DISCUSSED 
OVER THE COURSE OF THE EVENT. 
 
6. CONTRACTORS AND GRANTEES OF SARI/ENERGY, NEXANT INC., 
U.S. ENERGY ASSOCIATION, U.S. CHAMBER OF COMMERCE, 
WINROCK INTERNATIONAL, AND U.S. NATIONAL RENEWABLE ENERGY 
LABORATORY PRESENTED THEIR ACCOMPLISHMENTS AND LESSONS 
LEARNED AND PROVIDED ILLUSTRATIVE FOLLOW-ON ACTIVITIES. 
EMPHASIS WAS ON ENGAGEMENT WITH THE NEWEST MEMBERS OF THE 
PROGRAM - AFGHANISTAN AND PAKISTAN. FOLLOW - ON 
ACTIVITIES PLANNED BY THE PARTNERS INCLUDED POWER 
WHEELING TRADE ANALYSIS; ESTABLISHMENT OF DISTRIBUTION 
UTILITY BENCHMARKS; CAPACITY BUILDING ON REFORMS, UTILITY 
MANAGEMENT AND RENEWABLE ENERGY;CONTINUATION OF 
PARTNERSHIPS TO STRENTHEN INTER-COUNTRY DIALOGUES ON 
REFORMS, REGULATION AND UTILITY MANAGEMENT;CREATING AN 
ENABLING ENVIRONMENT FOR GRID CONNECTED WIND AND 
FACILITATION OF RURAL ENERGY PROJECTS. PLANNED ACTIVITIES 
ON POLICY AND ADVOCACY EFFORTS INCLUDE DEVELOPING POLICY 
PAPERS, ORGANIZING MEDIA ROUND TABLE EVENTS AND AWARENESS 
CAMPAIGNS ON REFORMS, REGIONAL ENERGY MARKETS AND 
FINANCING, CROSS BORDER ENERGY TRANSFER, AND POWER 
QUALITY AND RELIABILITY. 
 
7. A SARI/ENERGY SPONSORED REGIONAL ENERGY SECURITY 
REPORT PREPARED BY INDEPENDENT EXPERTS IN THE REGION LAID 
OUT RECOMMENDATIONS AND ACTIONS FOR ADDRESSING REGIONAL 
ENERGY SHORTAGES AND HEDGING THE RESULTING RISKS TO 
ECONOMIES.  THESE ACTIONS INCLUDED BUILDING AND 
STRENGTHENING REGIONAL COOPERATION AND TRADE, AND 
CREATING REGIONAL INFRASTRUCTURE LINKAGES SUPPORTED BY 
THE SARI/ENERGY NETWORKS. THE REPORT IDENTIFIED ISSUES 
WHICH NEED TO BE ADDRESSED IN THE CONTEXT OF REGIONAL 
ENERGY SECURITY, SUCH AS THE ESTABLISHMENT OF LARGE 
ENERGY PROJECTS WITH REGIONAL SCOPE AND IMPACTS, 
IMPLEMENTING A REGIONAL PROCUREMENT STRATEGY FOR 
PETROLEUM PRODUCTS AND A STRATEGIC REGIONAL PETROLEUM 
RESERVE, ESTABLISHING A REGIONAL FACILITY FOR TRAINING 
AND EQUIPMENT TESTING, DEVELOPING AND EXPANDING RENEWABLE 
TECHNOLOGY APPLICATIONS,AND EXCHANGE OF INFORMATION ON 
NEW TECHNOLOGIES INCLUDING CLEAN ENERGY, RENEWABLES AND 
HYDROGEN FUEL. IN ORDER TO FACILITATE THE ACTIONS, THE 
EXPERTS RECOMMENDED ACTIVITIES SUCH AS: SETTING UP A 
REGIONAL INSTITUTION WHICH WOULD FOCUS ON AND TAKE ACTION 
ON SOUTH ASIAN ENERGY SECURITY; ESTABLISHING DEVELOPMENT 
FINANCES TO PROMOTE INTER-COUNTRY INVESTMENT AND JOINT 
VENTURE INVESTMENTS; ORGANIZING INTER-GOVERNMENTAL 
COMMITTEES/WORKING GROUPS TO PROMOTE REGIONAL ELECTRICITY 
AND NATURAL GAS GRIDS; AND DEVELOPING A MASTER PLAN FOR 
THE RATIONAL UTILIZATION OF HYDROELECTRIC RESOURCES OF 
THE REGION. 
 
8. THE SARI-ENERGY COALITION, COMPOSED OF REGIONAL 
BUSINESS LEADERS, LAUNCHED A FAVOURABLY-RECEIVED CAMPAIGN 
AND A MEDIA ROUNDTABLE FOCUSED ON THE NEED FOR PUBLIC 
PRIVATE PARTNERSHIPS TO PROMOTE REFORMS IN SRI LANKA. 
THE SARI/ENERGY REGIONAL ENERGY PARTNERSHIP PROGRAM 
REPORTED SUCCESS OF THE REGULATORY PARTNERSHIP IN 
CREATING A CADRE OF KNOWLEDGEABLE REGULATORS IN THE 
REGION AFTER INTERACTION WITH THEIR U.S. AND SOUTH ASIAN 
COUNTERPARTS. SUCCESSES WERE REALIZED IN THE MEDIA 
PARTNERSHIP THROUGH BETTER REPORTING ON THE IMPACTS OF 
GOOD ENERGY GOVERNANCE, SUCH AS, HIGHLIGHTING THE 
BENEFITS OF PUBLIC-PRIVATE PARTNERSHIPS IN SRI LANKA AND 
THE IMPORTANCE OF THE REFORMS OF THE CEYLON ELECTRICITY 
BOARD TO ATTRACT INVESTMENT.  PLANS ARE UNDERWAY TO 
DEVELOP A PARLIAMENTARIAN PARTNERSHIP TO IMPROVE THE 
QUALITY AND RELAVANCE OF ENERGY LEGISLATIVE ACTIONS IN 
SOUTH ASIA BY SHARING THE EXPERIENCES OF PARLIAMENTS IN 
SOUTH ASIA AMONG THEMSELVES AND WITH THE UNITED STATES 
CONGRESS AND STATE LEGISLATORS. 
 
9. THE COMPLETION OF FIVE OF THE 34 SMALL GRANTS 
AWARDED BY SARI/ENERGY HAS RESULTED IN MODELS FOR ENERGY 
SAVINGS IN RICE MILLING, CREATION OF TWO INTERNET BASED 
REGIONAL RESOURCE CENTERS ON ENERGY EFFICIENCY MANAGED BY 
THE SRI LANKA ENERGY MANAGERS ASSOCIATION (SLEMA), ENERGY 
SECTOR REGULATION MANAGED BY THE ADMINISTRATIVE STAFF 
COLLEGE OF INDIA (ASCI), RENEWABLE ENERGY OPTIONS AND 
COST-EFFECTIVE COMMUNITY DISSEMINATED ENERGY/WATER 
CONSERVATION. THE PROCESS OF SELECTING 3-5 PROPOSALS FOR 
AFGHANISTAN AND PAKISTAN IS UNDERWAY. 
 
10. TOOLKITS THAT INCORPORATE WIND, SOLAR AND MICRO- 
HYDRO RESOURCE INFORMATION FOR PLANNING AND PROJECT 
PREPARATION PURPOSES ARE USED IN SRI LANKA AND THE 
MALDIVES. THIS EXPERIENCE AND APPROACH WILL BE REPLICATED 
IN AFGHANISTAN AND PAKISTAN TO CREATE RURAL ENERGY 
PLATFORMS TO PROVIDE ELECTRICITY TO REMOTE VILLAGES. 
 
11. THE INTERNAL USG AND PARTNERS DISCUSSION ON THE 
FINAL DAY FOCUSED ON THE UPCOMING PROGRAM REVIEW.  THE 
EXTENSIVE USE OF LOCAL CONSULTANTS AND EXPERTS WAS 
HIGHLIGHTED; OPTIONS FOR THE LOCATION OF THE PROGRAM AND 
MANAGEMENT STRATEGIES WERE CONSIDERED; MECHAMISMS TO 
PROMOTE TRANSFER OF KEY MESSAGES TO WASHINGTON D.C. WILL 
BE REVIEWED AND IMPROVED; AND A REVIEW OF SARI/ENERGY 
INPUTS IN RELATION TO MISSION NEEDS WILL BE UNDERTAKEN TO 
ENSURE THAT DUPLICATION IS AVOIDED AND VALUE IS ADDED. 
REPRESENTATIVES OF AID/WASHINGTON AGREED ON THE NEED FOR 
USG INVOLVEMENT IN THE ENERGY SECTOR IN SOUTH ASIA, AND 
ALIGNMENT OF PROGRAM GOALS AND OBJECTIVES WITH U.S. 
FOREIGN POLICY INTERESTS. 
 
12. THIS CABLE HAS BEEN CLEARED BY USAID AND/OR EMBASSY 
REPRESENTATIVES FROM ALL PARTICIPATING POSTS. 
 
ENTWISTLE