PAKISTAN: ENERGY CORRIDOR

SHABBIR H. KAZMI
(feedback@pgeconomist.com)
Jan 31 - Feb 6, 20
11

Pakistan has become the focus of attention of foreign investors, technology suppliers and the multilateral financial institutions. On one hand, country's demand for energy products is growing at around 10 per cent and its location between energy-rich and energy-starved countries makes it a natural energy corridor on the other.

Pakistan's Energy Security Plan (2005-2030) forecasts a seven-fold increase in total primary consumption and an increase of more than eight-fold in the requirement for power over the next 25 years. This requires huge investment as well as credit for undertaking mega energy projects. This includes construction of two gas pipelines and a few large size refineries in Pakistan. Pakistan also needs huge investment for construction of mega size hydroelectricity projects as well as installations of wind mills to contain dependence on thermal power plants, which are not only expensive but also cause pollution. If an elaborate energy mix is prepared using coal, hydel and windmills, Pakistan can become an exporter of electricity.

Pakistan had the potential to become a trade and energy corridor for Central Asia, South Asia, the Gulf, and the rapidly progressing western parts of China. Gwadar Port is the vital factor in turning Pakistan into a regional trade hub.

Since bulk of China's oil is purchased from the Arabian Peninsula. Gwadar provides the lowest cost logistics. Pakistan already has a mid country refinery and two pipelines to send crude and white oil products. On top of this, China and Pakistan are linked by 'all season KK Highway.

However, to achieve the objective Pakistan will have to put in place high quality of shipping services and connect the port to the upper parts of the country with an elaborate network of road and railway infrastructure. Pakistan has potentials due to its unique geographic position to emerge as one of the most important energy corridors of South Asia and Middle East.

The corridor would include developing oil refining and storage capacity in Pakistan's coastal areas. The proposed corridor includes building a network of roads and pipelines from central and western Asia, one component of which would be a Turkmenistan-Pakistan pipeline that could be extended to India, Myanmar, and China.

Pakistan and China have signed a memorandum on building an "energy corridor" to allow China access to the oil and gas resources of Central and Western Asia.

The memorandum of understanding, signed by officials, also sets out China's support for oil and gas exploration in Pakistan, and helps Pakistan to develop its coal and lignite as well as renewable energy resources. The viability and the potential of trade and energy corridor are huge and China certainly wants to use this.

The United States last month offered support for Pakistan's energy sector. But, while the United States has offered India help with its civil nuclear program, Washington is not ready to treat Pakistan equally. In such a scenario, Pakistan has no option but to look towards its most trusted friend China. Pakistan is seeking Chinese cooperation in building more nuclear power plants. Nuclear energy currently accounts for a tiny proportion of Pakistan's power generation for the time being but has enormous potential.

TAPI will link three of the eight SARRC members namely Afghanistan, Pakistan and India. While not much progress has been achieved, the probability of completing the project remains high despite war-torn Afghanistan.

One fails to understand the US as well as Indian stance towards Iran-Pakistan-India gas pipeline. The US has offered India nuclear technology for fizzling out the project but has allowed India to invest heavily in Iran in the construction of Chabahar port and linking it to Afghanistan and Central Asian countries. Some critics say that construction of Chabahar port and road and railway link is aimed at undermining the importance of Pakistan and Gwadar port in which China has made substantial investment. However, Pakistan offers the most cost effective way to Afghanistan and Central Asia.

Some critics say that Indian effort to control SAARC has remained the biggest hurdle. If Pakistan and India join hands, many woes of the member countries can be overcome. Ironically, India wishes to keep the smaller countries under its thumb and it is being supported by the US. This includes Indian ambition to attain a permanent seat in the UN Security Council.

Pakistan has a genuine complaint that India is not releasing water for Pakistan as per Indus Water Treaty. In fact, it is constructing more and more dams to usurp Pakistan's water share. It seems part of Indian strategy to weaken Pakistan. It has already made inroads into Afghanistan and creating dislike for Pakistan among the Afghans by creating an impression that Pakistan is imposing war on Afghans whereas India is busy in undertaking development work.

It will be better for the peace and development of South Asia if India removes many of the irritants identified by its neighbors and SAARC members. European Union and many other regional groups have attained progress only through cooperation and not by trying to dominate the smaller member countries. This created win-win situation for all. If India gives up it dream of dominating the region, stops accumulating arsenal and starts extending helping hand to its neighboring countries, all the SAARC countries could become more prosperous.

The economic integration will be possible only when the countries get uninterrupted supply of energy products at affordable price.