ENERGY COOPERATION KEY TO ECONOMIC DEVELOPMENT

KANWAL SALEEM
(feedback@pgeconomist.com)
Jan 31 - Feb 6, 20
11

Comprising one-fifth of world's population, the countries in the South Asian region are currently known for their expanding economies and large populations. Bangladesh, India, and Pakistan are the three largest South Asian countries in terms of population, gross domestic product (GDP), as well as land area.

The energy sector in South Asia region provides both challenges as well as opportunities for regional cooperation to achieve a win-win situation for all member states of SAARC; the ultimate beneficiary will be the people of the South Asia.

Cooperation in energy sector among countries in SAARC can help reduce energy security risks. South Asia is faced with the challenge of meeting its growing energy demand in a sustainable manner but with the limited means in hand.

Recognizing the significant role that energy plays on growth, the South Asian countries are beginning to focus on their energy issues and formulate common energy policies but still a lot is to be done by member states. Only concerted and dedicated efforts could yield results for the ultimate benefit of the people of region.

Due to their rapid growth, the energy demand in the SAARC countries has grown significantly over the years resulting in chronic energy shortages. Like many other countries in the developing world, these countries have only begun to focus on their energy issues and formulating common energy policies.

In 2005, recognizing the pivotal role that energy plays in economic and social development, the 13th SAARC Summit approved the establishment of the SAARC Energy Centre (SEC) in Islamabad. The SEC is mandated to strengthen its member countries' energy capacities by facilitating energy policy coordination through the establishment of common policies. By enhancing regional capabilities, the SEC needs to be a catalyst for economic growth.

In the 16th SAARC Summit, the following strategies were worked out:

* Developing a "Saarc Regional Energy Framework Agreement" for collaboration among the SAARC member states in harnessing indigenous energy resources and procuring energy supplies from other regions to meet their increasing energy needs.

* Promoting cross border investments in the energy sector among the SAARC member states.

* Putting in place investment protection and arbitration mechanisms.

* Sharing of technology, experiences and best practices should form an integral part of this agreement.

* Policies that involve the private sector as strategic partners should also be evolved.

* The existing regional policy development mechanisms need to be effectively utilised for coordination and harmonisation of Saarc member states' energy policies.

* Member states of SAARC should promote renewable energy projects such as wind, solar and biomass, using the latest technology to reduce their dependence on imported fuel.

* Ensuring energy efficiency and demand-side management in the electricity sector should be considered as a priority in the region.

* Establishing a regional forum where professionals engaged in the energy sector, including those in regulatory bodies, generation, transmission, distribution and exploration utilities, could regularly meet and exchange views, ideas, technologies and success stories. Key recommendations from such a regional forum could be examined by the energy ministers to promote effective energy policy in the region.

* Cross-border energy trade is taking place between India, Nepal, Bhutan and Sri Lanka and also between Pakistan and Afghanistan.

Experts told Page that SAARC countries need to draw up a set of guidelines, which can be widely discussed and agreed upon for the region. Such a set of guidelines could answer some of the crucial questions on how to resolve the issues of resources allocation and sharing of benefits, and also on how to resolve issues of regulation or establishing either a regional regulatory framework or letting them emerge through bilateral agreements.

The guidelines should include technology related issues and, most importantly, the cost of infrastructure.

According to them, with a co-integrated energy consumption strategy, SAARC countries may help increase the impact of energy integration if common, mutually beneficial energy policies are designed and implemented. Also, if the energy consumptions are co-integrated, then the countries might have several energy causality relationships.

There was agreement among SAARC countries to focus on harnessing indigenous sources of energy including solar, wind, bio and hydel and strengthening the regional energy related institutions, hence, all the countries need to focus to harness the potential through sincere efforts for the ultimate benefit of people of the region, they said.

They added that Pakistan had already supported the proposal to strengthen the SAARC Energy Centre and implementation of the proposed project providing for energy efficiency and support on renewable energy.

South Asian countries have remained largely energy importers and increasingly faced a serious energy shortfall. They continue to be characterised by low per capita consumption of energy, poor quality of energy infrastructure, skewed distribution and inaccessible and costly energy availability. All these have adversely affected their productive activities, social development, infrastructure progress and investment climate. There has been a strong realisation that availability and accessibility to energy can transform the quality of life, help raise health and educational standards, and retard rural-urban and cross border migration by enhancing the level and pace of income and employment generation.

There are quite revealing variations in the installed capacities of power utilities in South Asia. These variations also reflect the potentialities as based on their natural endowments.

Hydropower has been the most vital source of total installed capacity in Bhutan (100 per cent), Nepal (90 per cent) and Sri Lanka (65 per cent) whereas the thermal power dominates in Bangladesh (95 per cent gas based), India (72 per cent mainly steam based) and Pakistan (71 per cent).

In the composition of end use sectors, the share of industry has been over 37 per cent in South Asia except Pakistan.

The South Asia region has one of the richest sources of hydropower in the world. However, a very small proportion (hardly 15 per cent) of this great regional potential has been exploited so far. There are distinct advantages for South Asian countries to cooperate in the energy sector. These countries together possess vast stores of energy mostly in the form of water resources, oil, forest, coal and gas.

Nevertheless, economic gains based on regional cooperation in the energy sector become a firmly established practice across the regional groupings. Creation of a South Asian energy market and cooperative development of the available diverse energy sources in the region can help increase the level of energy security in the region, experts believe.

Cross border energy trade could lead to effective utilisation of natural resources, increase in reliability of power supply, economy in operation and mutual support during contingencies, bring about large scale transformation in the sectors contributing to economic growth, act as the single most effective confidence building measure (CBM) through the participation of multiple stakeholders, and substantially promote market integration in energy related goods and services.