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Greater regional cooperation urged to meet power needs

The SAARC region has witnessed encouraging GDP growth of 5.5percent to 6.5percent during 2004-2010. To keep the region on the trajectory of economic growth, uninterrupted supply of energy at an affordable price, is the key to sustaining it. At present, amongst the eight SAARC nations, India, Pakistan, Nepal and Bangladesh are faced with an acute shortage of electricity to the tune of 40000 MW.

According to a policy paper prepared by the SAARC Chamber of Commerce and Industry (SAARC CCI) titled, “Energy Policy: The way forward to Energy Trade in South Asia”, South Asia was ranked as one of the regions with the lowest per capita consumption of energy, particularly in the form of electricity, despite the fact that the region is blessed with enormous energy potential and can generate enormous amounts of electricity.

Presently, the South Asian countries are producing electricity that is less than 50 percent of their available potential.

The SAARC countries apply various energy mixes, predominantly using imported oil, which in turn, increases their import bill. Because of the eight to twelve hours of power cuts in Bangladesh, Nepal and Pakistan, commercial businesses have to pay 35 per cent extra, through the use of diesel and oil generators, adding to their operational expenses.

Most countries, with the exception of India and Pakistan, are predominantly dependent on a single commercial energy form- “Oil” for Afghanistan (78percent), Maldives (100percent), Nepal (67percent), and Sri Lanka (79percent); hydropower for Bhutan (50percent); and natural gas for Bangladesh (74 percent). Such heavy dependence on a single energy resource not only limits the options of meeting the diverse energy needs, but also increases energy security concerns. Interestingly, despite the substantial coal resources available in the region, particularly in India and Pakistan; some SMSs are importing coal. India, for example, imported 28 million tons of coal in 2006. This is mainly due to the poor quality of domestic coal and technological constraints for improving its quality.

All SAARC member states need more power for economic growth, but all of them, except Bhutan, are facing a shortage of electricity. At present, Bangladesh, India and Afghanistan need to import power from their neighboring countries. India’s demand is expected to rise by 7.4 percent as it had a peak shortage of 9 percent in 2011. Many member states are now exchanging electricity, as in the case of the Nepal-India power exchange, the Bhutan-India power exchange, the Bangladesh-India power exchange (250MW+250MW) from Baharampur to Bheramara (An on-going programme), the Bangladesh-India Power Exchange from Tripura (the proposed programme), the India-Sri Lanka Power Exchange (at the planning stage), Power from Central Asia through Afghanistan-Pakistan-India, and the Bangladesh-Myanmar power exchange. There is a dire need to make efforts for the success of the proposed SAARC Power Grid and the SAARC Energy Ring to be functional in its original concept and plan, to meet the requirements of mutual cooperation and sharing of resources for a sustainable future in the region.

Key challenges faced by the energy sector in South Asia include increasing energy deficits, single fuel dominance in the energy mix, rising import dependence, and lack of requisite energy infrastructure. Augmenting the energy supply and diversifying the fuel basket requires inter- and intra-regional energy trade.

In the power sector, the present installed capacity of the region (from all fuel sources) is 222,142 MW in relation to the present suppressed demand, which is greater than 300,000 MW. Over 75 percent of the petroleum products in the region are imported. The estimated total Hydropower potential is 299,330 MW, which depicts the energy potential far in excess of the requirement. Bhutan and Nepal have a huge hydro-electric potential, while Pakistan, India (in the North-east) and Myanmar (near Bangladesh) have about 59000, 60000 and 7000 MW hydro-electric potential respectively.

Electricity generation from renewable energy sources is predicted to grow at an average rate of 5 percent annually, which would increase the renewable share of the region’s total generation from 16 percent in 2011 to 20 percent in 2035. Within the ASEAN, the International Energy Agency (IEA) predicts that the total “realizable potential” for renewable electricity in 2030 is 1.8 times the total level of electricity consumption in the region in 2007. Some of the SAARC Member States (SMS) have considerable experience in using environment-friendly renewable energies. Policies for the sharing of such environment-friendly technologies could play a greater role in reducing energy imports and air pollution, and could be incorporated in the policies for sustainable development, environmental protection and improvement in public health.

The existing intra-regional energy trade among the SMSs is limited to electricity trade between India and Bhutan, India and Nepal. Overcoming the inertia, assessing further possibilities, and harnessing them is imperative, whilst taking into account the geopolitical, economic and technical risks. Encouragingly, governments of the region are engaged in a bilateral dialogue to resolve the issues pertaining to economic relations. Despite the bilateral developments in South Asia, national policies and the political mindset towards the concept of energy security have continued to be major inhibitors of the energy trade.

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