South Asia’s Energy Crisis
Cooperation Is The Way Out

By Khilendra Basnyat

SOUTH Asia abounds in some or the other energy sources such as water, coal and gas. The mountainous terrain of Bhutan, India, Nepal and Pakistan has huge hydropower potential. It has been estimated that Bhutan, Nepal and northeast India have hydropower potential of over 120 GW.

Gas Reserves

Bangladesh has abundant gas reserves, which can avail of the opportunity of gas trade with Bhutan, India and Nepal. In exchange of gas, Bhutan, India and Nepal could export hydropower to Bangladesh.

India is rich in coal reserves, which can be used to meet the rising demand for power in South Asian countries. This would help meet the peak load demands in Bangladesh and Pakistan, working to the advantage of all these three countries.

In the past few decades, Pakistan has greatly increased its power generating capacity based on natural gas through independent power producers. For this reason, it can now supply over 3000 MW power to India.

Sri Lanka can optimise power supply through a common power grid due to its link with South India, Likewise, a common power grid could lower the transportation costs for supplying natural gas by pipelines and Pakistan could serve as the gateway for furnishing natural gas from India and Central Asia.

In fact, the per capita consumption of energy among the south Asian countries continues to be low and this energy shortage has resulted in a low-growth equilibrium in this region.

According to a prediction made by the International Energy Agency, some years ago, South Asia will have the highest growth rate of energy consumption by 2010. However, the predictions for demand and supply only indicate the broad trends, which are likely to emerge because price elasticity, infrastructure and technological development have to be considered.

The rate of growth of energy consumption in the past few decades for South Asia was 5.5 per cent per annum. In 1996 alone, India and Pakistan accounted for 3.5 per cent of the primary energy consumption.

The per capita electrical consumption has risen over time. However the figure of 313 MW for South Asia as a whole is still inadequate compared to world standards. It is even lower than the figure for sub-Saharan Africa. What is more, losses are incurred through transmission and distribution where enormous losses are due to theft and pilferage.

The demand for electricity is expected to rise at the rate of 6.7 per cent per annum in the South Asian region as a result of increasing income and rural electrification.

In accordance with the government of India’s own estimates the peak demand shortfall is about 30 per cent the most affected being the northern region at 38.5 per cent. This shortage is costing India 2 per cent of its national income.

By 2011-12, India would have to double its generating capacity to 1,76,647 MW in order to meet the peak electricity demands.

Pakistan is facing, power shortages, with the peak demand shortfall of electricity causing economic losses up to 2000 MW. However, the predicted demand and generating capacity targets for Pakistan depicit that it will have surplus power in the coming years.

In Bangladesh, the average electricity demand is 1,700 MW despite the fact that the peak load demand is 1,900 MW. The Fifth Five-Year Plan sets the future demand at 4,051 MW by 2002, which could need another 3,319 MW capacity to increase the total generating capacity to 5.759 MW. This would entail about $2.17 billion, making it imperative for private investors.

In Nepal, electricity consumption increased by 13.3 per cent during 1983-94. The shortfall in the next couple of years is likely to be 51 per cent of the peak load capacity. Energy demand in this country is slated to grow at the rate of 12 per cent in the years to come.

In Sri Lanka, the installed thermal power capacity is 427.5 MW and hydropower capacity is 35 MW. The electricity reach is per 1.8 million consumers, accounting for 45 per cent of the total households.

In 1997, in Sri Lanka, energy demand reached 42,000 GW hour and has been increasing at the rate of 7.8 per cent per annum. However, the northern and eastern provinces have been lagging behind the rest of the country in that energy demand due to militancy problems since the past few years. The government plans to diversify the sources of energy supply by establishing coal plants after 2001. Here, mutual cooperation between India and Sri Lanka would be able to meet the demand and supply gaps in both the countries.

Bhutan and Nepal posses hydroelectric potential of 30,000 MW and 83, 000 MW respectively. These can be exploited to export power to India and Bangladesh and earn precious foreign exchange, which can be utilised for diverse development activities.

There is a potential for trade energy, which should be exploited in such a way that the energy gap within the region is bridged. Apart from this, industrialisation and economic development in the region cannot be repected without cost-effective energy source.

Since the South Asian region has its geographical diversity, it has enormous potential for energy production and consumption within the region. The prime movers for cooperation in energy supply come from the endowments among the South Asian countries in this region.

Most South Asian countries have the advantage of being created on a single landmass, which is convenient for planning and developing integrated power infrastructure such as power grid and gas pipelines. Such a network of electricity grid and gas pipeline will enhance energy, security, reduce fuel cost and help in the more efficient harnessing of energy resources. In addition, for small countries like Nepal and Bhutan, regional cooperation is indispensable because the only market available for their power is India.

South Asian countries mainly rely on bio-mass fuels. However, with the growing levels of per capita energy consumption, other energy sources will have to be exploited. This requires coordinated action by all the South Asian countries. For example, the hydro-electricity potential can be fully utilised only if an integrated market is developed. Likewise, gas pipelines are an economically viable prospect for this region. However, they require transit through more than one country.

Since South Asian countries have a similar structure of the economies, a coordinated approach would be in the larger interest of these countries. By pooling resources and having fair-trading arrangements these countries can come up with a win-win prospect.

South Asian countries’ power sector has been the exclusive preserve of the public section and would require major changes in policies. Hence attractive terms would be required for foreign investment.

If South Asian countries adapt uniform norms, they will be to the mutual advantage of all concerned. Moreover, they would also gain by integrating their environmental policies for a better future of these countries.

Energy Cooperation

If the present trend persists, there will be more energy crisis in South Asia in the years to come. In order to reduce rising energy crisis, South Asian could take lessons from ASEAN in energy cooperation. This is not to say that South Asia has no history of energy cooperation at all. This region abounds with instances of mutual cooperation in this sector. However, it is not up to the level possible. Actually, the growing energy demand scenario in this region gives a added incentives for cooperation in the energy areas.

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