Energy Security in South Asia

Energy Security in South Asia

16 February 2016

South Asia is the fastest growing region in the world, with a healthy growth rate of 7 percent in 2015, (projected to increase to 7.6 percent in 2017). The growing population and industrialization in the region has led to a tremendous surge in the demand for energy resources. The energy demands in South Asia are expected to grow at an annual growth rate of 5%, with households and industrial sectors serving as the major sources of energy consumption.

Lagging behind in power generation and natural resource wealth, South Asia is an energy-deficient region. However, over the last few years, countries like India and Bhutan have worked together to produce a power-surplus Bhutan, which contributes to Thimphu’s growth. India continues to import much of its coal, and thermal power forms the mainstay of power generation in  India. Countries like Nepal are eager to develop their hydropower potential, while regions like Pakistan are importing electricity from Central Asian states. A study by Asian Development Bank (2013) highlighted that domestic resource endowments, coupled with the present pace of energy generation/supply are not sufficient to meet the growing energy demand in the region. The intermittent power availability has constrained the sectoral and regional growth. The major challenges for power sector are in the form of poor/underdeveloped energy infrastructure, political differences among others have exacerbated the cost of energy generation. Extensive cross-border electricity links (such as those between India and Bhutan), and greater capacity building in the power generation segment could help nudge South Asia towards better producing energy.

The current issue of the SARCist focuses on ‘Energy Security in South Asia’. Mr. Padu S. Padmanaban argues that despite significant potential gains of expediting regional cooperation efforts, the region has observed restricted cooperation. He proposes to accelerate the bilateral India-Nepal electricity linkages as he views cross-border electricity trade, both at bilateral and multilateral levels, to be a fundamental part of regional resource management. These views are shared by Dr. Nimmi Kurian, who regards Border States to be emerging as India’s new power brokers. She has highlighted in her article the role of local state actors and their resolve for institutional bargaining with the Centre for access to regional energy markets.

Reiterating the relevance of regional energy cooperation through energy trade, Dr. Anasua Basu Ray Chaudhary considers regional trade as the key to ensure energy security in South Asia. Mr. Kashyap Arora, however, presents an overview of present institutional mechanisms for energy cooperation initiated by individual SAARC governments, at regional and bilateral levels.

Mr. Husain A. Babur has put forth the financial and economic implications of falling oil prices for regional energy markets and highlights the existence of a huge opportunity for the government of SAARC countries to do away with the traditional model of energy subsidies.

Ms. Lydia Powell emphasizes that the problem of ‘energy security’ is an economic problem that cannot be addressed by resource supply-augmenting solutions. She recommends an adequate attention to wealth-creation through investment in human capital that is crucial to energy efficiency in South Asia. Ms. Malancha Chakrabarty underlines that state-centered approach towards energy security (based on government-to-government interactions) is one of the major challenges to energy security in South Asia.

Dr. Priyantha Wijayatunga accentuates for regional cooperation in the area of clean and renewable energy. He highlights that despite the huge existing endowments of hydropower resources in South Asian economies like Bhutan and Nepal, the efforts to develop these resources have been minimal. He proposes to gradually open-up Indian power market and accommodate power trade beyond India, therefore providing opportunity and flexibility to other nations in accessing the regional power market.

Happy Reading!

Rajiv Kumar

Cross Border Electricity Trade in South Asia: Some Strategic Imperatives

Padu S. Padmanabhan, Former Program Director, South Asia Regional Initiative for Energy (SARI/E), USAID & Sr. Energy Advisor

Over the last two decades South Asia (SA) has been one of the fastest growing regions in the world, with an average annual growth rate of 6% as measured by GDP per capita. Yet despite this impressive macroeconomic growth, the energy sector in the region has not been able to keep pace, and continues to experience chronic problems of shortage of supply and poor quality of service. Indeed South Asian nations face a stark energy security dilemma: If they do not expand their energy supply capacities to meet growing demand, they remain static and undeveloped. On the other hand, if they accelerate economic development, they exacerbate their energy supply crunch. South Asia’s energy security dilemma is one of the signal energy challenges of the 21st century critical to the economic future of almost 1.5 billion people and the political future of one of the world’s most dynamic regions. Given this dilemma, the only long-term solution is the sustained increase in regional energy cooperation.
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India’s New Power Brokers? Border States and Regional Energy Trade in South Asia

Nimmi Kurian , Associate Professor, Centre for Policy Research, New Delhi

There are early signs that border states could be emerging as India’s new power brokers with the potential to drive cross-border energy trade in South Asia. This is a part of a longer shift in Indian foreign policy towards a greater sub-regional engagement with its neighbourhood. While regional trading blocs and arrangements have been a common phenomenon, both the bilateral and the regional levels have tended to bypass the sub-regional level with its local governance particularities and stakeholders. Initiatives such as the BIMSTEC (Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation), the Mekong Ganga Economic Cooperation (MGC), and the Bangladesh-China-India- Myanmar Economic Corridor (BCIM EC) focus inter alia on improving energy infrastructure and promotion of intra-regional power trade. The prospects for a South Asian power grid are also set to get a further boost following the SAARC agreement in 2014 on enhancing integrated power transmission connectivity.
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Regional Trade is the key to ensure energy security in South Asia

Anasua Basu Ray Chaudhury , Fellow, Observer Research Foundation, Kolkata

The World Energy Assessment overview (2004) reveals energy security as “a term that applies to the availability of energy at all times in various forms, in sufficient quantities, and at affordable prices, without unacceptable or irreversible impact on the environment”. These conditions must prevail over the long term if energy is to contribute to sustainable development. It is not only about securing access to primary energy but also more importantly, securing the reliable final energy supplies that depend on a number of factors like: market reforms, alleviation of transportation hazards, protection of power plants, power grids and energy conservation. These concerns are often related to domestic policies with implications for international politics. The question of energy security has slowly but surely occupied the centre-stage of the national security discourse at the turn of the 21st century almost in all the countries of the world and South Asian states are no exception to it.
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An overview of energy cooperation and its challenges in South Asia

Kashyap Arora, Research Associate, Centre for Policy Research

South Asian region which includes countries such as Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, and Sri Lanka, is one of the most populous regions of the world with a relatively small land mass and a high incidence of poverty. Most of the South Asian economies are also currently in the process of achieving their ambitious poverty reduction goals while their middle class urban population along with varied industrial, commercial, and transport sectors continue to grow. Taking these factors into consideration, energy security, which refers to a nation’s ability of securing uninterrupted energy resources at an affordable price, remains an indisputable reality for economic development throughout South Asia (1).

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Low energy prices are not forever

Husain A. Babur , Senior Advisor (Power), USAID Support to Privatization Activity in Pakistan.

Energy is a “big boys” game – capital intensive and prone to exogenous shocks. The need to provide safe and affordable power is at best a “utopian” dream or a pit of myriad false steps, each crumbling to new depth. The fourth industrial revolution echoed at Davos Economic Forum, this January, rides the shoulders of the electron Atlas – electric power.

Wind power, solar power and regional energy grids again totter to the drastic fall in oil prices. Few now forecast a rise beyond $60 per barrel in the next decade.  Many are predicting winners of the cheap oil. Reserve Bank of India, Governor Raghuram Rajan interviewed at Davos by CNN said, India needs to put the (oil) savings to “productive” use, a wise comment. At the sametime, a look at India’s trading partners (USA, UAE, China, Saudi Arabia and Brazil) shows why India or other developing countries with similar trading and economic profiles may fail to lock in the advantage of the falling oil prices:
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Regional Cooperation for Clean Energy Development

Priyantha Wijayatunga, Principal Energy Specialist, South Asia Department, Asian Development Bank

Exploiting the large primary energy potential in South Asia and the vast hydropower resources in Nepal and Bhutan in particular is critical in the efforts of the electricity industry to supply the fast expanding demand in the region at the lowest cost with a minimum impact on energy security and the environment.  Even though there are numerous large hydropower sites in Nepal, efforts to develop these resources have been minimal.  In the case of Bhutan, a few of such sites have been developed with a large potential yet to be exploited. At the same time, the potential for development of other renewable energy sources such as biomass, wind and solar power for electricity generation is enormous across all the countries in the South Asia region.
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Energy security in South Asia

Malancha Chakrabarty, Associate Fellow in Observer Research Foundation, New Delhi

South Asia is at a critical juncture today. Development is the overriding priority for the region because of the high incidence of poverty but energy is proving to be a critical constraint. The entire region is suffering from an acute energy crisis. There are three major concerns with regard to the energy sector. Firstly, South Asian countries are confronted with the huge challenge of securing energy to sustain rapid economic growth and meeting the rising aspirations of the people. Secondly, the region is home to a huge population that lacks access to clean forms of energy. A large section of the population, particularly in rural areas lacks access to electricity and relies on the traditional use of biomass for cooking. With limited domestic energy sources, most South Asian countries are also highly dependent on energy imports, particularly crude oil, from other regions. The mismatch between energy demand and resource endowments in individual countries builds a strong case for energy cooperation.
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The elusive pursuit of regional cooperation for energy security in south Asia

Lydia Powell, Head, ORF Centre for Resources Management and Senior Fellow, ORF (Observer Research Foundation) New Delhi, India

Regional cooperation among South Asian countries to facilitate sharing of energy resource endowments as well as sharing of energy infrastructure such as gas pipelines and electricity transmission lines has been promoted by many agencies including the Energy Sector Management Assistance Programme (ESMAP) of the World Bank and the South Asia Regional Initiative for Energy (SARI/Energy) of USAID for decades.  Closer to home, the South Asian Association for Regional Cooperation (SAARC) has promoted the concept of an ‘energy ring’ to facilitate cooperation in the region.  It was believed that energy abundant small countries could potentially export their way out of poverty, given the large and growing energy starved market of India in the neighbourhood. In addition, it was believed that an integrated South Asian market could command better bargaining power in securing supplies, particularly hydrocarbons from the energy abundant region of West Asia.  The broader vision was that energy integration would pave the way for integration of South Asian economies.  Despite the economic and political attractiveness of these ideas, cooperation and regional energy trade have proved to be elusive in South Asia barring some success in bilateral electricity trade between India and Bhutan. Bilateral electricity trade has also been initiated between India and Bangladesh and India and Nepal in the past two years but the sum of these parts does not amount to regional integration.
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By Naresh Sagar

Mentor MSME, Motivator, Media Event Org, Management fiscal & Water management.Social Media branding,Internet broadcasters,Propunder of Indian Philosophy

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