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.