The so­cial fab­ric is in tat­ters and in­dus­trial progress is slow­ing down across South Asia - and all be­cause power re­sources are not be­ing ad­e­quately ex­ploited.

Southasia - - FRONT PAGE - By Shab­bir H. Kazmi The writer is an economic an­a­lyst. He writes for var­i­ous lo­cal and for­eign pub­li­ca­tions.

The term South Asia refers to eight coun­tries namely Afghanistan, Bangladesh, Bhutan, In­dia, the Mal­dives, Nepal, Pak­istan and Sri Lanka. Th­ese coun­tries are also a part of the South Asian As­so­ci­a­tion for Re­gional Co­op­er­a­tion (SAARC), a bloc es­tab­lished in 1985. Afghanistan was in­cluded as the 8th mem­ber in 2006. China, Iran and Myan­mar are also seek­ing full mem­ber sta­tus of the bloc.

De­spite en­joy­ing mil­lions of acres of fer­tile land and ro­bust agri­cul­tural and manufacturing bases, the bulk of the re­gion’s pop­u­la­tion lives be­low the poverty line. Of­ten South Asia is termed as the poor­est re­gion in the world af­ter Sub-Sa­ha­ran Africa. While over a quar­ter of the world's poor peo­ple live in Africa, half of them live in South Asia. Ac­cord­ing to a re­port, there are more poor peo­ple in eight In­dian states than in the 26 poor­est African coun­tries.

A World Bank re­port re­leased in 2007 de­scribes South Asia as the least in­te­grated re­gion in the world. Trade among South Asian states was only 2 per­cent of the re­gion's com­bined GDP, com­pared to 20 per­cent in East Asia. Ac­cord­ing to an­a­lysts, due to sim­i­lar cli­matic con­di­tions, soil com­po­si­tion and mindset of the rul­ing jun­tas, th­ese coun­tries com­pete with each other in the global mar­kets. De­spite en­joy­ing close prox­im­ity and of­ten com­mon bor­ders, they have failed to com­ple­ment each other due to mu­tual hos­til­i­ties.

Three of the largest coun­tries by


pop­u­la­tion – Bangladesh, In­dia and Pak­istan, having elab­o­rate agri­cul­tural and manufacturing bases – hardly en­joy cor­dial re­la­tions. This vir­tu­ally closes doors for economic co­op­er­a­tion, par­tic­u­larly in the en­ergy sec­tor, con­sid­ered the life­line of the econ­omy. One of the rea­sons for the pre­vail­ing sit­u­a­tion is a ‘trust deficit’ as the hawks in th­ese coun­tries try to show that any co­op­er­a­tion in the en­ergy sec­tor will make the smaller coun­try sub­servient to the sup­plier.

One of the prime rea­sons for poverty within SAARC coun­tries is an acute short­age of en­ergy prod­ucts. This be­comes all the more pinch­ing be­cause some of the coun­tries are rich in en­ergy re­sources, fos­sil fu­els as well as re­new­able en­ergy. The an­i­mos­ity among coun­tries en­joy­ing com­mon bor­ders does not al­low them to en­ter into any mean­ing­ful co­op­er­a­tion. Though some of the smaller coun­tries have been more mod­est, the rulers of rel­a­tively big­ger coun­tries be­have rather strangely and con­trary to the ex­pec­ta­tions of their peo­ple.

Bangladesh, In­dia and Pak­istan have am­ple en­ergy re­sources but the non-com­mit­ment of their rulers in ex­ploit­ing th­ese re­sources, in­con­sis­tent poli­cies and gross mis­man­age­ment in the en­ergy sec­tor, have kept their GDP growth rates sub­dued.

In Pak­istan’s case, one could say that the en­ergy cri­sis loom­ing for nearly three decade is the out­come of in­con­sis­tent poli­cies and gross mis­man­age­ment. The coun­try has an ag­gre­gate in­stalled elec­tric­ity gen­er­a­tion ca­pac­ity of nearly 30,000MW but the av­er­age out­put hov­ers around 15,000MW. This trans­lates into 50 per­cent ca­pac­ity uti­liza­tion.

Be­low op­ti­mum ca­pac­ity uti­liza­tion is partly due to the non-avail­abil­ity of fuel and partly be­cause of in­ad­e­quate main­te­nance of power plants. Lately, gas short­age has emerged be­cause of the fail­ure to un­der­take drilling of wells due to poor law and or­der sit­u­a­tion in ar­eas that are rich in oil and gas re­serves. Added to th­ese is the bla­tant theft of elec­tric­ity, hov­er­ing around 30 per­cent, and re­ceiv­ables run­ning into bil­lions of ru­pees – the mother of in­ter-cor­po­rate debt.

Equally shock­ing is the news that In­dia also suf­fers from the same con­tentious prob­lem. The third largest econ­omy of the world has an ag­gre­gate in­stalled gen­er­a­tion ca­pac­ity of 250,000MW but ac­tual gen­er­a­tion is around 150,000MW. A point that dis­tin­guishes the two coun­tries is that while se­ri­ous ef­forts are be­ing made in In­dia to over­come the en­ergy cri­sis, the

ef­forts be­ing made in Pak­istan are only cos­metic.

In­dia is buy­ing elec­tric­ity from neigh­bor­ing coun­tries, has made ar­range­ments to im­port LNG and also suc­ceeded in ac­quir­ing nu­clear en­ergy tech­nol­ogy for civil­ian use from the United States, in ex­change for de­sert­ing the Iran-Pak­istan-In­dia (IPI) gas pipe­line. The other dif­fer­ence

is that In­dia re­mains one of the ma­jor buy­ers of Ira­nian crude oil, de­spite economic sanc­tions im­posed on Iran. It seems that In­dia has so­licited this ex­emp­tion in ex­change for its sup­port for the Chaba­har Port in the Sis­tan-Balochis­tan prov­ince of Iran. This port, along with the road and rail links be­ing con­structed up to Cen­tral Asia pass­ing through Afghanistan, has the po­ten­tial to be­come yet an­other gate­way to the en­ergy rich Cen­tral Asia. It will also un­der­mine the im­por­tance of the Gwadar Port in Pak­istan.

A com­mon irony of the South Asian coun­tries is that all of them are rich in cer­tain types of en­ergy re­sources but of­ten fall vic­tim to my­opic views of their rulers and geopol­i­tics of the re­gion. Pol­icy plan­ners in Pak­istan know the high cost of ther­mal gen­er­a­tion but suc­ces­sive gov­ern­ments have failed in con­struct­ing any mega size dam or hy­dro­elec­tric­ity project since the com­ple­tion of the Tar­bela Dam in the mid-1970s. Wa­ter stor­age ca­pac­i­ties of Mangla and Tar­bela are on the de­cline due to ac­cu­mu­la­tion of silt, re­sult­ing in the ad­di­tion of more fos­sil oil based power plants.

As against this, In­dia has re­mained busy in con­struct­ing dams and of­ten faced al­le­ga­tions from Pak­istan that the con­struc­tion was

in vi­o­la­tion of the In­dus Wa­ter Treaty. It has also suc­ceeded in adding wind and coal-based power gen­er­a­tion to re­duce de­pen­dence on fos­sil oil. In­dia buys a sub­stan­tial quan­tity of hy­del power from its neigh­bor­ing coun­tries.

Bangladesh may not be rich in oil but has sub­stan­tial re­serves of nat­u­ral gas. How­ever, it has also not been suc­cess­ful in in­creas­ing elec­tric­ity gen­er­a­tion. It has one of the low­est per capita elec­tric­ity con­sump­tion among the SAARC coun­tries. As against this, Sri Lanka is a small coun­try that en­joys high GDP but also suf­fers from an acute en­ergy cri­sis. Bhutan, having mega hy­dro­elec­tric­ity plants, pro­duces sur­plus elec­tric­ity which is ex­ported to In­dia. Nepal also ex­ports elec­tric­ity to In­dia.

Co­op­er­a­tion among Bhutan, In­dia and Nepal presents a model that can be em­u­lated by Bangladesh and Pak­istan. Bangladesh and In­dia en­joy a cor­dial re­la­tion­ship, which gives rea­son for co­op­er­a­tion between the two coun­tries. How­ever, In­dia and Pak­istan are not likely to de­velop even a good work­ing re­la­tion­ship due to the pres­ence of hawks on both sides.

This leaves only one op­tion for Pak­istan: to mend its re­la­tion­ship with Iran which is al­ready sup­ply­ing elec­tric­ity to Balochis­tan. Work on the Iran-Pak­istan gas pipe­line is at a stand­still due to Pak­istan’s in­abil­ity to mo­bi­lize funds to com­plete the part of the pipe­line fall­ing in its ter­ri­to­rial lim­its.

The in­sur­gency in Balochis­tan pro­vided In­dia with a rea­son to leave the IPI project while the TAPI project also faces a bleak future as the pipe­line has to pass through war-torn Afghanistan and Pak­istan, which In­dia does not con­sider a re­li­able trad­ing part­ner.

South Asia, having a huge pop­u­la­tion that is grow­ing at a high rate, has to cre­ate new job op­por­tu­ni­ties. This is not pos­si­ble with­out over­com­ing the en­ergy cri­sis. Dras­tic struc­tural changes have to be made for in­creas­ing avail­abil­ity along with re­vamp­ing the trans­mis­sion and dis­tri­bu­tion net­works and com­ing up with long-term poli­cies to en­sure an un­in­ter­rupted sup­ply of en­ergy at an af­ford­able cost.

Bangladesh, Myan­mar and Nepal are be­stowed with en­ergy re­sources. Iron­i­cally, Nepal uses just 0.3 per­cent of its mas­sive hy­dro­elec­tric po­ten­tial – one of the largest in the world. Only about 40 per­cent of its pop­u­la­tion has ac­cess to elec­tric­ity.

In Bangladesh, less than 30 per­cent of peo­ple en­joy ac­cess to elec­tric­ity, de­spite the coun­try having up to 15 tril­lion cu­bic feet of nat­u­ral gas. Many of th­ese blocks have been sold off to for­eign com­pa­nies for ex­trac­tion and pro­cess­ing. The coun­try still has am­ple re­serves to meet its own en­ergy needs, only if it can over­come the in­cli­na­tion to sell its nat­u­ral re­sources to In­dia.

South Asia is rich in en­ergy re­sources, rang­ing from hy­dro­elec­tric­ity and so­lar power to fos­sil fu­els in­clud­ing coal. Nepal, Bhutan, In­dia and Pak­istan have mas­sive hy­dropower po­ten­tials. Bangladesh has sub­stan­tial gas re­serves. In­dia's coal de­posits have been the en­gine for the coun­try's economic growth, while those of Pak­istan are yet to be ex­ploited. Some Pak­istani coastal ar­eas have also been iden­ti­fied as having the po­ten­tial to har­ness wind power. Di­ver­sity of th­ese en­ergy re­sources and cross-bor­der trade could be a game-changer for the re­gion.

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