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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.
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.