Shar­ing Power

The South Asian coun­tries con­tinue to suf­fer from energy short­age. A so­lu­tion could be cross-bor­der power-shar­ing, pro­vided other glitches are re­moved.

Southasia - - CONTENTS - By Shab­bir H. Kazmi

The coun­tries of South Asia have hu-ge energy gen­er­a­tion po­ten­tial but the per capita con­sump­tion is the low­est, just a lit­tle bet­ter than coun­tries lo­cated in the sub-Sa­ha­ran re­gion. This can be at­trib­uted to a num­ber of fac­tors that in­clude bad gov­ern­ment poli­cies, in­abil­ity to mo­bi­lize cap­i­tal, shy­ness of lo­cal in­vestors and, above all, mas­sive pil­fer­age due to high tar­iff. As these coun­tries are de­pen­dent on mul­ti­lat­eral fi­nan­cial in­sti­tu­tions (MFIs) for the much needed funds, they are forced to adopt poli­cies of the lenders rather than ex­ploit­ing in­dige­nously avail­able fu­els. Since the de­vel­oped coun­tries have the big­gest MFIs, the pre­ferred choice re­mains fos­sil oil.

Lately, the MFIs have been try­ing to con­vince the South Asian coun­tries to go for cross-bor­der sup­plies based on the suc­cess­ful model be­ing fol­lowed by such coun­tries as In­dia, Nepal, Bhutan and Bangladesh. It is not quite clear why a sim­i­lar agree­ment could not be ar­rived at be­tween two of the largest mem­ber coun­tries of SAARC – In­dia and Pak­istan - which share hun­dreds of kilo­me­ters of com­mon borders and

also en­joy the sta­tus of be­ing atomic pow­ers? The re­ply is sim­ple: an­i­mos­ity spread over decades.

Pak­istan is the worst vic­tim of the poli­cies of the MFIs, which played a ma­jor role in the cre­ation of in­de­pen­dent power plants (IPPs) in the coun­try with a com­bined gen­er­a­tion ca­pac­ity of over 8,000MW. Pak­istan has not been able to con­struct any mega hy­del power plants since com­ple­tion of the Tar­bela Dam in 1976. Con­trary to this, In­dia has been con­struct­ing dams in vi­o­la­tion of the In­dus Wa­ter Treaty signed be­tween the two coun­tries in the 60s.

Among the South Asian coun­tries, In­dia has the largest pop­u­la­tion and the gov­ern­ment suc­ceed­ing gov­ern­ments there have been tak­ing steps to boost power gen­er­a­tion. As a re­sult, the coun­try has added new and diver­si­fied gen­er­a­tion ca­pac­ity. Ac­cord­ing to es­ti­mates, the presently in­stalled gen­er­a­tion ca­pac­ity in In­dia ex­ceeds 270,000MW but, out of this, nearly 190,000MW is ther­mal-based. In­dia has been blessed with huge coal re­serves, which con­trib­ute over 165,000MW. The coun­try has not been able to achieve a sig­nif­i­cant break­through in hy­del and wind power but nearly 50,000MW is con­trib­uted by cap­tive plants. In­dia has the world’s fifth largest wind power gen­er­a­tion ca­pac­ity, which is 6% of the to­tal in­stalled ca­pac­ity. The coun­try also gets sup­plies from neigh­bor­ing coun­tries, in re­turn for the in­vest­ments it has made.

Pak­istan is the sec­ond largest mem­ber of SAARC and has nearly 20,000MW gen­er­a­tion ca­pac­ity. The bulk of this com­prises ther­mal gen­er­a­tion, which is mostly fur­nace oil-based. In the past, when crude oil price hov­ered at around US$147 per bar­rel, a strate­gic de­ci­sion was made not to pass on the in­crease in the cost to the con­sumer. As a re­sult, cir­cu­lar debt de­vel­oped and bal­looned to bil­lions of ru­pees. Since com­ing into power, the PML-N gov­ern­ment has paid over Rs750 bil­lion to clean the slate but the cir­cu­lar debt has kept on mount­ing mainly be­cause the gov­ern­ment has not been able to over­come two of the most con­tentious is­sues: colos­sal pil­fer­age and mount­ing re­ceiv­ables. Pak­istan has two trea­sures: Thar coal and the mighty In­dus. If these two re­sources are prop­erly ex­ploited, the men­ace of load shed­ding can be over­come and the cost of gen­er­a­tion can be brought down sig­nif­i­cantly, leav­ing no in­cen­tive for the pil­fer­age of elec­tric­ity.

In terms of pop­u­la­tion, Bangladesh suf­fers the acutest short­fall in power gen­er­a­tion. The coun­try has one of the low­est per capita elec­tric­ity con­sump­tion and around 60% of the pop­u­la­tion has ac­cess to this most im­por­tant util­ity. The coun­try is de­pen­dent on In­dia for meet­ing its power de­mands as well as con­struc­tion of new power gen­er­a­tion plants. The coun­try is rich in wa­ter re­sources and also has gas but hardly any oil and coal re­serves. Though, the gov­ern­ment is mak­ing ef­forts to over­come the pre­vail­ing short­age, the lack of good gov­er­nance is a ma­jor cause for de­lays and over­runs and pil­fer­age of elec­tric­ity is also com­mon.

Nepal is a small coun­try but it is blessed with wa­ter re­sources that help in hy­del gen­er­a­tion. Ac­cord­ing to avail­able in­for­ma­tion, the coun­try has nearly 800MW gen­er­a­tion ca­pac­ity, out of which over 730MW com­prises hy­del gen­er­a­tion. The coun­try has no known re­serves of oil, gas or coal. Nepal is also de­pen­dent on In­dia for meet­ing its re­quire­ments for funds for hy­del projects and in re­turn, In­dia also buys elec­tric­ity from Nepal.

Sri Lanka has slightly less than 3300MW gen­er­a­tion ca­pac­ity, half of which is hy­del while the re­main­ing is ther­mal based. Like other South Asian coun­tries, Sri Lanka also suf­fers from an acute short­age of power sup­ply. It can be said that the coun­try years of civil strife pre­vented it from un­der­tak­ing de­vel­op­men­tal work, par­tic­u­larly in terms of power in­fra­struc­ture and util­i­ties.

The fall­out of an acute short­age of elec­tric­ity in South Asia is that these coun­tries, ex­clud­ing In­dia and Pak­istan to some ex­tent, do not have a strong in­dus­trial base. Fur­ther, many ex­perts re­main skep­ti­cal about cross-bor­der sup­plies for two rea­sons: an­i­mos­ity among the coun­tries and lack of funds for the con­struc­tion of mega hy­del or ther­mal power plants.

It is in­ter­est­ing to note that while ndia suf­fers from an acute short­age of elec­tric­ity, it keeps of­fer­ing Pak­istan the op­tion to buy elec­tric­ity from it. This kind of of­fer of­ten makes the de­ci­sion­mak­ers in Pak­istan jit­tery. In ad­di­tion, the re­cent ut­ter­ings of the Prime Min­is­ter of In­dia hardly leaves any room for Pak­istan to buy elec­tric­ity or gas from In­dia which has also emerged as the big­gest op­po­nent of the China Pak­istan Eco­nomic Cor­ri­dor (CPEC).

In­dia has also with­drawn from the Iran-Pak­istan-In­dia (IPI) gas pipeline po­ject, tak­ing refuge be­hind the poor se­cu­rity sit­u­a­tion in Balochis­tan. It had gone to the ex­tent of ex­press­ing the fear that Pak­istan may sud­denly dis­rupt the gas sup­ply. If In­dia is not will­ing to trust Pak­istan, why does it ex­pect Pak­istan to give its life­line into the hands of an en­emy which im­posed three wars on it and is also most bla­tantly op­posed to CPEC?

It is not a cliché but a fact that if In­dia, Pak­istan and Bangladesh were to join hands, they would be­come the fastest grow­ing economies of the re­gion and sup­port the smaller South Asian coun­tries. The uni­fi­ca­tion of Ger­many, the re­vival of ties be­tween Ger­many and France and the grow­ing size of the EU shows that cor­dial diplo­matic re­la­tions could usher a new era of co­op­er­a­tion and pros­per­ity for the whole re­gion. If South Asia could co­op­er­ate on the power gen­er­a­tion and trans­mis­sion front, it would bode well for the ideals of SAARC. The writer is an eco­nomic an­a­lyst. He writes for var­i­ous lo­cal and for­eign publi­ca­tions.

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