Cooperation sought in energy sector among South Asian nations
Effective cooperation in the energy sector is critical for South Asian economies to move towards higher growth trajectory. In this regard, the stakeholders of the regional dialogue on ‘Exploring Trans-boundary Cooperation in Agriculture, Water and Energy’, which was organised here by CUTS International, have highlighted the key issues that need to be addressed to boost cooperation.
Due to trust deficit among the countries and important players predominantly hindering the energy cooperation among South Asian nations, energy cooperation in the region has not yet gathered momentum despite several efforts since the last two decades.
Stakeholders and experts in the regional dialogue laid emphasis on development of regional electricity grid for power trade; involvement of private sector in electricity generation and transmission; harmonisation of policy and regulatory framework among South Asian economies and dedicated regional agency for coordination among nations to translate energy cooperation into practice.
South Asia is one of the fastest growing regions in the world and it has to overcome the energy poverty for robust growth in the coming days. The World Bank Group recently projected that South Asia will grow by 7.3 per cent in 2017 as against 7.1 per cent in 2016.
South Asia can easily fulfil the demand for energy through cooperation in energy because they have diverse load profiles. For example, Nepal and India can exchange power because there is high demand in Nepal during dry season and surplus energy in wet season, which is just the opposite in India. As Nepal is located closer to the load centre of India, it can reap benefits by supplying surplus power to India and also to Bangladesh, said Mahendra P Lama, senior professor at School of International Studies in Jawaharlal Nehru University. “Trilateral cooperation among India, Nepal and Bangladesh is a must for the development of energy and energy market.”
On the other hand, policy harmonisation and reform in the power sector are other crucial factors to materialise foreign and private sector investment in energy. “Adequate reform in power sector and coordination among policy, legal and regulatory framework can pave the way for intra-regional investment in energy sector,” said Syamal Kumar Sarkar, director of the Delhi-based think-tank, The Energy and Resource Institute (TERI).
Demand of energy has been surging rapidly in India and Bangladesh. India and Bangladesh, and India and Nepal have already started cooperation in development of coal plants and hydropower projects, respectively, to meet the rising energy demand.
On the other hand, India which is considered to be the major load centre of the region has been largely dependent on fossil fuel for power generation. As per CUTS, Uttar Pradesh and Punjab states of India have been fulfilling its power demand through fossil fuels and currently 96.4 per cent of the total power demand in Uttar Pradesh is being met through fossil fuel. Similarly, 30.2 per cent of the total energy consumption in Punjab comes from fossil fuel.
In the medium-term, there is room for countries like Nepal to supply clean energy to Uttar Pradesh and Punjab by harnessing its hydropower potential, which will also be supportive for India to reduce the emission levels to achieve the targets of Sustainable Development Goals (SDGs).
According to the study commissioned by the World Bank, the region will save $226 billion in its electricity supply cost between 2015 and 2040 through establishing effective and efficient regional electricity grid.