The Narendra Modi government has made energy security an important
feature of its foreign policy, with some big ticket energy deals being
signed. One major step in this regard related to regional energy
security, when India, along with other South Asian countries, signed a
regional cooperation agreement on electricity trade during the SAARC
summit at Kathmandu. Under this agreement, Pakistan, India, Sri Lanka
and Bangladesh would be able to import electricity from hydropower-rich
Nepal and Bhutan.
But going by past experience, merely signing an agreement will not
suffice. Several SAARC initiatives in the past failed to take off due to
inherent political differences among its member nations. In addition to
differences between ruling dispensations, opposition parties in some
South Asian countries also held diverging view points on energy trade
and often opposed projects for political gains thereby discouraging real
time investment. For example, Nepal, a country with huge hydropower
potential, has been unable to create a conducive environment for energy
development due to this factor. Bangladesh also saw a similar trend,
wherein political parties prevented any export of natural gas to India.
In the present context, to make the energy agreement work, it would
be necessary for the respective governments to provide leadership and
direction on energy issues. The success of this initiative not only
rests on individual governments in the eight countries, but also on the
political behaviour of some opposition groups within these countries.
Currently, energy cooperation among SAARC members is occurring at a
bilateral level. India imports about 1416 MW of electricity from Bhutan
and it has begun to export electricity to Bangladesh. India’s
cooperation with Nepal has resumed in the form of construction of mega
projects through private investments like the Upper Karnali power
project.
The rationale for signing the SAARC electricity trade agreement was
the impending domestic energy crisis faced by individual member
countries. For instance, Pakistan is struggling to meet its rising
energy demands. In October 2014, it concluded the CASA 1000 power
project with the aim of importing electricity from the Central Asian
states of Tajikistan and Kyrgyzstan via Afghanistan. But the continuing
instability in Afghanistan renders the project unsustainable and
unfeasible. It is therefore being compelled to look eastwards for its
energy needs. Similarly, Nepal faces a severe power shortage despite
being extremely rich in hydropower.
Signing of the SAARC agreement is merely the first step in the
process of regional energy cooperation. To make this initiative work,
the governments within the region will need to synchronise their efforts
on a range of technical, institutional and political issues. Unless
there exists a strong political will
among the participating countries for a sustained period of time, this
initiative faces the danger of meeting a fate similar to that of several
other proposals under SAARC. The fundamental problem with SAARC remains
that the member nations do not trust each other. It is often seen in
SAARC that a commercially viable initiative gets side lined due to
overarching political differences among the participants.
But fortunately, with time, things appear to be changing and in the
last few months there has been a sea change in the attitudes of some
south Asian countries towards India. This could possibly be attributed
to the growing perception about the firm decision making ability of the
new Indian government. Also, as Professor S. D. Muni remarked during the
recently concluded 8th South Asia Conference held on 28-29 October 2014
at the Institute for Defence Studies and Analyses, the new Indian
government has indicated its willingness to step up cooperation with
countries of the region. The first sign in this regard was the
invitation extended to the leaders of South Asian countries to attend
the swearing in ceremony of the Narendra Modi government. It is time for
all the countries of the region to cash on to this new wave of optimism
in order to ensure that their energy needs are secured.
Three policy initiatives are key to moving things forward in the
energy sector. Firstly, for the development of regional energy trade,
the private sector must be allowed to participate. Unlike governments,
the private sector has better resources to execute projects. Many South
Asian countries do not have the financial wherewithal to make
investments. Even India, which happens to be the single largest economy
in South Asia, is facing challenges when it comes to financing some
energy projects. For example, the funding for some Indian-sponsored
hydropower projects in Bhutan had to be postponed due to lack of
adequate funding from India.
In such circumstances, the private sector must be allowed to pitch in
with investments and technology to enable the speedy execution of
proposed projects.
Secondly, given the tumultuous nature of South Asian politics,
private investors would be less forthcoming to invest in hydropower
projects unless the necessary legal regimes are put in place. It would
be useful for SAARC countries to either consider joining the Energy
Charter treaty
6 which entails the signatories to accord national treatment to investors of other member countries
7
or put in place a regional version of the energy charter treaty to
protect investments. Such steps would make the recently signed SAARC
initiative more effective and insulate it from changing political
circumstances.
Thirdly, it is important to put in place the technical infrastructure
for greater energy connectivity. During a recent field trip to Nepal
and Bhutan, respondents often complained to this author about the lack
of grid discipline on the Indian side. It is important for India to
rectify such technical shortcomings to facilitate regional power
exchange.
