Ideas and Action for a Better India
Based on A Talk by Charles Ebinger of Brookings USA in Mumbai
High population growth rate, high economic growth rate, and rapid urbanization have made South Asia a region where energy demands are growing at over 6% – a pace that is far in excess of the region’s capacity to meet, unless the countries act in concert innovatively, and bring urgent reform in their internal policies. The fact that a sizeable section of the population does not have access to electricity makes energy security a daunting challenge in the countries of this region namely, Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka.
India, Pakistan, Bangladesh, Nepal and Bhutan import anything between 75%-100% of their petroleum needs. But the region is rich in other sources of energy which are not evenly distributed and are to a large extent untapped. India, Pakistan and Bangladesh have large reserves of gas and coal. The South Asian region has among the world’s highest potential for hydel power, with Nepal and Bhutan in the lead. There exists a high potential for renewable energy, with India showing the way in solar and wind energy. Afghanistan, which is strategically placed between the oil rich Persian Gulf and South Asia, can benefit from this proximity and from the transit fee that it can levy from other countries in the region. Sri Lanka is looking to leverage hydel and biomass resources for its energy needs.
Inter and intra-regional energy production, distribution and exchange are beset by several seemingly insurmountable problems. Bickering between two of the largest players in the region, India and Pakistan, virtually eclipses any attempts at regional cooperation. Internally, in the name of expanding access to the poor, all these countries have subsidized their energy pricing -be it kerosene, LPG, or diesel to an extent where they are not just economically unviable but also that they do not reach their target group, the poor. Subsidies are straining the national budgets; for instance, the outgo on petroleum imports and subsidies as a proportion of GDP is the highest in India. Issues of price controls, lack of transparency and faulty planning are factors that militate against sound energy policies being followed among the countries in the region; this in turn impedes private investments in the power sector in this region.
Road and rail infrastructure for transporting coal or conveying gas are woefully inadequate in these countries. India has therefore turned to import of coal, while in recent years Pakistan has taken Chinese help in building roads, ports and airfields to gain access to its untapped coal reserves in the Thar region bordering Gujarat. In India, Pakistan and Bangladesh, the problem of access to land for building roads and pipelines is exacerbated by the fact that many of these areas are insurgency prone. Within these countries lack of consistency in policies is reflected in the disputes over royalty sharing between the Federal government and the states as can be seen in the case of Baluchistan and Islamabad. In India lack of governance manifests itself in intransigence in tackling the high transmission and distribution losses and loss making state electricity boards. It is proven that energy shortages are feeding unrest in the region and Pakistan is said to be a prime example.
The benefits of sound country wise and regional policies in the energy sector are manifold. Bringing electricity to the millions of poor in the region will alleviate people from much misery. It will give people access to better education, health, water and sanitation services, technologies that will open up communication, information sharing, storage of food grains and several other societal benefits that will bring peace and cohesion to these societies. The 1020 MW Tala Hydel Project in Bhutan contributed as much as 10% to the nation’s GDP growth. In the interests of the people of the region, the states of South Asia need to come together with a plan that can look into the energy needs of the region for the next 50-75 years. India is best placed to take the lead in this movement, being blessed with size, location, stability and a large talent pool possessed of the technological know-how.
But India has to overcome its poor legacy in formulating policies in this regard. The Iran-Pakistan-India, the Turkmenistan-Afghanisthan-Pakistan-India and the Oman under sea gas pipelines are all mired in regional and international politics. India has frittered away its traditional affinity with the countries of the region through lack of strategic foresight and vision. Mishandling of issues such as bringing gas from Bangladesh to India by creating pipelines via West Bengal, or exploring the oil blocks in Myanmar where India had an initial advantage, have provided an entry point to China in this region.
According to Dr. Charles Ebinger, Senior Fellow and Director, Energy Security Initiative, Brookings Institution, USA, to loosen the investment environment and address the needs of the energy sector, the business communities in these countries need to come together. New Delhi must be the prime mover and has to strengthen ties with countries in this region. Citing Germany’s claims of phasing out nuclear power over the next decade and stepping up production of solar power, Dr.Ebinger said that the country has already heavily subsidized its wind farming and the situation is untenable. Soon, Germany may be importing n-power from France and Czechoslovakia. Clearly, in the near term, solar power production cannot be stepped enough to provide for the growing energy needs of South Asia. He called for elimination of subsidies to different segments in the power sector, a radical step. Speaking at an interactive session organized in Mumbai by the CII, Dr. Ebinger called for intensified research in the area of clean energy from coal using carbon capture and sequestration technologies. With countries struggling to meet rising import costs of fuel, it may well be an exercise in self preservation for them to leverage regional cooperation to move towards greater energy security.