On energy security

Energy security is critical to economic growth, human development and achievement of post-2015 development agenda. In South Asian countries that include Pakistan, the demand for energy is increasing rapidly, thanks to fast developmental growth in the region and if one follows World Bank forecast the area will beat East Asia in economic development by 2016. But, the growth has created higher demand for energy and energy demand has also become an important factor for the overall sustainability in South Asia. The energy security was also one of the central topics at the SDPIs eighteenth sustainable development conference currently being held in Islamabad.
The momentum of growth which South Asia is enjoying is in a dire need of an adequate supply of energy on the sustainable basis. The region is facing extremely low per capita energy availability and consumption. As of 2010, according to World Bank close to 26 percent of the regional population did not have access to electricity, even though a quarter of worlds population lives in the area and the region has the largest chunk of the global un-electrified population. On the other hand, close to 62 percent population in the area according to a study by SDPI has no access to non-solid cooking fuels. The situation will only get worse as the demand for energy will grow to keep pace with the growing population and economy.
The major issues that face the South Asias energy security in general and Pakistan in particular, are higher cost and difficulties of providing conventional power infrastructure to reach a large number of populations living in rural areas. Heavy dependence on traditional energy for domestic usage and an undesirable, yet growing dependence on imported fossil fuels. But, given the resource constraints, domestic energy security is almost infeasible for Pakistan and the region without import dependency and exposing to geopolitical risks. That is why the situation calls for regional energy cooperation in the region which can also be the major step in energy security in the area.
There is enough evidence that South Asia can achieve regional energy security through developing a regional electricity grid and market. Energy resource surplus countries such as Nepal, and Bhutan, could benefit from export-led growth, which would simultaneously meet demands in energy deficient countries like Pakistan and Bangladesh. At the moment, the regional energy trade between South Asian countries constitutes is less than 5 percent of total trade within the region.
According to a recent report by World Bank, there are complementarities in electricity demand and resource endowments among countries in this region due to the diversity of primary energy resources and differences in seasonal patterns of supply and demand. If thats not enough regional cooperation is expected to bring in economies of scale in investment, consolidate financial situation, enhance competition and efficiency, and enable cost-effective penetration of advanced energy technologies.
Nevertheless, there are some positive signs. Pakistan, along with other SAARC member countries, signed a regional cooperation agreement on electricity trade during the summit at Kathmandu. Under this agreement, Pakistan, India, Sri Lanka and Bangladesh would be able to import electricity from hydropower-rich Nepal and Bhutan.
However, with that set going by experience, merely signing an agreement will not sufficient. There are some shortcomings like poor installation of generation capacity, insufficient operational efficiency, and the weak financial performance of utilities, hesitant private sector participation and limited power sector reforms. Furthermore, the biggest issues related to any regional trade is policy, institutional and political barriers. Lack of confidence and trust in the countries, in particular between India and Pakistan trade-restrictive policies and challenges in establishing effective regional agencies are other obstacles to regional energy cooperation.
Having said that the need for regional cooperation on regional energy security is necessary and that is why it is high time for the South Asian region to have a dedicated regional agency whose job should be to create an institutional memory that does not erode with political changes and to steer the dialogues and initiatives.