The Chairman of Saarc Energy Working Group (SEWG) at the concluding session of the two-day meeting at Islamabad December last emphasized that cooperation among South Asian countries of energy would lead to opening up a number of opportunities
for profitable investment and promote trade among the member countries.
SEWG recommended the establishment at Islamabad of a Saarc energy centre (SEC) to work as a catalyst for economic growth and development by coordinating and facilitating integration of regional strategies and activities in the energy sectors of member countries through exchange of information, technology and expertise.
Earlier, on December 16, the Federal Secretary to Pakistan's Ministry of Petroleum and Natural Resources, while chairing the inaugural session, had stressed the need for enhancing cooperation among members to meet the fast growing energy deficit in Saarc member countries due to projected high economic growth rates in the region.
Formed in pursuance of the 12th Saarc summit, the SEWG was mandated to conduct a study on South Asian Energy Cooperation including the concept of an Energy Ring.
At its first meeting in June 2004, SEWG identified areas of cooperation and formulated an Action Plan comprising proposals largely on: a South Asia Energy Forum at Ministerial level for exchange of views on policy issues and cooperation; setting up of a Saarc Energy Centre; a regional study on options, benefits and constraints of energy trade; transnational energy lines (electricity, gas and oil); sharing expertise, know-how and training; feasibility of establishing a Regional Fund; promoting energy efficiency /conservation at least cost ; promoting cooperation on CNG use in transport; learning lessons from innovative projects in member states; and circulating an internet-based quarterly Saarc Energy Newsletter.
During its second meeting at Islamabad, SRWG has drawn up plan for 2005, which also includes eight workshops and seminars on the subjects of energy trade, independent power producers, energy efficiency standards, efficiency in road transport, CNG development, rural electrification, micro-hydro electricity and wind energy, so as to benefit from collective experiences in priority areas.
The energy ministers of Saarc member countries are expected to consider detailed roadmap of long-term cooperation in energy field in Islamabad on March 17-18, 2005.
Saarc member countries (Pakistan, Bangladesh, Bhutan, India, the Maldives, Nepal, and Sri Lanka) have substantial energy resources which need to be economically exploited for welfare and prosperity of the people.
Almost all members have large hydroelectricity potential, of which only a small fraction has been so far exploited. Lack of financial resources and inaccessibility of the terrain are the main reasons. Thermal power is the major source of energy in most of the countries.
Pakistan and India have large coal reserves. India has been making more use of coal for power generation. Utilization of local coal for power generation in Pakistan is expected to increase now with the assistance from China.
India has reportedly installed capacity of 900 MW of wind energy, second only to the United States. Pakistan has plans to build wind farms in Sindh and might benefit from India.
All Saarc member countries are dependent on imported energy which is likely to increase due to accelerated economic growth, if in the meantime no major discoveries of oil or gas are made. Energy import bill will go higher, also because of increased oil prices. n
Pakistan's primary commercial energy needs are largely met through import of oil, the cost of which might exceed $4 billion this year. In order to reduce import dependence and to provide people with clean environment, the country is shifting from oil to natural gas, of which share in energy mix has increased to about 50 per cent.
To meet future increasing gas requirements, Pakistan is working on import of gas from neighbouring countries. Import of electricity might also come under consideration in the coming days.
Overall energy development and availability situation of other Saarc countries is not much different from that of Pakistan. Moreover, development of energy infrastructure projects requires large capital outlays, not easily affordable by many countries.
Closer cooperation among Saarc countries in energy field has the potential to improve energy availability, efficiency and trade. Energy sector has received more attention at Saarc only recently.
The seminars planned by SEWG during 2005 cover a very broad spectrum such as energy trade, independent power producers, energy efficiency standards, efficiency in road transport, CNG development, rural electrification, micro-hydro electricity and wind energy.
Problems actually faced in member countries in each area might be discussed threadbare to devise solutions for application in their respective countries. Of all Saarc member countries, India presumably has advantage in fabricating different energy related plants and equipment.
It could be hydel or thermal power generation plants, motors, transformers, steel pipes for oil refineries or oil / gas pipelines, electricity cables, transmission towers, etc.
India might have higher local content as compared to other countries in the region. Such equipment could be fabricated in India or in neighbouring countries under arrangements for meeting needs of other counties at relatively lower costs.
Information on such fabrication capacities and views on the joint fabrication arrangements might be shared with other members through the SEWG and the Saarc Energy Centre. Some of the projects might be developed on these lines for consideration in the meeting of the Saarc energy ministers scheduled in March 2005.
Independent power producers (IPPs) are relatively a recent phenomenon. Some of the member countries already have had mixed experience in their approval, financing, tariff setting and implementation.
There is by now enough of experience and knowledge which the respective members can share for benefit of other member countries. Progress so far made, apparent lapses or problems, use of standardized agreements for Concession, Power Purchase and Fuel Supply, present policies regarding IPPs, etc might be discussed.
Originally thermal power plants were considered under IPPs while hydro power plants have been considered only recently. There is need to develop the expertise for financing different IPPs under fairly and equitably negotiated arrangements.
Pakistan, India, Bhutan, Nepal and Bangladesh have large hydroelectric potential which might be exploited better if there are joint projects on terms fair to all counter parties.
The potential importing country might join hands and provide finances for implementation of more hydropower projects and recover the loan with profit by purchasing electricity under long-term arrangements.
The arrangement could be between two or more governments. India already has a number of hydro projects with Bhutan and Nepal under financing and import of electricity arrangements.
Involved in there are policy issues such as sharing of cost and benefits, determination of power tariff, cost of transmission line and its sharing mechanism, environmental issues and funding arrangements which have to be resolved.
Gas is a preferred source of energy all over the world including Saarc member countries. Bangladesh is endowed with natural gas reserves but so far gas exports appear not to be contemplated.
India and Pakistan are also large producers of gas. However, gas supply is short in most of the member countries and is likely to remain so until major finds are made through extensive exploration.
It appears future gas requirements will be met through imports from neighbouring countries. Pakistan is already talking with three countries for importing gas through regional gas pipelines. With proper arrangements the gas pipelines could be extended to India as well. Saarc countries might consider implementing these projects jointly.
