Regional energy sector cooperation

Published March 6, 2017
Prime Minister Nawaz Sharif during the press stakeout at Islamabad on March 1. The  CASA-1,000 Project is important for regional energy trade as it will act as a model for  subsequent trade arrangements.
Prime Minister Nawaz Sharif during the press stakeout at Islamabad on March 1. The CASA-1,000 Project is important for regional energy trade as it will act as a model for subsequent trade arrangements.

The meeting of the Heads of State of the Economic Cooperation Organisation, which was held in Islamabad on March 01, has adopted the vision 2025 with the underlying goal to substantially enhance intra-trade and investment among the ECO countries.

The crux of this Vision statement is to improve regional connectivity through efficient transport networks and sharing of energy sources in order to increase the intra-trade — which currently stands at 8pc of these countries’ cumulative external trade — to 20pc by 2025.

For Pakistan it is important to normalise its relations with Afghanistan as the trade routes to ECO countries pass mainly through that country.

Among all the ECO countries, Pakistan’s forward thrust to build its energy infrastructure through the auspices of the CPEC is perhaps the most notable one

ECO is a beacon of hope for progress for the 450m people of Afghanistan, Azerbaijan, Iran, Kazakhstan, Kyrgyz Republic, Pakistan, Tajikistan, Turkey, Turkmenistan and Uzbekistan — which notably are all Muslim countries.

If the goal set out in the recent Islamabad summit to double the amount of regional trade is to be achieved, Energy can play a major role in reaching this target.

At this point, Pakistan’s energy trade is only with Iran from where it imports electricity mainly to meet Balochistan’s needs

Afghanistan’s cooperation with Central Asia in the energy sector has been very successful as more than 70pc of its electricity need is now met through imports.

Kabul has working arrangements for electricity imports from all its neighbours viz. Iran, Tajikistan, Turkmenistan and Uzbekistan which it continues to expand.

How the successful electricity trade by Afghanistan with its other neighbours can lead to expanded arrangements across the Pakistani border is a subject that is not confined to just technical and economic factors.

If CASA-1,000 is successfully implemented, it will give a boost to plans for Pakistan to import electricity from Turkmenistan and Uzbekistan as well.

The country is, however, expanding its imports of LNG from distant lands at huge costs: building new port infrastructure and in the recurring cost of sea transportation.

This became necessary due to the slow progress of the TAPI (Turkmenistan-Afghanistan-Pakistan-India) gas pipeline and in making import arrangements from Iran’s gas fields in South Pars.

Now that economic sanctions have been lifted on Iran and hoping that there will be a long-term assurance from America on this account, Pakistan’s best choice is to re-engage with Iran to finalise arrangements for the I-P pipeline as pipelines are not only less costly but also more reliable and a faster transportation mechanism than sea routes.

In order for the TAPI project to be realised, not only does the $10bn investment need to be mobilised for the project but any hurdle in making arrangements inside Afghan territory also needs to be overcome.

The CASA-1,000 Project is important for regional energy trade as it will act as a model for subsequent trade arrangements. For many decades, gas pipelines criss-crossing through Central Asia and Russia have reliably supplied natural gas to the heart of Europe in spite of passing through many countries.

Turkey has made strides in developing its renewable energy resources and improving energy efficiency in its commercial and industrial sectors.

Its local development banks (eg TSKB and TKB) have taken the lead in furthering the clean energy agenda through launching funds to promote and support these initiatives.

Several of its municipalities — not just of Istanbul and Ankara — have launched their own energy conservation and efficiency projects that have not only helped to greatly reduce pollution but also put Turkey in the fore-front among ecologically responsible countries.

With its own well-developed financial institutions, Pakistan is in a position to enter into technical arrangements with banks and other organisations in Turkey to gain an understanding of programmes aimed at energy efficiency improvements.

Azerbaijan’s capital, Baku, is the location where oil was discovered for the first time in the Soviet Union and today it exports over one million barrels a day through a pipeline that starts in Baku and terminates in Turkey.

Due to Azerbaijan’s long history of oil exploration and production, Pakistan’s petroleum sector professionals can benefit from that country’s technical knowledge through frequent exchanges of delegations.

The Azerbaijan State Oil University with its 100-year history can be one of the institutes of learning that Pakistani students could consider while perusing education in the field of petroleum technology and engineering.

The ‘Heart of Asia’ conferences — a Turkish initiative — have been taking place since 2011 on a regular basis to expand coordination between Afghanistan and its neighbours.

Afghanistan is truly the heart of Asia and this fact becomes even more prominent when one realises that it shares borders with a maximum five ECO member countries.

For Pakistan to have a meaningful cooperation with Central Asian energy-rich countries, it must recognise Afghanistan’s importance.

No electricity transmission line, gas pipeline or any other type of commodity exchanges can take place between Pakistan and these countries without Afghanistan’s active participation in such arrangements.

Long-term energy cooperation should not be seen as a one-way-road for imports from Central Asia to Pakistan.

As Pakistan develops its own resources viz. Thar Coal, further expands its LNG import infrastructure and increases its hydropower generation, the prospect of energy exports to Afghanistan and onward to other countries of Central Asia, are indeed real.

Among all the ECO countries, Pakistan’s forward thrust towards building its energy infrastructure through the auspices of the China Pakistan Economic Corridor (CPEC) is perhaps the most notable one.

If the CPEC is to become a force-multiplier for the entire ECO region, ways should be explored to enhance cooperation with all its member countries so that its fruits and benefits can be shared by the people of all countries of the region.

—The writer is a freelance consultant on energy and climate change.

Published in Dawn, Business & Finance weekly, March 6th, 2017

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