Trans-boundary energy trade not that easy for Pakistan


    trlPerfunctorily, the European electricity interconnection seems like the solution for overcoming energy shortages and ensuring energy security. And why wouldn’t it? Such interconnections have allowed Europe to import power from contiguous satellite groupings of power markets and meet its electricity requirements. 

    With increasing need for economic integration, the role of energy trade has taken on greater importance, both in relation to energy deficit in a singly country, as well as a means of facilitating economic opportunity. 

    As pointed out in SDPI’s regional conference on Trans-Boundary Cooperation in Energy Sector, Pakistan, Afghanistan and India are losing around two to three percent of GDP due to energy shortages. Where South Asia stands today, especially in terms of its energy situation, it is tacit that augmenting the energy supply needs diversifying the energy basket. The cost of non-co-operation is high, and it is vital that the countries in this part of the world get access to new sources of energy to bridge the energy deficit. Also, this connectivity between the countries can help not only in reducing the price of the overall basket of energy, but also in circumventing the risks associated with the volatility of oil prices. 

    Talking specifically of inter-regional energy trade, the idea of Pakistan importing electricity can be paralleled with some successful examples in South Asia as highlighted at the session. With Nepal, India has 12 cross border power interconnections, all of which are operational. With Bangladesh, India has established a high voltage transmission line of 500MW capacity, which is also functional. It has also signed agreements for two 660MW power plants each on equity participation basis with Bangladesh. With Sri Lanka, India is setting up two thermal power plants of 250MW on equity participation basis, while a 500-1,000MW under sea pipeline is under consideration. Similarly, India is importing 1,400MW of electricity from Bhutan and has signed MoUs for 10 hydro-power projects with a gross capacity of 11,000MW to be developed by 2020. 

    Seem like there are reasons enough for Pakistan to embark upon electricity trade with its neighbours. However, history and context suggests that complexities like political and heritage issues are too strong on this side of South Asia. From what it appears, electricity sharing and trade has been achieved between countries that do not have overriding political issues, at least in South Asia. Geo-political situation, national security perspectives and trust deficit between Pakistan and its direct neighbours, India and Afghanistan stand as major hurdles in any such cooperation. 

    Other factors that impede cross-border integration of Pakistan with regional peers include the availability of power in the region; already, the region is facing shortage of electricity. Also, heavy investment in infrastructure, security situation and the regulatory environment has serious repercussions for establishing and integrated energy market. 

    Ideally, the need for economic cooperation and regional trade to meet energy deficit challenges should help countries reconcile their political differences. With new governments being formed in Afghanistan and India, we have yet to see how this deficit of energy is going to shape political cooperation within this trio.

    Source : Business Recorder