Representing seven percent of global demand, energy consumption in Southasia is considered low for a region with more than 22 percent of the world’s population. However, as the Indian economy continues to grow apace, and if Pakistan and Bangladesh, with their sizeable populations, also sustain their recent economic growth, this share stands to increase significantly. Energy consumption in the region as a whole has been rising by around 5.5 percent a year over the last three years, as compared to an average annual global growth rate of 2.5 percent. The growth in demand for electricity would be over 10 percent a year in all Southasian countries, to satisfy prevailing shortfalls and the backlog of rural electrification commitments, if sufficient generation could be mobilised. The region accounts for about 5.9 percent of world commercial energy consumption.
This does not include non-commercial energy sources such as wood, animal waste and other biomass, which account for more than half of the region’s total energy consumption. The import of petroleum products to meet the growing demand for energy in Southasia is on the rise, putting additional pressure on balance of payments. Indeed, the immediate energy-security concern for Southasian governments is how to finance the sustained high oil prices. None of the countries in the region have been able to pass on the full international prices of petroleum to their populations, for fear of social unrest. The Maldives and Sri Lanka, which respectively import 100 and 85 percent of their commercial energy needs, are particularly vulnerable to escalating petroleum prices. Close behind is Nepal, which imports around 55 percent of its primary commercial energy. In comparison, India, Pakistan, Afghanistan and Bangladesh, which import 20-30 percent of their overall energy imports, might seem more secure.
But this is misleading, since all countries depend on imported petroleum for their transportation needs, and the urban poor rely on kerosene for cooking fuel. An estimated 40 percent of the population in Southasia – a staggering 600 million, mostly rural – does not have access to electricity or other modern energy services. They continue to light their homes with dim, inefficient kerosene lamps, and cook in smoke-filled kitchens with firewood, dried animal manure and agricultural residue. The lack of basic energy services keeps people from good health, impacts negatively on education for girls and boys (due to the inability to study after dark), and disallows many from increasing their incomes.
Traditional energy usage continues drudgery for women and girls who are compelled to collect firewood and other biomass fuels, and impairs their health from cooking in smoky kitchens. Poor lighting reduces the ability of girls and boys to study in the evening and lack of electricity restricts access to information through television and radio. Lack of electricity means babies are delivered in poorly lit rooms, and rural health posts do not have refrigeration for storing vaccines. The UN’s Human Development Index (HDI), which includes a composition of income, education, life expectancy and energy use, shows that countries with the lowest HDI are also those with the lowest amount of per-capita energy usage.
Interestingly, for countries starting out at low HDI levels, a small increase in energy use is accompanied by rapid improvement in the quality of life. The significant improvement in peoples’ lives brought about by even small amounts of energy usage, such as through solar electricity or a micro-hydropower plant, implies that this is at least partially causal. In addition, a number of studies in Southasia have documented that well-implemented rural electrification (from the grid or from off-grid sources), and the adoption of simple technologies such as biogas and improved cooking stoves, have had a tremendous impact on people’s well-being. Achievements of the last 10 years have provided institutional models to scale-up energy access to rural populations through a mix of community-based private-public initiatives.
Successful grid-based initiatives include rural electrification cooperatives in Bangladesh and community-based electrification in Nepal. They show that rural user groups and cooperatives are often better managers of electricity distribution networks than are disinterested utilities. Bangladesh, Sri Lanka and Nepal have demonstrated that large numbers of rural people can have access to electricity through solar home systems when high-quality set-ups are sold to users using micro-finance and small subsidies. One to three percent of the homes in these countries are currently lit by solar energy, and the proportion is growing. Developing household biogas through rural micro-enterprises is a successful model developed in Nepal, which is now being replicated in Bangladesh as well as in Vietnam. Some five percent of rural households in Nepal are now cooking on biogas. Community-based micro-hydro is also well-established in the mountainous areas of Pakistan and Nepal, with plenty of room to grow in other Southasian countries.
The challenge of achieving universal energy access in Southasia is not one of resources. It is one of priority. A fraction of the resources that governments in Southasia will need to invest in pulling themselves out of the ongoing energy crisis can result in providing modern energy services to all rural households. Globally, it is estimated that seven percent of the total electricity generated will be sufficient to meet the needs of all those who today are without power; and one percent of the total commercial energy worldwide would meet the cooking needs of the two billion people currently without clean cooking fuel. What Southasian countries urgently need is a comprehensive energy policy at the national level, which could later be integrated at the regional level.
In addition to overcoming challenges to domestic energy-policy reform, other principal barriers to developing interconnected regional energy networks are geopolitical, structural and procedural in nature. Apart from politico-security concerns that have lingered since the days of Partition, the impediments to crossborder energy cooperation include a lack of regional energy infrastructure; weak regional institutional and regulatory framework (for regional planning, investment financing, investment protection, contract enforcements, policy and commercial risk mitigation, etc); water-sharing issues; pricing policies and access regulations; and differences in subsidy policies.
Considering the dynamics of energy trade and cooperation in Southasia, it is clear that there is significant scope in advancing regional initiatives by increasing energy access and supply, and improving energy security, reliability and quality in the region. Complementarities exist not only in the diversity of resource endowment, but also in the seasonal characteristic of the supply of and demand for power, geographical proximities of demand centres and the technological bases of power industries. Potential for financial gains, investment flows, technology transfers and integration with global markets remain attractive features for regional energy trade. However, prior to developing a regional energy policy through SAARC, national policy frameworks in Southasia need to be well-defined. These frameworks must address and analyse current energy-related bilateral and regional trading arrangements; institutional, regulatory, technical and policy issues; and power-purchase agreements. Only then will an integrated regional energy policy become realistic.
~ Bikash Pandey is an energy expert based in Islamabad.