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Business Recorder

Published Date: May 26, 2014

Trans-boundary energy trade not that easy for Pakistan

Perfunctorily, 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: http://www.brecorder.com/br-research/44:miscellaneous/4444:trans-boundary-energy-trade-not-that-easy-for-pakistan/