THE NEXT STEPS FOR SAARC ENERGY AGREEMENT
Mirza Sadaqat Huda
Saarc countries must come together to envision energy as the means of reducing low-level political conflicts
The viability of Saarc was once again put to test at the 18th Saarc Summit recently, when the three agreements on connectivity and energy cooperation that were due to be signed in Kathmandu failed to garner consensus among all eight countries.
Pakistan stated that it was unwilling to sign the agreements as its “internal processes” were incomplete. Despite the low expectations that have been generally associated with Saarc Summits, the three agreements had generated some hope, particularly as they were aimed to be a collective declaration of the need for interdependence via transport and energy infrastructure.
However, in the concluding ceremony of the summit, Nawaz Sharif agreed to sign the Saarc Framework Agreement for Energy Cooperation, with the other two agreements also expected to be signed in the near future. Whether this is meant to be a last minute face-saver for Saarc or a genuine appreciation of the need for cooperation in energy, remains to be seen. Given that this is the only substantial outcome of the Saarc Summit, what implications it can have for energy cooperation in the region needs to be examined.
Firstly, the conceptualisation of energy security under the agreement has still not been revealed. This is extremely important as this underlying theme determines the repercussions that this agreement will have on future initiatives on the regional grid. One would hope that the outdated supply-centric and economic growth-focused understanding of energy has been discarded for a more comprehensive view.
Agreements on energy and energy projects at the Saarc level must aim to increase accessibility and affordability among the under-privileged, and have an impact on reducing inter-state tensions in the South Asian region, in addition to fueling economic growth.
Secondly, the agreement is solely on the issue of electricity. This raises the question whether pipeline projects such as the IPI (Iran-Pakistan-India), TAPI (Turkmenistan-Afghanistan-Pakistan-India), and MBI (Myanmar-Bangladesh-India) have been excluded to divert resources for the realisation of the Saarc Energy Grid, or if pipelines are no longer considered to be feasible in the current geopolitical context.
Thirdly, although the agreement is meant to be an overarching cooperative scheme that aims to address broad issues, such as the enabling of cross-border trade in electricity, the development of a common regulatory mechanism and the waiving of customs fees, energy projects are inherently sub-regional.
This is owing to India assuming a central position as the fulcrum of energy demand in South Asia, which creates two energy markets: The eastern market, comprising of Bangladesh, Bhutan, Nepal; and the western market, comprising of Pakistan and Afghanistan.
The countries in these two markets are expected to trade in electricity with India as well as provide transit facilities for transmission lines. The vast difference in the geopolitics of these two markets, notwithstanding the common regional denominators such as the need for energy infrastructure development, may require a breakdown of the agreement into two loosely connected action plans.
The eastern market would comprise of Nepal and Bhutan, each with hydroelectric potentials of 83,000MW and 30,000MW respectively, providing electricity to India and Bangladesh. India will also aim to export electricity from its northeast region to its eastern states through Bangladesh.
However, the realisation of crucial multilateral projects in this region has been held down by India’s refusal to provide Bangladesh access to Nepal and Bhutan through India. Bangladesh has formally requested a “power corridor” to access the Bhutanese and Nepalese markets several times, each of which has been turned down.
This is despite the fact that very recently, Bangladesh agreed to allow India to transfer hydroelectricity from Assam to Bihar through Bangladeshi territory. For the Saarc energy agreement to have any impact, allowing Bangladesh to access the hydroelectric markets in Nepal and Bhutan is crucial, and this issue should be looked at with pragmatism, in light of the need to strengthen the relationship between the two friendly but often disputing neighbours.
In addition, if India seeks to exploit the more than 5,8971MW of hydroelectric potential in its northeast region, Bangladesh would be a natural partner in transmission and trade, owing to its geographic position. Bilateral negotiations in this regard would be a lot smoother if reciprocity is shown by India regarding the provision of a power corridor for Bangladesh to access electricity from Nepal and Bhutan.
Some analysts may argue that the western market is much more problematic due to the continuing conflict between Afghanistan and Pakistan, and Pakistan and India, which to some extent overshadowed many Saarc Summits, including the recently concluded one in Kathmandu. However, the gateway to the Central Asian region provided by Pakistan and Afghanistan, and the opportunity for India to tap into some projects that are already underway in that region, makes the western market very important in terms of energy cooperation.
In addition to the potential trade in electricity between India and Pakistan, two other projects that are underway will be greatly enhanced if they can be linked to the South Asian region via India: The CASA-1000 project and TUTAP.
CASA-1000 envisions the transfer of excess hydroelectricity from Kyrgyz Republic and Tajikistan in the summer months, when there are huge shortages of power in Afghanistan and Pakistan. The TUTAP project consists of Turkmenistan, Uzbekistan, and Tajikistan trading in power with Afghanistan and Pakistan.
These two projects are conceptualised under the Central Asia-South Asia Power Transmission initiative, and therefore, long-term objectives of such projects should link them to India, which would increase the number of stakeholders in the project and provide greater opportunities for peace building between India and Pakistan.
It may even provide a platform for perceiving common interests in Afghanistan by the two South Asian rivals. The countries involved in the CASA-1000 and TUTAP projects should thus collectively approach India to join the project, keeping in mind that, in the very long-term, the Saarc Energy Grid may well be connected to the Central Asian electricity grid.
Energy for prosperity and peace
The agreement signed on November 28 may have given some hope for the realisation of energy cooperation in South Asia. However, it needs to be understood that an overarching agreement has little impact on project-based cooperation, owing to the centrality of India in the South Asian geography. The follow-up of the agreement should thus be two separate action plans: One for the western market, and another for the eastern market.
Within such action plans, arguably, one of the most important aspects would be the issue of financing infrastructure development, for which South Asian countries must come up with innovative means of attracting international donors. In addition, the action plans must conceptualise energy in the economic, geopolitical, and social realms.
In addition to the overt purpose of fueling economic growth, the plans should thus include issues such as affordability and accessibility, owing to the 584 million people in the region who do not have access to electricity. Most importantly, the peace-building capabilities of energy projects must be recognised and duly exploited.
Saarc countries must come together to envision energy as the means of reducing low-level political conflicts in the eastern market by binding countries together via mutual benefits, and as a deterrent to high-level military conflicts in the western market by incentivising peaceful means of dealing with intractable disputes.
DECEMBER 24, 2014