Energy Co-operation is Necessary for Development of SAARC Countries

Energy is the key ingredient of the socio-economic development of every country and every region. SAARC member countries are very poor but also the fast growing in the world so, energy is crucial part for the development of these countries.

South Asian region has basic feature of growing economies and high population growth rate on the other hand, per capita energy consumption of the region is least in the world. A huge population of this region is using the traditional and inefficient energy resources that are also polluting the environment. All the countries also have low per capita income which lacks the access to the advanced energy sources which are expensive. This region is facing the challenge of poor energy state to meet the requirements. Oil import is increasing in the SAARC countries and also there is a need of heavy investments for the development of energy market, which itself another challenge for the region. In SAARC countries, energy was neglected in measures to support the economic development for a long time. However, it has a key role in the three dimensions of economic development which are:

Social Dimension (fight against poverty)
Economic Dimension (security of supply)
Environmental Dimension (environmental protection)

Demand of energy is very high in the South Asian countries and the rate of growth of consumption is three to four times higher than developed countries. SAARC countries are using coal and certain renewable energies (conventional biomass) instead of oil gas and nuclear energy. Biomass is frequently used that raises the risks for health and environment.

There is a great need for the development of power market within the SAARC countries. But there is lack of investment in the energy sector because these are developing countries and the public sector could not afford alone. Private sector investments must therefore be attracted. All SAARC member countries are dependent on imported energy which is likely to increase due to fastened economic growth, if in the meantime no major discoveries of oil or gas are made. Energy import bill will go higher, also because of increased oil prices .Cooperation in the demand side of the energy in the SAARC countries is one the most promising avenues of the approach. SAARC countries must cooperate to manage the energy demand more effectively for the survival through measures which support energy efficiency. However, this needs sufficient funds, advanced technologies and a propitious legal and financial framework. Cooperation in the management of energy supply can lead to greater stability in the energy sector.

In South Asia the need of energy particularly electricity, is rapidly growing. Improved electricity supply is a key for economic growth and improving social services.

Electricity is not available around the 1.5 billion population of the SAARC member countries, especially in the rural areas, which adversely affects the efforts to reduce poverty and create better opportunities for all.

National energy systems are autarchic with weak or non-existent interconnections. There is little cross border trade of electricity, with the exception of India-Bhutan trade, and none in natural gas.

Energy resource surplus South Asian countries (Nepal and Bhutan, Central Asian countries, Iran and Myanmar would surely benefit from energy export-led growth and accomplishment of large-scale regional projects which otherwise would be infeasible; those with considerable energy export requirements (Pakistan, India, Sri Lanka and Afghanistan) would enhance energy security as would the other (Bangladesh) from improving the energy mix.

A two-track approach:

(i) Enhancing energy trade through specific projects, whether bilateral or multilateral.
(ii) Strengthening regional organizations and institutions, to complement the first track, help augment mutual trust and confidence, and develop conditions for scaling up.

There are two regional energy trading hubs, one at the western flank of the region, consisting of Pakistan, Afghanistan and north-western India as importing markets of energy that trade with Central and Western Asia. The other hub is at the Eastern flank of the region consists of Bangladesh, Nepal, Bhutan and Sri Lanka. Both hubs could develop steadily, with India eventually bridging the two hubs into a region-wide integrated energy market.

SAARC could play a key role in helping build mutual trust, integrated energy market, build up regional institutions and physical infrastructure, and partner with development organizations.

Differing resource endowments, development requirements, and demand patterns among the SAARC member countries and its neighborhood create considerable opportunities for cooperation and trade in the energy sector and – eventually, for creating one of the world's largest integrated energy market. Without the cooperation in the energy sector SAARC member countries are not able to secure their future and their high dependency on the other countries for the import of energy increasing the bills and darken the ways of the economic development. Its is essential for the SAARC member countries to cooperate with one another in the energy sector and provide the financial and technical support to each other in order to create the integrated energy market and brighten the ways of economic development for the future.