November 16, 2011
India's march toward rapid development generates hope and optimism, but a growing mismatch between supply and demand presents enormous challenges. Charles Ebinger, Director of the Energy Security Initiative at the Brookings Institution, painted a bleak scenario when he talked about the likelihood of India facing a severe energy crisis by 2035. Ebinger, who recently wrote Energy Security in South Asia: Cooperation and Conflict, delivered a lecture on the topic at The Fletcher School on November 16 as part of an ongoing Resource Conflicts Seminar Series.
Charles Ebinger has worked with every government in Pakistan since 1977, advised many governments in Nepal, and has been a part of the regulatory reform process in eight states in India. He said that despite being beset with instability, Pakistan has been able to maintain fairly impressive growth, and Bangladesh is not far behind. However, the staggering growth in population, ever-growing energy needs, and massive urbanization in South Asian countries are putting immense pressure on energy supplies. He stressed the importance of greater cooperation among South Asian countries to tackle the impending energy crisis.
More than 400 million Indians have no access to electricity, and the power sector is plagued by the dual responsibility of the states and the central government. From inefficient grids to dilapidated transmission lines, India's energy sector is desperate for reforms. “In the 1990s, India had hoped to start six high profile projects, but only two of them have seen the light of the day. There are a number of government organizations with overlapping mandates to deal with energy issues. Electricity is provided free to farmers and natural gas is highly subsidized, and there are State Electricity Boards that are sometimes at loggerheads with central government policies,” Ebinger told the audience.
India is one of the world's biggest generators of wind power. Nonetheless, it will only account for less than four percent of India's energy needs. Electricity is also generated through hydropower in Nepal, India and Bhutan, and this particular sector is booming. Ebinger remarked that the GDP of Bhutan almost doubled after a dam was built, and it doubled yet again after the construction of another dam.
However, hydropower has mostly been developed in northern India, and while it has a lot more potential, these areas are heavily populated, and hydropower projects are hard to develop. Ebinger drew attention to the underdeveloped gas pipeline networks that are still not well connected. He recalled that Cairn India Ltd. had to coordinate with 1,400 village councils and two state governments to build a 100 kilometer pipeline in India. Disputes over royalties between state and central governments are also a reality. Ebinger called for price reforms and said that murky land title rights are impeding progress on the projects.
India produces more than seventy percent of its electricity from coal, and in Pakistan this figure is about twenty five percent. Pakistan, in particular, needs help in the energy sector because textile mills – the backbone of its economy – are shutting down. “Many cities remain without electricity for several hours during the day, and there have been demonstrations against the government. Extremists have tried to exploit this situation. People are turning against the government,” said Ebinger.
Pakistan’s Baluchistan province produces more than eighty percent of the country's energy requirements; however, it remains politically marginalized and economically underdeveloped. Pakistan has recently found huge reserves of coal deposits, but the area is inhospitable and lacks infrastructure. Ebinger highlighted that despite many promises made by the government, the Thar coal reserves in Pakistan have not been fully developed as the area lacks infrastructure. Now, China has decided to invest billions of dollars in the project to develop infrastructure and to construct transmission lines, communication facilities and road networks.
Ebinger said that South Asian nations will have to bridge the gap between energy supply and demand through imports. This scenario puts India in direct competition with China, South Korea and other developing nations. Ebinger gave several instances where India had the opportunity to tap the huge potential reserves of energy in other countries, yet Indian political leadership dithered to take decisive action. As a result, China has been able to secure a number of projects, and this trend could ring alarm bells for India in the future.
In Ebinger's view, several reasons have prevented South Asian countries from coming to a joint platform to solve the energy crisis. “There are many areas of potential cooperation among the countries of South Asia, as well as with their nearby neighbors in central Asia and the Middle East… but due to deep seated ethnical and political animosity, it has failed to come to pass.”
-Sachin Gaur, MALD candidate F13