Answer: India’s energy diplomacy for ensuring energy security in the South-Asian region ranges from cross- border electricity trade to supplying petroleum products and setting up liquefied natural gas terminals. Cross-border energy trade is a key aspect of India’s ‘neighbourhood first’ policy, with plans to build energy links to check China’s growing influence. Need for energy cooperation in South Asia:

• To match the energy demand and resource endowments among the South Asian countries:
  • For instance, India, Pakistan and Bangladesh account for the major share of natural gas and coal resources in the region. However, these countries also have huge resource demand due to large populations.
  • Bhutan and Nepal, on the other hand, have hydropower potential in excess of their demand for electricity over the foreseeable future and offer the best prospects for intra-regional electricity export.
• Enable access to clean energy: A large section of the population, particularly in rural areas, lacks access to electricity and relies on the traditional use of biomass for cooking.
• Leverage economies of scale in energy procurement: Regional energy transfer will increase countries’ access to energy resources (from outside the region) and leverage economies of scale thereby.

Existing gaps in South Asia’s energy cooperation:

• Resources constraints: While coal is abundant in India, Bangladesh and Pakistan, it is not considered a fuel of the future due to its pollutant effects and negative impacts on society through mining-induced displacement of vulnerable communities. On the other hand, while gas is comparatively a cleaner hydrocarbon, supplies are depleting in Pakistan and Bangladesh.
• Issues with mobilization of financial resources: Financial resources are needed to develop the necessary energy infrastructure. One of the major reasons for this is the state-centred approach towards energy security that is primarily based on government-to-government interactions and the use of public sector enterprises.
• Lack of diversification of fuel basket: There is an overarching dominance of a single fuel in the energy mix across all SAARC nations. India, for instance, is heavily dependent on coal, Bangladesh and Pakistan on gas, and Bhutan and Nepal are predominantly hydro-based energy generators, which leaves countries vulnerable to disruptions caused by market and technological failure.
• Limited focus on renewable energy: Despite abundant renewable sources available across the region, they have not been efficiently tapped. Afghanistan, for instance, has large renewable resources, which, if exploited fully, could help reduce supply gaps.
• Slow progress on regional and multilateral projects: Despite recent progress in negotiations, no construction has yet taken place and doubts have been raised about the completion of the projects in this regard.
  • Overarching political differences: At present SAARC, SASEC AND BIMSTEC are the three established institutional mechanisms dealing with regional energy cooperation in all or some of the South Asian countries. However, cooperation among member countries has not been as successful as expected due to political differences.

South Asian nations need to see the comparative advantages they hold in various energy sectors, and must come together to benefit each other via trade links. India must take a lead by facilitating financing, developing harmonized technical regulations, deepening professional networks, and enhancing regional business opportunities. In this direction, a high-level group, namely the South Asia Group for Energy (SAGE), has been set up for promoting, initiating and facilitating effective policy dialogue and capacity building on bilateral, sub-regional and regional basis for energy and related issues among South Asian countries.