The Geopolitics of Energy in South Asia: Energy Security of Bangladesh [1 ed.] 0367618729, 9780367618728

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The Geopolitics of Energy in South Asia

This book examines the relation between energy and politics in South Asia and explores the geopolitics surrounding energy security in the region. Analyzing energy security and the scramble for resources in South Asia, the book highlights the important role of energy in light of the rapid economic growth of South Asian countries. The book analyzes the current energy security status of the countries in South Asia, their strengths and weaknesses, and the policies that need to be implemented in order to ensure their energy security. Focusing on Bangladesh as a case study, the author argues that the country is geographically important both in respect to its energy resources and as an energy hub. The author applies a novel analytical framework to measure the energy security of the region and examines the role of the US and China in this geopolitical scenario. A new assessment of energy security issues and the geopolitical aspect of energy security, this book will be of interest to researchers in the fields of energy studies and security, International Relations, South Asian Studies and Asian Politics. Chowdhury Ishrak Ahmed Siddiky is Adjunct Associate Professor at the University of Asia Pacific, Bangladesh, and the Deputy Director of the South Asian Institute of Advanced Legal and Human Rights Studies (SAILS), Bangladesh. He is also a practicing lawyer at the Supreme Court of Bangladesh and the editor of The Rule of Law in Developing Countries: The Case of Bangladesh, published by Routledge (2018).

Routledge Contemporary South Asia Series

12 Bangladesh and International Law Edited by Mohammad Shahabuddin 13 Terrorism and the US Drone Attacks in Pakistan Killing First Imdad Ullah 14 The Bangladesh Garment Industry and the Global Supply Chain Choices and Constraints of Management Shahidur Rahman 15 Globalising Everyday Consumption in India History and Ethnography Edited by Bhaswati Bhattacharya and Henrike Donner 16 Islam and Religious Change in Pakistan Sufis and Ulema in 20th Century South Asia Saadia Sumbal 17 Socio-Cultural Insights of Childbirth in South Asia Stories of Women in the Himalayas Sabitra Kaphle 18 The Geopolitics of Energy in South Asia Energy Security of Bangladesh Chowdhury Ishrak Ahmed Siddiky 19 Transdisciplinary Ethnography in India Women in the Field Edited by Rosa Maria Perez and Lina Fruzzetti For the full list of titles in the series please visit: www.routledge.com/RoutledgeContemporary-South-Asia-Series/book-series/RCSA

The Geopolitics of Energy in South Asia Energy Security of Bangladesh

Chowdhury Ishrak Ahmed Siddiky

First published 2021 by Routledge 2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN and by Routledge 605 Third Avenue, New York, NY 10158 Routledge is an imprint of the Taylor & Francis Group, an informa business © 2021 Chowdhury Ishrak Ahmed Siddiky The right of Chowdhury Ishrak Ahmed Siddiky to be identified as author of this work has been asserted by him in accordance with sections 77 and 78 of the Copyright, Designs and Patents Act 1988. All rights reserved. No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers. Trademark notice: Product or corporate names may be trademarks or registered trademarks, and are used only for identification and explanation without intent to infringe. British Library Cataloguing-in-Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloging-in-Publication Data Names: Siddiky, Chowdhury Ishrak Ahmed, author. Title: The geopolitics of energy in South Asia : energy security of Bangladesh / Chowdhury Ishrak Ahmed Siddiky. Description: First Edition. | New York : Routledge, [2021] | Series: Routledge contemporary South Asia series | Includes bibliographical references and index. Identifiers: LCCN 2021005641 | ISBN 9780367618728 (Hardback) | ISBN 9780367626389 (Paperback) | ISBN 9781003110057 (eBook) Subjects: LCSH: Energy security—Bangladesh. | Energy policy— Bangladesh. | Power resources—Bangladesh. | Bangladesh—Foreign economic relations. Classification: LCC HD9502.A4 B372 2022 | DDC 333.79095492—dc23 LC record available at https://lccn.loc.gov/2021005641 ISBN: 978-0-367-61872-8 (hbk) ISBN: 978-0-367-62638-9 (pbk) ISBN: 978-1-003-11005-7 (ebk) Typeset in Times New Roman by Apex CoVantage, LLC

To my late mother Khurshid Azim Siddiky, who taught me about life.

Contents

List of abbreviationsviii List of figuresx List of tablesxi Forewordxii Introduction

1

1 The concept of energy security

16

2 Energy scenario of South Asian countries: an analysis

35

3 The geopolitics of energy in South Asia

69

4 Energy scenario of Bangladesh: policy priorities and challenges

96

5 Issues and challenges facing the energy sector of Bangladesh

111

6 Measuring the energy security of the South Asian countries: an analysis

129



143

Conclusion

Index167

Abbreviations

BAEC – Bangladesh Atomic Energy Commission BAPEX – Bangladesh Petroleum Exploration & Production Company Limited BIMSTEC – Bay of Bengal Initiative for Multi-sectoral Technical and Economic Cooperation Bcf – Billion Cubic Feet BMT – Billion Metric Tons BGFCL – Bangladesh Gas Fields Company Limited BPC – Bangladesh Petroleum Corporation BPDB – Bangladesh Power Development Board BTOE – Billion Ton of Oil Equivalent BT – Billion Tonnes CNOOC – China National Offshore Oil Corporation CNPC – China National Petroleum Corporation CPN-M – Communist Party of Nepal-Maoists CUFL – Chittagong Urea Fertilizer Factory EMRD – Energy and Mineral Resources Division EOI – Expression of Interest ETFC – Electricity Tariff Fixation Commission FSRU – Floating Storage Regasification Unit GDF – Gas Development Fund GDP – Gross Domestic Product GNP – Gross National Product GTCL – Gas Transmission Company Limited GW – Gigawatt HELE – High Efficiency Low Emission IEA – International Energy Agency IOC – International Oil Company IOC – Indian Oil Corporation IMF – International Monetary Fund IPI – Iran Pakistan India Pipeline IPP – Independent Power Plant JICA – Japan International Cooperation Agency JV – Joint Venture KAFCO – Karnaphuli Fertilizer Company Limited

Abbreviations ix KM – Kilometers KGOE – Kilograms of Oil Equivalent KWH – Kilowatt Hour LNG – Liquefied Natural Gas MCM – Million Cubic Meters MDG – Millennium Development Goals MGMCL – Maddhapara Granite Mining Company Limited MMBD – Million Barrels Per Day MMBTU – One Million British Thermal Units MMCF – One Million Cubic Feet MMCFD – Million Cubic Feet per Day MMSCMD – Million Metric Standard Cubic Meters per Day MOEMR – Ministry of Energy and Mineral Resources MOU – Memorandum of Understanding MW – Megawatt MWE – Megawatt Electric NC – Nepali Congress NDC – Nationally Determined Contribution NEA – Nepal Electricity Authority NELP – New Exploration and Licensing Policy NEP – National Energy Policy NGFF – Natural Gas Fertilizer Factory NIEP– National Integrated Energy Plan NWPGCL– North West Power Generation Company Limited OECD – Organization for Economic Cooperation and Development ONGC – Oil and Natural Gas Corporation PDB – Power Development Board PEPCO – Pakistan Electric Power Company PLA – People’s Liberation Army PSC – Production Sharing Contract PSI – Pounds per Square Inch PSMP – Power Sector Master Plan PSMP– Power Sector Master Plan SAARC – South Asian Association for Regional Cooperation SREDA – Sustainable and Renewable Energy Development Authority SDG – Sustainable Development Goals SEC – Specific Energy Consumption SGFL – Sylhet Gas Fields Limited SINOPEC – China Petroleum and Chemical Corporation TAPI – Turkmenistan Afghanistan Pakistan India Pipeline Tcf – Trillion Cubic Feet UML – Unified Marxist Leninist UNFCCC – United Nations Framework Convention on Climate Change UNOCAL – Union Oil Company of California US – United States of America WAPDA – Water & Power Development Authority

Figures

2.1 3.1 3.2 4.1 4.2

The Energy Mix of Bhutan Power Generation Mix of South Asia Energy Import Percentage of South Asia Current Fuel Mix of Bangladesh The Fuel Mix of Bangladesh in 2041

60 74 81 97 100

Tables

1.1 2.1 2.2 2.3 2.4 2.5 3.1 3.2 4.1 4.2 4.3 6.1 6.2

The Energy Use in South Asia Impact of Electricity Shortage on GDP in South Asia Access of Energy in South Asia Demand of Petroleum Products in Pakistan Primary Energy Outlook of Pakistan till 2030 Primary Energy Consumption of Nepal Energy Resources in South Asia Share of Primary Energy Supply Fuel Mix of Bangladesh in the PSMP of 2010 and 2016 Present Fuel Mix of Grid-Connected Power Generation Fuel Mix on the Basis of Installed Capacity Domestic Supply and Import of Power in the SAARC Countries Domestic Supply and Import of Petroleum Products (POL) in the SAARC Countries

25 36 38 48 54 55 70 76 98 101 103 130 130

Foreword

The world is currently suffering from the impact of the corona virus. The wheels of the economy in the West and also in South Asia have come to a halt. Oil prices have stagnated and pipeline and LNG are negatively affected. The pandemic has also destabilized the oil markets and disrupted the global supply chains. The virus has cast a shadow over renewable energy markets as solar and wind developers face an uncertain global supply chain. As a result, energy consumption and demand are diminishing. Barclays projects that global oil consumption, including that of South Asia, will decline by approximately 200,000 bpd due to the pandemic. The International Energy Agency has also revised its projected oil consumption downward by 365,000 bpd. Further, various international organizations are carrying out surveys and research on the possible impacts of the pandemic on global fuel, considering the eventual impacts on the global fuel. All these have affected the energy security of South Asia as all the countries in the region are trying to figure out a way to best deal with the situation. The importance of ensuring that energy is available at a reasonable price has been acknowledged by policy makers around the world. However, the degree of demand for energy has varied. Competition for access to world energy resources is a vital aspect of economic growth and has always been present. It is now believed that a smooth transition by the industrialized world and equitable growth in the developing world will be disturbed by a shortfall of energy. Thus, the energy sector carries great uncertainties due to its very nature. Moreover, the time scale which must be considered in designing an energy policy and determining the need for energy supply in a given country or region is normally longer. As this longer benchmark brings more uncertainty in prediction, policies and strategies need to consider alternative strategies. Further, the design of an energy strategy normally takes various basic factors into account, such as energy demand, energy supply, the function of energy markets, etc. All these are taken into account in formulating the energy policy and economic objectives of a given country. However, in the case of South Asia, there is hardly any organized energy strategy and most of the current energy policies in place are stopgap measures.

Foreword xiii The next decade will present multidimensional challenges for all the South Asian countries as their energy and power sectors would have to keep their development momentum going and overcome the lapses experienced over the last decade for achieving the SDG 7. The challenges for the next decade include ensuring affordable mix of fuel (own and imported) for achieving the cost of generation of power, modernizing power transmission and distribution network, enhancing efficiency of power and energy supply, improving governance and curbing corruption and increasing the urgency to explore and exploit petroleum resources. However, implementing these will be a major challenge for all the South Asian countries due to their huge population and resource constraints. This book covers these important aspects and discusses the various ways in which the governments of the South Asian countries deal with these issues. Ensuring energy security in South Asia can be achieved only through greater cooperation among the South Asian countries. However, due to political differences between the major countries in the region, cooperation in the sphere of energy is not always possible. The SAARC Energy Centre established in Islamabad, Pakistan, could act as a conduit in ensuring greater cohesion among the South Asian countries. Moreover, the general population of the region needs to apply pressure on their respective governments to ensure the energy security of the region. Further, greater attention also needs to be given to the climate change issues facing South Asia. The region is one of the worst in greenhouse gas emissions and if no concrete steps are taken by the policy makers, some of the countries such as Bangladesh, Maldives and even parts of India will submerge under water. This book does not cover this issue in depth, but more work needs to be done by energy experts and policy makers on this important energy security issue. Considering the current uncertain time, this book by Dr Ishrak Siddiky is ideal as it deals with the energy security issues faced by all the countries in the region. The book covers both the geopolitical and national issues faced by India, Pakistan, Bangladesh, Nepal and Bhutan and the ways through which their individual problems can be mitigated. To my knowledge, no single book has so far covered all these important energy issues facing the various South Asian nations, and this book will provide insights into how to deal with these issues in a strategically important part of the world. Dr Kamal Hossain1 Dhaka 7 December 2020

Note 1 Dr Kamal Hossain is an eminent international lawyer, energy expert and an ICSID arbitrator. He has also been a United Nations (UN) consultant in oil and gas matters in PRC,

xiv  Foreword Thailand, Malaysia, the Philippines, Trinidad and Tobago and Uzbekistan. Dr Hossain was also an ad hoc Judge for Malaysia, in the International Tribunal for the Law of the Sea, Hamburg (2003); a member of the Arbitral Tribunal under Annex VII of the UN Convention on the Law of the Sea (UNCLOS), in the Land Reclamation case involving Malaysia and Singapore, (2004–2005) and in the Maritime Delimitation case involving Guyana and Surinam (2005–2007). He was also the Vice Chairman of the International Law Association till 2016. In addition, Dr Hossain was the Minister of Petroleum and Mineral Resources and the Minister of Foreign Affairs of the Government of the People’s Republic of Bangladesh.

Introduction

As this book is being written, the global coronavirus pandemic has triggered a crash in the crude oil prices. The prices of all crude-oil linked fuels have gone down substantially. The lockdown of major countries has caused the closing down of major industries, commercial organizations and air traffic. As a result, the unprecedented decline of global fuel demand has created a huge oversupply in the global market and ultimately this has caused the oil price to fall to an all-time low. The coronavirus pandemic has also destabilized the equity and bond markets.1 There are also concerns all over the world that the share markets would plunge further. Moreover, according to the International Energy Agency (IEA), the effect of the global pandemic would be felt throughout the supply chain of the oil and gas sectors and that would have a ripple effect on other parts of the energy sector as well.2 This being the current situation, the energy security of all the countries in the world is even more precarious.

Energy scenario in South Asia The South Asia region is made up of eight countries with a combined population of 1.7 billion and is one of the most energy-starved regions in the world.3 The need for massive energy consumption becomes even more critical as the region recently emerged as the fastest growing economic region in the world with a 7.06% GDP growth.4 However, the lack of a central energy hub and a well-coordinated energy trading has led to a weak trade trajectory.5 Moreover, South Asia is considered as one of the least economically integrated regions in the world.6 The demand for energy is growing at 4.6% while the region has only 707 kWh of per capita electricity consumption as opposed to the world average of 3,128 kWh.7 The total energy consumption in the year 2015 was 928.4 Mtoe against the domestic production of only 641.7 Mtoe, leading to a massive 286.7 Mtoe of energy gap in the region.8 This gap is filled by the South Asian countries through the import of fuel from various parts of the world. A concerted effort to make full realization of power trading between the countries of South Asia is required to improve the energy security of these countries. India imports around 75% of its hydrocarbon requirements from abroad making it the fourth largest consumer and the fifth largest importer of oil and gas in

2  Introduction the world.9 Other than renewables and alternative sources of energy, hydrocarbons meet around 40% of the energy requirements of the country.10 India has 20% of the world’s population, but has only 3.3% of its energy.11 As a result, the domestic demand is met by 85% of imports from abroad. Further, this demand and supply crunch is not being met by exploration and exploitation of the country’s own resources. India has 26 sedimentary basins equivalent to the land area of 3.14  MMkm2 which offers a vast potential of hydrocarbon resources. Although there are no separate estimates for the oil and gas reserves in the Indian Ocean, it is estimated that the region may have around 32 BT of mineral resources.12 Pakistan, on the other hand, is suffering from a lack of exploration and exploitation of its gas resources. The current gas reserves in the Sind province have rapidly declined over the years resulting in the rising population facing load-shedding for hours.13 The country has also not been exploiting its coal reserves which are further causing its energy crunch. Pakistan like India is heavily reliant on the import of oil from the Middle East, which is also draining the country economically. The country has also not invested in renewable energy or has diversified its fuel mix. Nepal and Bhutan rely on their hydropower resources for the supply of energy in their countries. Both the countries have invested heavily in hydroelectricity and have built their energy infrastructure around it. However, Nepal is currently facing a supply crunch due to its reliance on hydropower resources and is trying to diversify its fuel mix. Meanwhile, Bhutan is unwilling to exploit any of its other resources as it wants to keep its environment pristine. Although the country is in balance in regard to its energy supply, it needs to expand and diversify its resource base in order to deal with the future demand.

The case of Bangladesh Bangladesh is currently dependent on onshore fields for its gas output, with production hovering around 2,700 MMCFD against the demand for over 3,300 MMCFD.14 To meet the growing energy demand and depleting onshore energy reserves, the country has belatedly concentrated on exploring oil and gas reserves in the Bay of Bengal. The Bay of Bengal is the least explored area for potential oil and gas reserves. Both India and Myanmar discovered gas in the western and eastern parts of the Bay of the Bengal.15 Geological studies also suggest that Bangladesh can have significant gas resources in the onshore and offshore belts. However, till now, Bangladesh has failed to explore these resources properly in order to deal with its energy supply crunch. Moreover, the country’s own gas reserves used to contribute about 89% of the fuel mix for the generation of power till the year 2009.16 However, that contribution has now dropped to about 62%.17 The government, in order to manage the gas crisis, has diverted the gas from the new industries.18 The government has also initiated the process to set up liquid fuel-based power plants as a contingency measure for confronting the crisis. Further, the recoverable reserve of natural gas in Bangladesh is 27.9 Tcf, out of which only 11 Tcf of gas remains.19 As a result,

Introduction  3 the entire reserve will be depleted by the year 2031 if no new gas reserves are discovered.20 The Power Sector Master Plan (PSMP) 2010 considered coal as the preferred fuel for generating 20,000 MW of power.21 However, the PMSP 2015 brought down that estimate to about 35% with the entire coal being imported from abroad.22 This is striking as the country has substantial coal reserves. According to experts, [E]xploring own coal and setting up of coal power plant is the best option for Bangladesh for supplying power at affordable cost . . . there are challenges for mining coal but there are technology for successfully managing all challenges and impacts, however mining is now a political issue, without a political decision, it is no longer possible to start coal mining.23 As a result, due to the political issues surrounding coal mining, the resource cannot be used for power generation. The government is also trying to ensure efficient use of power and energy. It is currently working to achieve a target of reducing 30% of power use through implementing efficient use of power and energy.24 The work of Sustainable and Renewable Energy Development Authority (SREDA) is quite visible in the country, as it has started constructing high-efficiency power plants. The average efficiency in power generation is currently 33%.25 Although a lot of progress has been made by Bangladesh to diversify its fuel mix, the average import of oil, LNG and coal for power generation has increased which is not healthy for the energy security of the country.

Energy security and South Asia The concept of energy security is extremely difficult to define as the concept is different for different stakeholders. On the one hand, the producing country considers it as exporting their resource to a stable and secure importer, while for the importing country, it means importing a secure supply of energy at an affordable price. On the other hand, the transit country would consider it as a secure supply of energy going through their country allowing them to earn tariff. Further, the import of energy from external sources, high price of energy and a rapid depletion of energy resources causing a significant supply crunch have resulted in a lack of energy security in South Asia.26 Moreover, all these factors have implications toward energy security. There could also be an argument regarding the import of energy supply not being negative as long as the supply is secured and the importing country has the available resources to buy them. Moreover, the depletion of mineral resources in the world is also debatable as new technology and innovation have increased the supply of oil. However, the question of energy security arises when energy-rich countries use it as a weapon on the bargaining table and geopolitics rather than economics influence their decision-making. As a result, a proper energy policy is required to assess the current and future demand and access to energy.

4  Introduction Another important aspect of energy security is the ability of a country to shift from one source of energy to another. This could mean changing the supplying country due to a better price or changing the source of energy from oil to gas. This ability to change is of extreme importance, as the diversification of energy mix allows the country to have options to meet its energy demand. However, it might be difficult to have various options for a secure supply of energy due to competition from other countries for the same resource. For example, most of the South Asian countries import their oil from the Middle East, which results in higher prices and no alternatives for them.27 Moreover, the concept of energy security in terms of oil and gas is different. This is because gas is difficult to store and its transportation infrastructure is different from that of oil.28 As a result, a physical link between the producer and the consumer has to be created as alternative routes to supply are also limited. For example, a cargo of oil destined for Europe can easily be switched to Bangladesh. However, this is not possible for the supply of gas. This is because, unlike gas, oil transportation is not costly, and therefore oil that is destined for a specific place can easily be redirected to another destination.29 Moreover, unlike the global oil market, the market for gas is regional.30 Further, any disruption in the supply of oil will have a global implication which is not applicable for the supply of gas. This is because the cost of gas transportation is higher than that of oil, and its delivery systems are inflexible.31 Moreover, the development of gas in a particular region or a country is isolated due to a lack of switching between routes which means disruption in one region might not have global consequences.32 Also, the security of gas supply is concerned with physical shortage, while for oil it is price shocks in the world market.33 It is also important to note the differences between the definitions of oil and gas security. Gas security is defined as the “guarantee that all the gas volumes demanded by customers will be available at a reasonable price”.34 Oil security on the other hand means “reliable and adequate supply of energy at a reasonable price”.35 The difference between these two definitions is that gas security is linked with demand without considering the adequacy of gas supplies in all the sectors.36 For example, if a particular sector in a country uses gas and it cannot be obtained, then it can be substituted by other fuels, such as coal or oil. However, the same is not the case with oil, as some sectors are totally dependent on oil which cannot be substituted.37 As a result, the market for oil is global in nature as any shock in price or in the production of oil will have major consequences all over the world. The nature of the oil market is such that even if the oil-producing country increases its output in order to counter the import in the country, any fluctuation of price in the world market will also affect the domestic price of oil in that producing country and might adversely affect its economy.38 The concept of energy security can also be divided into security of demand and security of supply. Security of demand includes rules on taxation on energy products, state rules on aid and subsidies.39 As a result, all these demand side management will regulate demand, lower the dependence on imported energy

Introduction 5 and improve the security of supply of a country.40 The security of supply, on the other hand, ensures access to energy in any part of the world. For example, if any country in South Asia requires the supply of energy due to increased demand in those countries, then there is a need to import the energy from outside the region. As a result, supply security becomes important. Moreover, demand side measures are also crucial as they will increase the energy efficiency of countries. According to experts, countries should develop energy savings in the residential and industrial sectors through various measures such as through certification of buildings, billing of heating and cooling costs according to consumption, third party financing in the public sector and energy audits of energy intensive industries.41 Taxation could also play an important role in ensuring that countries can control their level of consumption and lower subsidies.42 Although there is clearly a difference between oil and gas security, the risks faced by both are similar. According to an expert, they have the following similar risks: i) reserve depletion, ii) the structure of supply contracts, iii) the investment regime, iv) the insecurity of energy sources, v) the insecurity of energy transit routes and vi) the insecurity of energy facilities.43 The South Asian region is heavily reliant on energy resources imported from other countries due to depletion of mineral reserves in their own respective countries. India, Pakistan, Bangladesh and Nepal import oil from the Middle Eastern countries. India’s oil reserves have depleted over the years, while Pakistan, Bangladesh and Nepal do not have any oil resource. The transportation sectors of these four countries are heavily reliant on oil while some power plants are run on it. All these risks increase the energy insecurity in these countries. Moreover, the South Asian countries also import gas to run their various power plants throughout the region. India, Pakistan and Bangladesh import a huge amount of gas into their countries while Nepal and Bhutan are not that far behind either. All the countries importing gas have to sign the long-term gas supply contract from the supplying countries. These long-term supply contracts are not always beneficial because of the fluctuation of demand at times. For example, Bangladesh imports gas from Qatar and during winter months the demand for energy in the country decreases. However, despite the fall in demand in the winter months, it has to continue importing gas at the same rate as before in order to honor the contract.44 A lack of investment in some of the South Asian countries has also resulted in the supply crunch. Most of the countries lack a proper energy infrastructure and requires a huge investment to upgrade the current energy facilities. For example, China has invested billions of dollars in the energy infrastructure of Pakistan and Bangladesh.45 Meanwhile, India has invested in Nepal, Bhutan and Bangladesh.46 However, a lot more investment is required by the international oil companies (IOCs) in the exploration of oil and gas in these countries. This is due to the fact that the national oil and gas companies of most of the South

6  Introduction Asian countries lack the technical know-how and people to carry out complex projects in the region. Most of the South Asian nations are reliant on oil and gas from the Middle East although some receive their gas from the Central Asian countries. However, there is reliance on the import of their fuel mix from the Middle East due to their longterm relationship with them. This might be a source of energy insecurity because the Middle East is a volatile region and any disruption in the supply of resources could have a negative impact on the economy of the South Asian countries. Moreover, the supply and transit routes could also be a source of problem as there is a need for greater diversification in the supply and access of the energy resources. The insecurity of energy infrastructure is also prevalent in India, Pakistan and Bangladesh. All the three countries have security risk toward their energy infrastructure due to terrorist threats. Further, the energy infrastructure of all the South Asian countries requires an urgent upgrade in order to increase their energy output and lower the energy supply issues prevailing in these countries. However, a greater investment in the energy infrastructure of the region is currently taking place which will enhance the energy security of the countries. The tendency of all the South Asian governments to heavily subsidize the energy products is also detrimental to the demand side of energy security. In Bangladesh and Pakistan, the price of energy is heavily subsidized for the consumers resulting in the government creating an artificial bubble in the energy market. As discussed earlier, lowering of subsidies is a key area where all the governments of the region can work in order to increase the energy security of the countries.

The analytical framework As discussed in the earlier sections, the concept of energy security is multidimensional and has different meanings for different stakeholders. As a result, four criteria will be used to analyze the energy security situation of the South Asian countries. These are as follows: i) the availability of resources,47 ii) the accessibility of resources,48 iii) the affordability of resources49 and iv) the geopolitics of the resources. Availability of resources will help us to understand the current energy scenario in all the South Asian countries. Due to the supply crunch prevailing in all the five countries, there is a lack of domestic supply causing all these countries to import fuel. Further, the dependence on a very few countries to supply their energy mix is also worrying as any supply disruption will have a very negative impact on the economy of these countries. Accessibility of resources is an important criterion as all the countries except Bhutan have seen their resources deplete over the last two decades. Moreover, countries like Bangladesh and Pakistan have not been able to make any new oil and gas discoveries resulting in each of these countries running out of gas between ten and twelve years’ time, respectively.50 As a result, these countries need to get access to new resources. Further, a lack of proper energy infrastructure is also a

Introduction 7 drawback for all the countries in South Asia to access resources domestically and internationally. All the countries in the region heavily depend on imported fuel mix to run their economies. As a result, the affordability of resources is important for measuring the energy security of the developing countries in the region. Due to overdependence on imported fuel, all the countries spend a substantial amount of their money to run the transportation and economic sectors of their country. Further, energy subsidy to the population further pressurizes the governments of the region, as the consumers are not paying the actual amount of money for the energy services being rendered. The South Asian region is extremely volatile due to the conflict between India and Pakistan. As a result, the geopolitics of the energy resources also adds another dimension to the political climate in the region. All the energy-starved countries in the region have failed to cooperate among themselves due to internal and external actors. External actors include the US and China, while internally India tries to dominate over the other countries in the region. The great power game between the regional and outside powers plays a dominant role toward the energy security of all the countries in the region.

Geopolitics and the concept of cooperation in South Asia from the perspective of international relations theories Geopolitics is an integral part of understanding the current energy security issues in South Asia. Geopolitics is also one of the criteria used in this book for measuring energy security.51 The entire South Asian region was a colony of the British Empire, which had long-lasting effects on the racial harmony and politics in the sub-continent. The division of countries along racial and religion lines was always controversial and despite 70 years of independence from the British, division among South Asian countries persists and it is having a detrimental effect in the realms of energy as well. Almost all the countries of South Asia have energy security issues due to energy crunch faced by the countries in the region. As a result, a strong bond and cooperation is required among all the South Asian nations to ensure that the energy security problems can be dealt with. The South Asian Association of Regional Cooperation (SAARC) created in 1985 was an organization set up to meet the needs of the South Asian countries.52 However, despite having such an important regional organization, this organization has been made redundant due to geopolitics and internal squabbling among its members. As a result, to understand the geopolitics of the region and the outside actors involved, it is important to understand these dynamics from the perspective of international relations theories which are adept in analyzing the behavior of the South Asian states and the reason why they fail to cooperate despite cooperation being the only remedy that can solve the energy security issues in the region.

8  Introduction The realist and neorealist schools The realist perspective could be associated with power-based theories including hegemony, relative gains and distributional conflict. According to realists, a lot of obstacles hinder having international cooperation, which in turn causes difficulty in forming international cooperation.53 For realists, power is the ultimate source for forming and maintaining cooperation. Moreover, they are of the opinion that without power, it is difficult for any cooperation to last in the long run, and without hegemonic power there would be no formation of cooperation in the first place.54 They believe certain cooperation could be formed for mutual interest which includes the security and sovereignty of states. The concept of political autonomy is also compatible with realist views. In the context of South Asia, the largest country India often acts like a realist as it prefers bilateral rather than multilateral cooperation to deal with energy security issues in the region. Since India is the most powerful country in the region, it has the strength and leverage to form and maintain cooperation with other South Asian countries. Moreover, the other countries like Bangladesh, Pakistan, Nepal and Bhutan are often coaxed into following the leadership of India due to its economic and military strength. However, realists also believe that cooperation is not possible and there are a lot of obstacles toward achieving it because each and every state wants to have sovereignty over its needs and as a result is reluctant to depend for its needs on others. In fact, autonomy is extremely important for them in this anarchic world and interdependency goes against that philosophy even if it provides short-term gains.55 For example, despite repeated attempts to have a South Asian electricity grid, the plan has still not materialized due to India’s reluctance in depending on other countries to supply their energy needs. Further, autonomy is important for India as well because that allows it to control its energy supply which is a realist trait. Neorealists, on the other hand, point out that states are more interested in relative gains than absolute gains because larger gains by other states can in the long run lead to confrontation.56 In a cooperative setting, there is always a possibility of some states gaining more than the others, which in turn will lower the support for the regime. Moreover, the problem with cooperation is that some states within a regime can cheat and get away with it because there is no effective monitoring. Even if there is a breach and a member is caught, there is no effective way of sanctioning them, resulting in states losing their faith in cooperation. Fritz Scharpf also points out that while the benefits of cooperation are more attractive than the outcomes expected in the case of non-agreement, cooperation is seriously threatened by distributive conflict over the choice among cooperative solutions. . . . It is probably fair to say that in the majority of ongoing relationships that is the major obstacle to cooperative solution.57

Introduction  9 SAARC is a good example where the benefits accrued by all its members vary according to their strength and leverage. Although all the countries try to benefit from this regional organization, India and Pakistan tend to benefit more due to their size and strength. For example, India has signed energy agreements with Nepal and Bhutan which allows them to participate in the domestic and international markets of those countries. However, this is not an absolute gain for India because it has to compete with China in the building of energy infrastructure in these countries resulting in India being content with its relative gain. Pakistan also tries to dominate in the energy landscape of Afghanistan and has to fight with India and the US in order make any gains from its cooperation with the former. However, neorealists also believe that some cooperation may be of mutual benefit if it concerns security aspects of states, but overall, this cooperation will tend to have a very limited impact on world politics. This is because the hegemonic states with their sheer power and influence would be able to achieve relative gains according to their wish with little or no effort at all and can make their position stronger.58 In a cooperative setting, states not only focus on whether or not they are willing to forgo certain policy making autonomy but are also worried about the gains that the other partners might make. Waltz points out that when faced with the possibility of cooperating for mutual gain, states that feel insecure must ask how the gain will be divided. They are compelled to ask not “will both of us gain? But who will gain more?” Even the prospect of large absolute gains for both the parties does not elicit their cooperation as long as each fears how the other will use its increased capabilities.59 China’s recent investment in the energy sector of Pakistan, Bangladesh and Nepal has resulted in all the three countries being close to China for developing their energy infrastructure. This has resulted in India worrying about its hegemonic status in the region, and this new cooperative structure has resulted in India feeling insecure and questioning how its gains will be divided with China. Moreover, since there is no prospect of China and India cooperating with each other, India will find it difficult to compete with the latter in the energy landscape of the region due to China’s superior economic and military power. As a result, from the neorealist perspective, China has every possibility of making absolute gain compared to India in the energy sector of the region. However, Grieco points out three important aspects regarding this matter. He points out that i) states sensitive to the distribution of gains are not really relative gain seekers, ii) states are not only relative gain seekers but also want absolute gains. As a result, they do not have problems going for cooperation at least in the short run, iii) although states are never completely indifferent to differences in gains, their sensitivity to relative losses varies.60

10  Introduction As a result, taking these three aspects into consideration, it is clear that China seeks absolute gain through its involvement in the energy sector of the region. India on the other hand has to accept relative gains and losses due to greater investment in the energy sector of other South Asian countries by China. Realists also believe that some cooperation which protects the political autonomy of states is compatible with their theory. This relates to the autonomy of states to control the business and political environment within their boundary or adjacent to it. This does not cause any problem for cooperation because states do not depend upon others for help, the states themselves can monitor the activities through their own security agencies that ultimately do not affect the states’ power in any way.61 The neoliberal school Neoliberals advocate for collaboration among actors. They consider states as rational egoists who are interested in their own goals and gains. They believe that cooperation promotes common good and is best suited when its participants or members include benign hegemonies. According to them, power might be necessary for the formation and maintenance of cooperation, but it is not the only criterion because different members within a cooperative setting have different interests and all these interests and expectations too play a big part in cooperation and should not be overlooked. The situation of Bangladesh, Nepal and Bhutan has similarities with the neoliberals as all the three countries have sought cooperation in order to deal with the supply crunch affecting these countries. Bangladesh has signed agreements with Russia, China and India for the building of nuclear, coal and oil-based power plants in order to increase its energy security. It has also accepted the leadership of India in the region and although there is mistrust among the two countries, Bangladesh believes cooperating with India will allow them to reap more benefits than from others. States might not also be overly bothered about the decision-making autonomy once they see they are making some gains from cooperation. As a result, they will be willing to trade off their decision-making and other political autonomy in order to make those gains which will serve their interest more. According to them, there are not that many issue areas which might make states feel threatened if other states gained more than them.62 In fact, Keohane states that opposition to cooperation due to some actors getting more relative gain than others “is theoretically implausible when applied to situations in which substantial mutual gains can be realized through cooperation and in which governments do not expect others to threaten them with force”.63 As a result, states will cooperate where there is mutual gain and even if they gain less than others in a cooperative regime because it serves their purpose. However, neoliberals do accept the fact that sometimes powerful states might gain more than other states, but all states gain to some extent from cooperation. Keohane also states that reciprocity is the most important aspect of cooperation among egoistic states. In the context of South Asia,

Introduction 11 although India gains more from its hydropower agreements with Nepal and Bhutan, the latter tends to benefit from the investments made in their countries. Neoliberalists also believe that there are some formal and informal institutions which help in facilitating cooperation among countries. These institutions play a role during negotiations and help to monitor and provide transparency between various actors within a cooperative regime. They also help to sanction members if they fail to abide by the rules and procedures. As a result, there is little chance of cheating, as argued by realists. Neoliberals believe that although there are certain obstacles toward cooperation, there is nothing to worry as long as states have mutual interest and understanding in an issue area which will facilitate further cooperation. This in turn would help overcome any obstacles toward cooperation. For example, SAARC despite being dysfunctional has promoted cooperation among the countries of South Asia. Although the interests of bigger states like India are an obstacle for cooperation in the organization, there are other mutual interests among the other countries that have kept the organization together. Bangladesh created SAARC in order to bring greater cooperation among all the countries in South Asia. The creation of SAARC was opposed by both India and Pakistan, the two hegemons in the region due to their belief that the smaller countries were trying to corner them. Moreover, both these countries joined SAARC to control the organization for their own benefits. However, the organization is now dysfunctional due to India’s conflict with Pakistan. As a result, this neorealist attitude by two of SAARC’s largest members is in sharp contrast with the other members who are neoliberal in nature. Bangladesh, Nepal, Bhutan, Sri Lanka and Maldives prefer greater cooperation because without cooperation among the countries, there is very little chance of energy security in South Asia. There is a lot of geopolitics involved in the energy trade of South Asia. The eastern part of the region consisting of Nepal and Bhutan can supply energy to India and Bangladesh. However, due to India’s neorealist attitude, Bangladesh has failed to receive any energy supply from both Nepal and Bhutan. On the western part of the region, no cooperation is possible due to the realist position of both India and Pakistan. For example, the Turkmenistan, Afghanistan, Pakistan and India pipeline never materialized due to insurgency in Afghanistan, Pakistan and India. Both India and Pakistan promote insurgencies in order to portray their power toward each other.

Structure of the book The chapters that follow cover the aforementioned issues from a variety of aspects, some of which are on South Asia and the others on Bangladesh. As will be clear from the chapters, each one of them discusses important areas that are affecting the energy security of the South Asian countries. The first chapter considers the definition of energy security and how it is contextualized among the different stakeholders involved in the energy sector. The chapter discusses the different aspects of energy security, the different factors

12  Introduction affecting the energy security policy and the criteria that will be used for measuring the energy security in South Asia. This chapter also sheds light on the concept of energy security from the prism of global energy consumption. The second chapter surveys the energy landscape in South Asia and the various issues faced by India, Pakistan, Bangladesh, Nepal and Bhutan in their energy sectors. There is a discussion on the energy mix of the various countries, the issues and challenges faced by them and the important stakeholders who play a role in their energy security. The chapter also focuses on the various strategies employed by the governments of these countries in dealing with energy security and whether they have been successful. The third chapter concerns the geopolitics surrounding the energy resources in South Asia. The chapter highlights the volatility of the region and the mistrust among the various countries which are preventing them from cooperating with each other. Further, countries outside the region also play their part to keep a hold on the region due to their strategic location and economic value. The chapter also discusses the internal dynamics at play in all the countries that also has a role in destabilizing the energy security of the countries in the region. The fourth chapter deals with the energy security issues of Bangladesh and the issues it faces to ensure its energy security. The location of Bangladesh is ideal to be a transit country and due to it having the fastest economic growth in South Asia, the country has become an important ally for those wishing to explore resources in the Bay of Bengal. The chapter also focuses on the energy sector of the country and the policies it needs to implement in order to become energy solvent in the coming decade. The fifth chapter discusses the issues and challenges that Bangladesh faces in order to deal with the supply crunch currently affecting the country. The chapter also highlights the policy of the country in its various energy sectors including oil, gas, coal, nuclear and renewable energy. Although the country has made a lot of progress in terms of increasing its energy capacity, a lot more is required to meet the demand of its increasing economic growth. The sixth chapter analyzes the energy security of South Asia by using the four criteria discussed in detail in Chapter 1. The four criteria are used as an analytical framework to measure the energy security of the five South Asian countries. This analysis would help us to understand the problems plaguing the countries in terms of their energy security and their possible solution. The book concludes by considering the current energy scenario in South Asia and the geopolitics involved which is derailing the true potential of the entire region. There is also a discussion about the role SAARC could play to increase the cooperation between the countries and the reasons for it being dysfunctional. The future of Bangladesh in terms of its energy security is also highlighted. Moreover, the important role played by China and the lack of interest shown by the US in the region are also analyzed to understand the new power game being played in South Asia and in other parts of the world. The chapter concludes by discussing the path forward for the five South Asian countries and the challenges they are likely to face to enhance their energy security.

Introduction  13

Notes 1 International Energy Agency, World Energy Outlook 2019, Paris: International Energy Agency, 2019. 2 Ibid. 3 For the purpose of this book, only the five major energy-producing and importing countries in South Asia, including India, Pakistan, Bangladesh, Nepal and Bhutan, are discussed. The energy scenario of Sri Lanka, Maldives and Afghanistan are not discussed in this book. As a result, when South Asia is referred to in this book, it refers to only the five countries. 4 Supra, see note 1. 5 Ibid. 6 Ibid. 7 Ibid. 8 Ibid. 9 Supra, see note 1. 10 Ibid. 11 N. Banskota, South Asia Trade & Energy Security: The Role of India, Irvine, CA: Universal Publishers, 2012. 12 Ibid, p. 13. 13 Ibid, p. 14. 14 S. Sufi, “How Secure Is Energy Security?”, Energy & Power, May 16, 2018. 15 Ibid, p. 18. 16 Ibid, p. 22. 17 Supra, see note 14. 18 Ibid. 19 R. Panda and M. Karthik, “Regional Energy Cooperation for Accelerating CrossBorder Electricity/Energy Trade & Mobilizing Investment in BIMSTEC Region”, Energy & Power, March 16, 2020. 20 Ibid, p. 20. 21 “The Power Sector Master Plan 2010”, Sustainable and Renewable Energy Development Authority and Power Division, Ministry of Power, Energy and Mineral Resources, Government of the People’s Republic of Bangladesh, p. 35. 22 “The Power Sector Master Plan 2015”, Sustainable and Renewable Energy Development Authority and Power Division, Ministry of Power, Energy and Mineral Resources, Government of the People’s Republic of Bangladesh, p. 24. 23 S. Sufi, “Coal Power: Challenges in Generation”, Energy & Power, May 16, 2017. 24 Ibid, p. 18. 25 Ibid, p. 19. 26 Supra, see note 23. 27 Supra, see note 14, p. 23. 28 Ibid, p. 24. 29 Ibid, p. 25. 30 Ibid, p. 22. 31 D. Yergin, The New Map: Energy, Climate and the Clash of Nations, Allen Lane, 1st edition, 2020. 32 Ibid, p. 22. 33 Ibid, p. 24. 34 Ibid, p. 25. 35 Ibid, p. 26. 36 Supra, see note 31, p. 27. 37 Ibid, p. 28. 38 Ibid, p. 29. 39 Supra, see note 19, p. 22.

14  Introduction 40 Ibid, p. 23. 41 B. Barry, C. Redgwell, A. Ronnne, and D. Zillman (eds), Energy Security: Managing Risk in a Dynamic Legal and Regulatory Environment, Oxford, Oxford University Press, 2004, p. 4. 42 Ibid, p. 5. 43 Ibid, p. 6. 44 M. Hossain, “Energy Efficiency: The Future of Power Generation”, Energy & Power, December 1, 2019. 45 Ibid, p. 24. 46 Supra, see note 41, p. 25. 47 This criterion was formulated by the energy security and sustainability (ESSD) framework by the Asia Pacific Energy Research Centre (APERC) in “A Quest for Energy Security in The 21st Century, Tokyo, Japan, 2007. 48 Ibid, p. 25. 49 Ibid, p. 28. 50 Supra, see note 44, p. 25. 51 Chapter 1 of the book discusses the four criteria through which the concept of energy security can be measured in South Asia. 52 Supra, see note 14, p. 22. 53 R. Koehane, International Institutions and State Power: Essays in International Relations Theory, Boulder, CO: Westview Press, 1989. 54 Ibid, p. 47. 55 Ibid, p. 48. 56 K. Waltz, Theory of International Politics, New York: Random House, 1979, p. 179. 57 F. Scharpf, “Decision Rules, Decision Styles and Policy Choices”, Journal of Theoretical Politics, 1, 1989, pp. 149–176. 58 J. Grieco, “Realist Theory, and the Problem of International Cooperation: Analysis with an Amended Prisoner’s Dilemma”, Journal of Politics, 50, 1988, pp. 600–624. 59 Supra, see note 53, p. 61. 60 Supra, see note 53. 61 S. Krasner, “Sovereignty, Regimes, and Human Rights”, in V. Rittberger et al. (eds), Regime Theory and International Relations, Oxford University Press, Oxford, 1991. 62 R. Koehane, “Neoliberal Institutionalism: A Perspective on World Politics”, in R. Keohane (ed), International Institutions and State Power: Essays in International Relations Theory, Boulder, CO: Westview Press, 1989. 63 Supra, see note 62, p. 67.

Selected bibliography Banskota, N. South Asia Trade & Energy Security: The Role of India, Irvine, CA: Universal Publishers, 2012. Barry, B., C. Redgwell, A. Ronnne, and D. Zillman (eds), Energy Security: Managing Risk in a Dynamic Legal and Regulatory Environment, Oxford: Oxford University Press, 2004. Grieco, J. “Realist Theory, and the Problem of International Cooperation: Analysis with an Amended Prisoner’s Dilemma”, Journal of Politics 50:600–24, 1988. Hossain, M. “Energy Efficiency: The Future of Power Generation”, Energy & Power, December 1, 2019. International Energy Agency. World Energy Outlook 2019, Paris: International Energy Agency, 2019. Koehane, R. International Institutions and State Power: Essays in International Relations Theory, Boulder, CO: Westview Press, 1989.

Introduction 15 Koehane, R. “Neoliberal Institutionalism: A  Perspective on World Politics”, in R. Keohane (ed), International Institutions and State Power: Essays in International Relations Theory, Boulder, CO: Westview Press, 1989. Krasner, S. “Sovereignty, Regimes, and Human Rights”, in V. Rittberger et  al. (eds), Regime Theory and International Relations, Oxford: Oxford University Press, 1991. Panda, R., and M. Karthik, “Regional Energy Cooperation for Accelerating Cross-Border Electricity/Energy Trade & Mobilizing Investment in BIMSTEC Region”, Energy & Power, March 16, 2020. Scharpf, F. “Decision Rules, Decision Styles and Policy Choices”, Journal of Theoretical Politics 1:149–176, 1989. Sufi, S. “Coal Power: Challenges in Generation”, Energy & Power, May 16, 2017. Sufi, S. “How Secure is Energy Security?”, Energy & Power, May 16, 2018. “The Power Sector Master Plan 2010”, Sustainable and Renewable Energy Development Authority and Power Division, Ministry of Power, Energy and Mineral Resources, Government of the People’s Republic of Bangladesh. “The Power Sector Master Plan 2015”, Sustainable and Renewable Energy Development Authority and Power Division, Ministry of Power, Energy and Mineral Resources, Government of the People’s Republic of Bangladesh. Waltz, K. Theory of International Politics, New York: Random House, 1979. Yergin, D. The New Map: Energy, Climate and the Clash of Nations, New York: Allen Lane, 1st edition, 2020.

1 The concept of energy security

Introduction The concept of energy security has evolved over the last three decades. The reliance on fossil fuel as the primary source of energy generation has resulted in almost all the countries becoming insecure about their energy security. Some countries are more insecure than others due to their need and sources of supply. For example, a country like Japan has no domestic petroleum resources, while Canada has untapped oil and gas potential.1 As the global demand for petroleum resources has outpaced supply, the cost of petroleum has risen. However, the evaluation of energy security from an international perspective is difficult due to the different circumstances that each and every energy-hungry country finds itself in, causing different interpretations of the term energy security. Assessing energy security from the supply and demand side would contain analysis of the aggregate capacity to fulfill energy demand through existing sources of supply.2 This assessment process includes evaluation of the relationship between aggregate fuel supply and demand trends either at present or in the future.3 This would also include protecting energy infrastructure from different threats including terrorism and supply disruptions due to natural calamities. This analysis would help to evaluate the supply chain risks which might enable the respective countries to make an informed choice. Another assessment strategy for energy security could entail certainty of access to resources on a country-by-country basis in order to assess the disparities of access and supply chain risk that exist within the global supply of energy.4 This assessment would also include the availability of resources, diversity of fuel and the dependence on import.5 The relationship between the exporting country and the importing country is also crucial in this case, as any political instability might result in supply disruption. However, this type of assessment is crucial for countries supporting conventional energy services and is ready to build their energy infrastructures. The interpretation of energy security by assessing it as a challenge of balancing availability, accessibility and affordability from an aggregate perspective is also another strategy that can be used for its evaluation.6 The three important criteria of availability, accessibility and affordability are crucial in the analysis of energy

The concept of energy security 17 security according to some analysts.7 These three criteria are also used by the IEA as the foundation for their energy security assessment methodology.8 The threat of global warming has also resulted in the new assessment of energy security as countries are worried about their environment. The long-term reliance on fossil fuel is untenable due to the threat of global warming.9 Moreover, a balance must be found between availability, accessibility and affordability within the constraints of the global system.10 As a result, the conceptualization of energy security depends on the choices that are made in terms of the variables that should be included in its analysis and how these multiple variables are weighted.11 In fact, the assessment of energy security comes from a specific ideology-based definition of what energy security contains.12 Further, the priorities of a country also play a key role in how the energy security is assessed. The first section of this chapter discusses the various definitions of the concept of energy security followed by an analysis of the different national energy security perspectives of policy makers. There is then a discussion on the different factors affecting the energy security policies of countries followed by the four criteria that will be used in this book to measure the energy security of the South Asian countries.

Definition of energy security The definition of energy security varies from country to country and depends upon their energy policy. Accordingly, there are 45 different definitions of energy security and counting.13 According to some experts, energy security is the “ability of an economy to guarantee the ability of energy resource supply in a sustainable and timely manner with the energy price being at a level that will not adversely affect the economic performance of the economy”.14 Others define it as “a condition in which a nation and all, or most of its citizens and business have access to sufficient energy resources at reasonable prices for the foreseeable future from serious risk of any major disruption”.15 While some definitions of energy security focus on the energy policy and economic aspects of a country, other definitions focus on diversification. As a result, energy security is defined as “diversity, or a mix of fuel sources, stability or stable sources of reserve and technology”.16 The International Atomic Energy Agency (IAEA) defines it as “secure supply of energy fuels as well as imports, technologies that promote self-sufficiency as well as protection against disruptions, including those that hedge against price volatility, encourage diversity of technologies and sources, reduce threats to and from neighboring states”.17 Other experts focus on the environment when discussing about the topic and considers energy security to include “stable, cheap and environmentally friendly energy cycle including primary suppliers, transportation, refining, transformation, and final consumption”.18 The Food and Energy Security Act of the US is about 1,300 pages long while the Energy Independence and Security Act of 2007 is about 200 pages and neither has a clear definition of energy security.19 As a result, this shows the difficulty in

18  The concept of energy security having a definition of energy security as it encompasses so many different aspects for so many countries with no clear indication of what it means. This is due to the fact that the needs of countries change from time to time and so does their policies, making it difficult for them to assess their long-term energy needs. Their focus is primarily on the present and the recent future rather than being long term in nature. The definition of energy security has over the years been made from a scientific view, economic view, ecological view and even social welfare view.20 As a result, all these views together have tried to formulate what energy security really means to each group because a country’s energy security policy is formulated based upon these views. However, it is difficult for a country to follow a set principle based upon the different aspects because geopolitics and other factors change their priorities.

National energy security perspectives The economic aspect of energy security has been a dominant part of the discussion over the last three decades. The race for the cheapest forms of energy with minimal risks has been the focus for most of the countries. In fact, under this perspective, countries that boast an abundance of domestic energy resources of any type are considered to have a sufficient level of energy security.21 However, the problem with this perspective is that it fails to distinguish between sustainable and unsustainable energy resource governance. For example, one country could be satisfying its domestic energy needs through its own energy reserves like oil and gas while another country could be satisfying its domestic needs through hydropower. As a result, the latter’s energy policy is more sustainable and would enable it to have a long-term energy security. However, it is not always possible for a country to focus primarily on sustainable use of resources for its energy security as short-term economic maximization is crucial as well. This will enable it to minimize cost and provide the financial leverage necessary to transfer toward alternative sources of energy.22 Technological advancement has also resulted in countries focusing on alternative sources of energy like wind power, solar energy and nuclear power. The climate change perspective of energy security has also been crucial in how countries frame their energy policy. The signing of the Paris Agreement has to some extent capped carbon dioxide emissions and has altered the economics of energy source.23 Moreover, new technologies to mitigate climate change and the commitment from countries to move away from conventional sources of energy have resulted in greater investment in new technology. It is also a reality that the economic and social welfare of people around the world will be adversely affected as the problem of climate change intensifies. The social capital perspective should also be considered in framing a country’s energy security. The evolution of social capital has consequences for the economic development of a country. As a result, anything influencing social capital will have an effect on the national energy security strategy of a country.24 Since

The concept of energy security  19 energy is an essential service, access to affordable energy plays an important role in various human activities which is an important indicator for the well-being of a society.25 Further, the energy sector plays a key role in the social capital of a country by being one of the biggest employers. The link between social capital and energy is important for the evaluation of a country’s energy security strategy. This is because an enhanced social capital implies greater economic development and political stability which in turn implies a balanced energy security because healthier economies invest to optimize in energy networks.26 For example, if a country plans to change its sources of energy in order to enhance its energy security, it will be easier to convince its population if it has a high social capital.

Factors affecting energy security policy Different factors affect the energy security policy of a country and this includes reducing vulnerability to a foreign threat, preventing supply crisis or geopolitics.27 As a result, the supply security aspect of energy security is sometimes the main focus of an energy security policy. However, according to experts, reducing threats to oil supply and operating in a mode of crisis management are two important tenets of energy security policy.28 The differences between the thinking behind formulating a country’s energy security policy can be analyzed from three different factors: i) the degree to which a country is rich in energy or has poor energy resource,29 ii) the degree to which market forces are allowed to operate as compared with the use of government intervention to set prices,30 and iii) the longterm versus the short-term planning.31 Although the energy needs and energy policy vary between countries, there is a convergence among countries regarding the factors affecting their energy security policy. This convergence does not change the regional and national differences but tries to minimize the potential conflict that may arise from different energy security policies that many countries may take into account.32 The protection of the environment is crucial in the supply security-oriented energy policy of countries.33 In order to protect the environment, the energy policy of various countries will have to be reformulated. Some of the environmental problems resulting from the use of fossil fuel are acid rain and global climate change. Though the signing of the Paris Climate Change Agreement has been useful in reducing carbon emissions, it has not been enough to curb various other environmental problems. For example, trans-boundary air pollution is a major concern in Europe, North America and East Asia.34 Further, global climate change poses a greater threat to the energy policies of various countries. As a result, a comprehensive approach to deal with greenhouse gas emissions is necessary. Other environmental issues that countries deal with include radioactive waste management and deforestation.35 As a result, most countries need to consider all these environmental factors in their energy security policy. The role of technology is another factor that countries need to consider in their energy security policy. There are risks associated with the development and use

20  The concept of energy security of advanced technologies. Risks such as those at the Three Mile Island in the US, Chernobyl in Russia and natural disasters with impact on energy infrastructure are important issues that need to be considered.36 Some of the technological risks can be transnational like Chernobyl, which had cross-boundary implications. As technological advancement is a global phenomenon, these risks can also be exported. Moreover, nuclear technology is exported to a number of developing countries like Bangladesh, UAE, Vietnam, Thailand, Indonesia and Malaysia.37 All these technological advancements in the energy field also need to be considered by countries while formulating their energy security policy. The demand side management to address energy demand and assure supply is also a crucial factor in the energy security policy. In fact, the management of energy demand is equally important with the management of supply due to the advancement in new technologies.38 Moreover, demand side management does not stop the uncertainties that are present in energy policy planning as demand surges and drops occur depending on changes in weather and economic conditions.39 Further, there are risks involved with demand side management of energy resources, which include underestimation of supply, demand surges and utility management.40 Recession in a country’s economy can also cause problem in the energy security policy since recession means large supply capacity surpluses.41 Sociocultural factors also play a role in the energy security policy as the country’s public confidence is important to carry out the various energy-related objectives of the government. This includes promoting public acceptance through public relations campaigns.42 It also includes being transparent in taking certain energyrelated decisions or disclosing information about how a decision was reached.43 Moreover, accounting for sociocultural factors and increasing the confidence of public could be crucial in framing the energy security policy of a country. The geopolitics of energy security is also another factor that countries need to take into account in their energy security strategy. This is because the end of the cold war has brought in a new level of uncertainty in all regions of the world. The threats of regional wars have dramatically increased together with unrest in the Middle East, the former Soviet states, the Balkans and in South East and South Asia.44 As a result, energy security and military security go hand in hand in the current world scenario.

Global energy consumption The overall energy consumption differs from country to country. The energy mix of each and every country has implications for its economic, environmental and security aspect of the global energy system.45 The key focus of the energy mix is the energy supply from fossil fuels such as coal, oil and natural gas in comparison to other energy sources such as nuclear power, renewable electricity and biofuels.46 The overdependence on fossil fuel in the global energy mix shows the lack of diversity in the global energy mix and its negative impact on the environment. The fossil fuel share in the global primary energy increased to 82% as the world industrialized while traditional biomass-based fuel’s share remained constant and

The concept of energy security 21 even fell.47 The future share of fossil fuel will decline due to most of the countries’ action on climate change. If the current trend continues, the share of fossil fuel in the world energy mix will decrease by 76% by the year 2035.48 According to the IAEA, the fossil fuel share will fall to 63% which shows that under stringent climate change policies, fossil fuels are likely to remain a majority share of global energy for the next few decades.49 However, there is also an increase in the consumption of other forms of fuel. The global consumption of oil has reduced to 34% in the year 2010 and will further reduce to 30% by the year 2035.50 The transport sector is the least diverse compared to the other sectors with more than 95% of the world transport energy needs being met by oil and other liquids.51 The consumption of coal has relatively increased over the years and currently stands at 26%.52 However, like oil, because of coal’s emissions of carbon dioxide and other pollutants, consumption will depend on the actions taken by countries to deal with climate change.53 As a result, the share of coal in the global energy mix will reduce to 20% in the future.54 The share of natural gas has also increased over the years and according to experts, its share in the global consumption will rise to 26%.55 The share of renewables has also increased due to the greater concern among countries about climate change. Renewables including hydroelectric, biomass, wind, geothermal and solar power are projected to rise to about 26% by the year 2035 in the global energy consumption.56 The emergence of nuclear power has also been significant over the years. Its share of primary energy consumption will also rise to around 7% by the year 2040.57 Global climate change and carbon dioxide emissions The global carbon dioxide emissions have increased by about 16% from 31 BMT annually in the year 2010 to 36 BMT in the year 2035.58 Moreover, without any change in policy, carbon dioxide emissions could rise by 40% to 43 BMT.59 However, with greater cut in emissions by countries, emissions will fall by 30% from 2010 levels to less than 22 BMT by the year 2035.60 According to the IEA, moderate climate change policy tends to yield flat or declining emissions in North America and Europe in the future, but they also result in moderate emissions growth in other regions of the world.61 The new policies of the IEA also have OECD countries’ carbon dioxide emissions declining to 10% from the 2010 levels by the year 2035 whereas non-OECD countries’ emissions increased by about 50%.62 However, a concerted effort is required by both the developing and developed countries to lower the level of carbon dioxide emissions in the world. Due to greater economic cost, the developing countries are not always willing to divert their energy consumption toward renewable energy. Electricity Electricity’s share in the world primary energy consumption is about 40%.63 In terms of end use energy consumption, electricity is growing much faster than

22  The concept of energy security direct use of fuels.64 As a result, due to the importance of electricity in the global energy consumption, it is important to consider the roles of different fuels and technology for electricity generation.65 The global electricity generation mix includes 41% coal, 22% natural gas, 16% hydro, 13% nuclear, 5% oil and 4% other renewables.66 Electricity generation has increased over the last two decades and will continue to rise in the coming years. Future policies will also dictate how much electricity consumption will take place in the future. Recent policies by countries to encourage energy conservation through various programs and lower the level of emissions through various means have not been a barrier for energy generation.67 The global energy generation is set to increase by 80% with the long-term electrification of the transport sector.68 Further, there are increasing electricity demands in the Middle East, parts of Asia, Africa and also in the West. Moreover, in the future, the growth of electricity consumption will be much faster in the East than in the West.69 The consumption of coal will also have an impact on the generation of electricity in the East and in the West. Although the consumption of coal has lowered in the West, it could increase in the East unless there is a change in policy.70 The increasing use of hydroelectricity and other renewables in electricity generation is also set to rise due to the growing climate change concerns. The use of natural gas for electricity generation will also continue to increase in almost all the regions of the world.71 It is important to note that the use of oil for electricity generation will fall due to other environmentally safe methods of generation. Renewables like hydro, wind, biomass and solar also form an important source of electricity generation. The major advantage of renewable sources compared to other sources are their low air emissions and fuel operating costs.72 However, due to their high capital costs, renewable sources are expensive compared to fossil fuel.73 In the last decade, renewables accounted for about 20% of the world electricity generation, the majority of which was hydroelectricity.74 Renewables are favored by countries which have a policy for clean energy, diversification and climate change.75 The share of nuclear energy in electricity generation stood at 13% in the last decade.76 According to experts, nuclear power generation rises to 70% while nuclear capacity rises from 375 GW in the year 2010 to more than 630 GW by the year 2035 due to the climate change policies of countries.77 Moreover, this growth could have been more if not for the recent nuclear accidents happening around the world. Petroleum Petroleum has been an important source of energy due to its high energy density and transportability compared to other sources.78 The future demand for oil as the world’s largest energy source will remain for the next decades.79 The global consumption of petroleum will grow to 110 MMBD by the year 2035.80 The consumption of oil is also different between the West and the East. Although the consumption of oil is higher in the West than in the East, consumption will be

The concept of energy security  23 equal in both parts of the world by the year 2035.81 Rising population growth and a high GDP in the East has resulted in greater consumption of energy.82 On the other hand, the West’s consumption has not increased over the years due to their change in energy policies. The fall in consumption in the West is also due to a saturated demand of transportation services, government regulation and high prices of fuel.83 The worldwide recoverable oil resources currently stand at five trillion barrels split between conventional and unconventional sources.84 However, if conventional and nonconventional resources are considered together, North America has the most resources with more than two trillion barrels while if only conventional sources of energy are considered, the Middle East ranks the highest with one trillion barrels of proven reserves.85 Due to the global distribution of oil reserves, most experts indicate an increasing production share for OPEC. OPEC’s share of supply stood at 40% in the last decade and will likely increase to 50% in the future.86 The OPEC members of the Gulf Cooperation Council account for about 50% of OPEC’s production.87 As a result, most of the countries of the world are dependent upon them. Natural gas The share of natural gas consumption has increased over the years and was around 22% in the last decade.88 Gas consumption is set to grow by another 20–30% by the year 2035 in the West, while it is projected to rise to about 110% in the East.89 The consumption of natural gas will grow further due to the policies by countries to lower their carbon emissions. Although the demand for gas will increase in all the regions of the world, the source of supply is different for each and every country. The Middle East and Africa will support their need through local production while countries in Latin and North America will turn to unconventional sources of natural gas.90 Asian countries on the other hand will depend upon LNG and pipeline imports. The unconventional gas development in North America makes the region account for 25% of global production.91 The increase in gas production in the US is due to the application of horizontal drilling and hydraulic fracturing techniques for shale gas deposits.92 The development of shale gas took place in the Barnett Shale formation during the early 2000s and gathered pace around the years 2007– 2008.93 Shale gas drilling then expanded to other parts of the US. As a result, the shale gas production has increased greatly over the years and accounts for 30% of US dry gas production.94 Canada and Mexico have also significant deposits of shale gas.95 The greater focus on shale gas in the US has resulted in the country becoming a net exporter through LNG. Further, the LNG terminals that were built for import are now used to export LNG to take advantage of the price differences between US spot prices and delivered LNG prices abroad.96 The shale gas deposits are found not only in North America but also in China, Argentina, Australia and Europe.97 Although most of these countries have still not developed their shale deposits for commercial purpose, their future development

24  The concept of energy security will shift the dynamics of the international gas market and will reduce the influence of major exporters of gas like Russia. For example, Russia, Iran and Qatar collectively contain more than 50% of the world’s proven gas reserves.98 Moreover, Gas Exporting Countries Forum (GECF) formed in 2001 controls about 70% of proven gas reserves.99

Criteria for measuring energy security According to the energy security and sustainable development (ESSD) framework, energy security can be analyzed through the four A’s.100 These four A’s are availability, accessibility, affordability and acceptability.101 The four A’s focus on physical terms and both short-term and long-term objectives. Each of the four A’s is analyzed through pairing them with social, economic or environmental aspects. As a result, in order to analyze the energy security in South Asia, four criteria will be used to understand the current energy security scenario in the region. These four criteria are i) availability of resources,102 ii) accessibility of resources,103 iii) affordability of resources104 and iv) the geopolitics of resources. Availability of resources The availability of resources concerns the delivery of the resource to the consumers. The delivery of the resource to the consumers can be implemented through ensuring that there is no supply disruption. In order to lower the supply disruption, diversification is important to ensure that a country is not dependent on one particular exporter for its supply. This would allow the country to become more flexible because it would result in multiple types of energy or various sources of supply.105 The availability of resources also has an impact on the society in general. If a country cannot provide adequate resources to its citizens, it will cause unrest. Moreover, some countries provide energy subsidies to their people and as a result increase in the price of oil affects the subsidy requirement and can cause burden on the state.106 The energy diversification of resources allows countries to ensure a steady supply of resources to meet their domestic needs. As a result, the share of subsidized fuels in relation to the final consumption of the resources also shows the state of energy security in a country.107 Countries exporting their natural resources tend to be in a better position than energy-importing countries, as they can deal with any eventuality relating to the availability of resources. Table 1.1 shows the energy use of various countries in South Asia. From the perspective of energy security, the dependence of a country on a specific primary energy resource shows its vulnerability during supply disruption. Increasing the variety of primary energy in the supply mix will increase the flexibility and availability of a country to meet its energy needs.108 However, this does not take into account whether the energy mix of a country is depleting or whether renewable energy resources are being used. As a result, the existing utilization of energy resources gets priority over other potential energy resources of a country.

The concept of energy security 25 Table 1.1  The Energy Use in South Asia Country

Population (2018)

Unit

Thousands Person per km²

Afghanistan 37,172 Bangladesh 161,356 Bhutan 754 India 1,352,617 Maldives 515 Nepal 28,087 Pakistan 212,215 Sri Lanka 21,670

Population HDI Energy use* density ranking (2018) (2018)

57 1,240 20 455 1,719 196 275 346

Gross CO2 National emissions Income per (2014) capita 2018

Kilograms US dollars of oil equivalent per capita 168 136 134 130 101 149 150 76

229 367 637 892 434 460 516

550 1,750 3,080 2,020 9,310 960 1,580 4,060

Metric tonnes per capita 0.3 0.5 1.4 1.7 3.1 0.3 0.9 0.9

Source: The World Bank Indicators, 2019

The role of the environment is also crucial under this category. Lack of access and supply disruption can cause energy unavailability which may cause fuel substitution to the less environmentally friendly options.109 In some countries, unavailability of gas supplies for power plants has led to increased use of oil in electricity generation. Further, countries dependent on coal are also trying to diversify their sources of energy generation in order to protect the environment. Accessibility of resources The accessibility of energy resources is crucial for energy security because without access, a resource cannot be utilized. As a result, the role of energy transportation and infrastructure is crucial for accessing resources.110 Accessibility from the perspective of a country implies providing access to energy in households which in turn reflects the ability of the citizens to use energy.111 The greater the access to energy in households, the greater is the effect on community and population as a whole. Moreover, access to energy has a correlation with the economy of a country. A sound infrastructure for transporting various energy resources goes a long way in ensuring energy accessibility. On the other hand, problems in the transport infrastructure can obstruct energy supply from the production regions to the demand regions and other users.112 However, it is also important to note that manmade actions and natural calamities can also affect energy infrastructures.113 There is in fact a link between the environment and infrastructure which can have both a positive and negative impact. A positive impact is the expansion of energy access resulting in general population getting the benefit while a negative impact is the lack of proper planning and implementation process.114

26  The concept of energy security It should also be considered that expanding access to energy could have a negative impact on the environment. The destruction of the Amazon forest and the exploration in Antarctica are examples of negative impacts of energy expansion. In many countries like Bangladesh, India and Pakistan, erection of transmission and distribution power lines over people’s land, legal aspects to land ownership and the health implications of electrical and magnetic influence are serious concerns that need to be dealt with.115 Affordability of resources The affordability of resources is relevant for both energy producers and consumers. The energy exporting countries want a stable market to supply their resource while the energy importing countries are interested to get the resource at a reasonable price. Moreover, without energy affordability, energy availability and accessibility will only have limited-service provision.116 The affordability of buying the resource also depends upon the consumption pattern of the general population.117 Lower-income households tend to spend a higher proportion of their income on energy-related services than the other income groups.118 As a result, any increase in price will have a negative impact on low-income households. There is also a strong link between affordability and the economy of a country. Most of the developing countries like Bangladesh, India and Pakistan do not have a uniform policy in the electricity sector which results in different costs in different regions of these countries.119 Further, the remote areas in these countries are not serviced properly which causes a low electrification ratio.120 The government in these countries also determines the price for the liquid fuels while distributing them to the general population.121 Energy subsidy is another important factor in all the South Asian countries. However, it has been difficult to sustain this for the governments of the South Asian countries. As energy consumption increases and limitations in providing energy continue, the budget allocation for energy subsidy has increased in all the South Asian countries.122 Moreover, energy policy in most of the developing countries aims to lower their dependence on oil and increase the use of coal, natural gas and renewables.123 However, this type of energy policy is difficult to implement if the government cannot increase the price of electricity and provide subsidy at the same time. Further, a reduced energy subsidy might also not be favorable for inefficient national energy companies who are forced to service the general population at a low price. The race to provide affordable energy can also have an impact on the environment. Some of the countries have switched to oil or coal as they are more affordable than the other energy resources. For example, some of the coal-exporting countries have seen a surge in demand for coal due to its low price.124 However, the global concern about climate change has resulted in many countries using clean technology causing the market for coal to decline over the last decade. This is not the case with countries with rich reserves of coal as they intend to use the resource domestically even if they fail to export it elsewhere.

The concept of energy security 27 The geopolitics of resources Geopolitics is one of the most important criteria in measuring the energy security of a country. Due to the greater competition among countries to secure their sources of energy, the stronger countries are willing to undertake any measures necessary for the secured supply of their energy resources. There are problems for countries whose energy resource management is strongly dependent on the market-based access to energy. However, this is not always possible for a resource like oil as the producing countries act like a cartel to set the price rather than maintain the oil price at a given level as indicated by the market. As a result, for most of the Western countries, it is not about whether the market for oil or any other resource can be trusted but is more about defending the market.125 For example, for most of the Western countries, the rise and fall of the market price is normal as it depends upon the supply and demand of the resource. However, what is problematic for these countries is the price and supply of energy becoming the subject of strategic pressure which is disconnected from the realities of the market.126 The international market for energy resources has always been protected indirectly by the armed forces of major Western countries.127 These Western countries have ensured maritime security in the world’s major shipping routes which is essential for transporting energy resources throughout the world. The presence of the Western countries in the high seas has reduced the threat from non-market actors.128 This has ensured the secured supply of resources which in turn has kept the price stable in the market. The insufficiency of petroleum resources has caused anxiety among all the countries of the world. The future availability of petroleum resources due to increased consumption is a cause of concern if no new reserves are discovered over the next couple of decades. Further, the output of oil production also needs to be increased to satisfy the needs of most of the countries of the world. However, there are doubts about the petroleum industry being able to meet much higher levels of demand in the future as the current oil fields are declining in output.129 According to experts, some of the reasons for future energy security problem will be due to i) the global output of petroleum reaching its peak causing the supply to fall,130 ii) the global oil reserves being concentrated in the Middle East and other volatile regions of the world causing supply disruption,131 iii) greater competition among major powers and other emerging powers to control the supply and reserves of energy resources and iv) climate change and other natural disasters causing supply disruption.132 According to the US Department of Energy, the world oil consumption is expected to rise to 117 MMBD by the year 2030 while the oil production capacity is expected to rise to 117.7 MMBD by that time.133 As a result, there might be a supply crunch in the future considering other variables including increased population, economic activity and other unforeseen events. The current energy industry is overwhelmed with increasing demand and is failing to increase production as the competition for access to oil and other resources among the world’s major consuming countries has become increasingly intense.134 This rise in competition for energy is due to the steady increase in

28  The concept of energy security demand from the Western countries together with the sharp rise in demand from the newly industrialized countries like India and China.135 In the recent past, the developing countries consumed less energy than the rich Western countries. However, the developing countries’ demand has been increasing and now they are competing with the Western countries on equal terms for access to the world’s oil and gas supplies.136 Moreover, the production of petroleum and other resources was largely in the global North. As a result, oil production was centered on countries like the US, Canada and Europe.137 These countries went for massive production of their resources in order to spur their economic growth. However, once their reserves started to decline in the 1960s and the 1970s and their demand grew, the consuming nations of the global North increased their reliance on the global South.138 As a result, the center of production shifted from the North to the South and has remained in the South ever since. As a result, competition for energy resources and the shifting of production from the North to the South have increased the geopolitics of petroleum and other resources among the various countries of the world. Further, the lack of energy security among the developing countries stems from the fact that most postcolonial nations also suffered from weak state structures and a tendency toward military strongmen and corruption.139 However, what set the oil-producing countries apart from them is the attraction of oil revenue from international oil companies.140 Although these countries were receiving oil rents, they also suffered from instability as their oil facilities in the global South became targets of attack from insurgents and extremists.141 As a result, the Council on Foreign Relations noted that the depletion of conventional sources (of petroleum), especially those close to the markets in the United States, Western Europe, and Asia, means that the production and transport of oil will become even more dependent on an infrastructure that is already vulnerable.142 Further due to the need to protect the production and infrastructure, the geopolitics of ensuring the access and supply of energy resource grew. This has also led to Western countries under the leadership of the US to protect refineries, pipelines, loading facilities, shipping lanes for transport to offshore fields, regime protection, military support for government that facilitate the export of their countries oil reserves to foreign markets for uninterrupted access and supply to and from key oil-producing regions.143

Conclusion The energy priority differs from country to country and as a result there is no single definition that defines energy security. However, a country needs to consider whether it will focus on international energy security or domestic energy security. From the international perspective, the reliance on fossil fuels for primary energy

The concept of energy security  29 generation places all the countries in a vulnerable situation. On the other hand, from the domestic perspective, most countries are less insecure than assumed due to them having a solid energy policy at work.144 It is also important to note that the energy security threat differs between the developing countries and the developed world. The developing countries face threats due to lack of equitable access to energy services, energy poverty and pollution.145 These three factors are the major stumbling blocks of energy insecurity in developing countries which results in their population suffering. According to the IEA, the energy economics community has devoted considerable time and effort to analyzing the challenges of energy security and environmental sustainability (for the industrialized world), unfortunately the energy economics community has given far less attention to the challenge of energy poverty among the world’s poorest people.146 The threat for developed countries is the access and transportation of energy in order to satisfy their needs. Most of the developed countries now have to fight with emerging economies in order to secure their access to energy. This competition has resulted in the price of energy resources skyrocketing due to excess demand resulting in developed countries spending more on energy than they expected. Finally, climate change will affect the policies of most of the countries in regard to their energy security. The melting of ice in the Arctic, deforestation and increased concentration of carbon dioxide in the atmosphere have all caused countries to change their energy security priorities. Most of the countries have cut down on their consumption of fossil fuels and have focused more on renewable energy, nuclear power and natural gas. However, the reliance on fossil fuels is overwhelming as the transportation sector is heavily dependent on it. Moreover, most of the developing countries also prefer a cheap source of fuel to run their economy, which makes it difficult for them to switch to other expensive sources of energy like renewables. As a result, depending upon their energy needs, a country adapts and changes its energy security policy.

Notes 1 D. Moran and J.A. Russell (eds), Energy Security and Global Politics: The Militarization of Resource Management, Routledge Global Security Studies, Abingdon, Oxon: Routledge, 2009. 2 Ibid, p. 4. 3 Ibid, p. 6. 4 J.H. Kalicki and D.L. Goldwyn, Energy & Security: Strategies for a World in Transition, Washington, DC: Woodrow Wilson Center Press, 2013. 5 Ibid, p. 3. 6 B.K. Sovacool (ed), The Routledge Handbook of Energy Security, Abingdon, Oxon: Routledge, 2011. 7 Supra, see note 6, p. 20. 8 Ibid, p. 21.

30  The concept of energy security 9 A. Konoplyanik, “Energy Security and the Development of International Energy Markets”, in B. Barry, C. Redgwell, A. Ronnne, and D. Zillman (eds), Energy Security: Managing Risk in a Dynamic Legal and Regulatory Environment, Oxford: Oxford University Press, 2004. 10 Ibid, p. 63. 11 Ibid, p. 64. 12 Ibid. 13 Ibid, p. 65. 14 B. Barry, C. Redgwell, A. Ronnne, and D. Zillman (eds), Energy Security: Managing Risk in a Dynamic Legal and Regulatory Environment, Oxford: Oxford University Press, 2004, p. 19. 15 Ibid, p. 20. 16 Ibid. 17 F. Verrastro and S. Ladislaw, “Providing Energy Security in an interdependent World”, The Washington Quarterly, 30(4), 2007. 18 Ibid, p. 98. 19 F. Ciutta, “Conceptual Notes on Energy Security: Total or Banal Security?”, Security Dialogue, 41(2), 2010. 20 L. Chester, “Conceptualizing Energy Security and Making Explicit Its Polysemic Nature”, Energy Policy, 38(2), 2010. 21 Ibid, p. 74. 22 K.M. Cambell and J. Price (eds), The Global Politics of Energy, Aspen, CO: The Aspen Institute, 2008. 23 Supra, see note 22, p. 123. 24 Ibid, p. 124. 25 Ibid, p. 127. 26 Ibid. 27 D. Yergin, “Ensuring Energy Security”, Foreign Affairs, 85, 2006. 28 Ibid, p. 70. 29 Supra, see note 22, p. 128. 30 Ibid, p. 129. 31 Ibid. 32 Ibid. 33 W.J. Nuttall and D.L. Manz, A New Energy Security Paradigm for the Twenty First Century, Cambridge: Judge Business School, University of Cambridge, 2008. 34 Ibid, p. 5. 35 Ibid, p. 8. 36 Ibid, p. 9. 37 Ibid, p. 12. 38 J.C. Jansen and A.J. Seebregts, “Long Term Energy Services Security: What Is It and How Can It Be Measured and Valued?”, Energy Policy, 38(4), 2010. 39 Ibid, p. 1654. 40 Ibid, p. 1655. 41 Ibid, p. 1659. 42 D. Moran, “The Battlefield and the Marketplace: Two Cautionary Tales”, in D. Moran and J.A. Russell (eds), Energy Security and Global Politics: The Militarization of Resource Management, Routledge Global Security Studies, Abingdon, Oxon: Routledge, 2009, p. 17. 43 Ibid, p. 18. 44 Ibid, p. 19. 45 Ibid. 46 G. Luft and A. Korin (eds), Energy Security Challenges for the 21st Century: A Reference Handbook, Santa Barbara, CA: Praeger, 2009. 47 Ibid, p. 6.

The concept of energy security  31 48 Ibid, p. 7. 49 Ibid. 50 M. Brown, “The Environmental Dimension of Energy Security”, White paper presented before an International Workshop on Energy Security Concepts and Indicators for Asia, Centre on Asia and Globalization, Lee Kuan Yew School of Public Policy, National University of Singapore, November 15, 2009. 51 Ibid, p. 5. 52 Ibid, p. 6. 53 Supra, see note 50, p. 7. 54 Ibid. 55 Supra, see note 46, p. 10. 56 Ibid. 57 Ibid. 58 US Department of Energy, International Energy Outlook 2015, Energy Information Administration Report No. DOE/EIA-0484(2015), www.eia.doe.gov/oiaf/ieo/electric ity.html. 59 Ibid, p. 5. 60 Ibid, p. 6. 61 Ibid. 62 Ibid. 63 Ibid, p. 9. 64 Ibid, p. 10. 65 Supra, see note 58, p. 11. 66 Ibid, p. 12. 67 Ibid. 68 Ibid. 69 International Energy Agency, World Energy Outlook 2016, Paris: International Energy Agency, 2016. 70 Ibid. 71 Ibid. 72 Ibid. 73 Ibid. 74 Ibid. 75 A. Goldthau, “Emergency Diplomacy in Trade and Investment of Oil and Gas”, in A. Goldthau and J.M. Witte (eds), Global Energy Governance: The New Rules of the Game, Washington, DC: Brookings Press, 2010, p. 27. 76 Ibid, p. 29. 77 Ibid, p. 30. 78 Supra, see note 75, p. 30. 79 A. Goldthau and J.M. Witte (eds), Global Energy Governance: The New Rules of the Game, Washington, DC: Brookings Press, 2010. 80 Ibid, p. 6. 81 Supra, see note 75, p. 31. 82 Ibid, p. 32. 83 Ibid, p. 33. 84 Ibid. 85 Ibid. 86 Ibid, p. 34. 87 Ibid, p. 35. 88 Supra, see note 69. 89 Supra, see note 75, p. 80. 90 Ibid. 91 Victor and L. Yueh, “The New Energy Order: Managing Insecurities in the Twenty First Century”, Foreign Affairs, January 2010.

32  The concept of energy security 92 D. Yergin, The New Map: Energy, Climate and the Clash of Nations, New York: Allen Lane, 1st edition, 2020. 93 Ibid, p. 12. 94 Ibid, p. 13. 95 Ibid, p. 14. 96 Ibid, p. 15. 97 Ibid, p. 20. 98 Ibid. 99 Ibid. 100 Asia Pacific Energy Research Centre (APERC), A Quest for Energy Security in the 21st Century, Tokyo: APERC, Institute of Energy Economics, 2007. 101 Ibid, p. 16. 102 This criterion was formulated by the energy security and sustainability (ESSD) framework. See note 99. 103 Supra, see note 100, p. 16. 104 Ibid. 105 Supra, see note 100, p. 23. 106 Ibid, p. 24. 107 Ibid, p. 25. 108 Supra, see note 100, p. 26. 109 Ibid. 110 Ibid, p. 40. 111 Ibid, p. 41. 112 Ibid, p. 42. 113 Ibid, p. 43. 114 Ibid, p. 45. 115 Supra, see note 91, p. 26. 116 Supra, see note 75, p. 34. 117 Ibid, p. 35. 118 Ibid, p. 38. 119 Supra, see note 42, p. 25. 120 Ibid, p. 26. 121 Ibid, p. 27. 122 Supra, see note 46, p. 17. 123 Ibid, p. 18. 124 Supra, see note 46, p. 19. 125 Ibid. 126 M.T. Klare, “Petroleum Anxiety and the Militarization of Energy Security”, in D. Moran and J.A. Russell (eds), Energy Security and Global Politics: The Militarization of Resource Management, Routledge Global Security Studies, Abingdon, Oxon: Routledge, 2009, p. 43. 127 These countries include the US, the UK, and France. In Asia, China is also flexing its muscle to control the South China Sea resources resulting in confrontation with Japan, Philippines, Vietnam, Cambodia and others. 128 Supra, see note 125, p. 45. 129 Ibid, p. 46. 130 Supra, see note 126, p. 47. 131 Supra, see note 126, p. 48. 132 Ibid, p. 49. 133 Ibid, p. 50. 134 Ibid. 135 D. Yergin, “Energy Security and Markets”, in J.H. Kalicki and D.L. Goldwyn (eds), Energy & Security: Strategies for a World in Transition, Washington, DC: Woodrow Wilson Centre Press, 2nd edition, 2013.

The concept of energy security  33 136 Ibid, p. 75. 137 Ibid, p. 77. 138 Ibid, p. 78. 139 M. Lall, The Geopolitics of Energy in South Asia, Singapore: The Institute of Southeast Asian Studies, National University of Singapore, 2009. 140 Ibid, p. 10. 141 Ibid. 142 A.M. Jaffe and K.B. Medlock III, “China, India and Asian Energy”, in J.H. Kalicki and D.L. Goldwyn (eds), Energy & Security: Strategies for a World in Transition, Washington, DC: Woodrow Wilson Centre Press, 2nd edition, 2013. 143 Ibid, p. 289. 144 Ibid, p. 290. 145 Ibid. 146 International Energy Agency, World Energy Outlook 2018, Paris: International Energy Agency, 2018.

Selected bibliography Asia Pacific Energy Research Centre (APERC). A Quest for Energy Security in the 21st Century, Tokyo: APERC, Institute of Energy Economics, 2007. Barry, B., C. Redgwell, A. Ronnne, and D. Zillman (eds). Energy Security: Managing Risk in a Dynamic Legal and Regulatory Environment, Oxford: Oxford University Press, 2004. Brown, M. “The Environmental Dimension of Energy Security”, White paper presented before an International Workshop on Energy Security Concepts and Indicators for Asia, Centre on Asia and Globalization, Lee Kuan Yew School of Public Policy, National University of Singapore, November 15, 2009. Cambell, K.M., and J. Price (eds). The Global Politics of Energy, Aspen, CO: The Aspen Institute, 2008. Chester, L. “Conceptualizing Energy Security and Making Explicit its Polysomic Nature”, Energy Policy, 38(2), 2010. Ciutta, F. “Conceptual Notes on Energy Security: Total or Banal Security?”, Security Dialogue, 41(2), 2010. Goldthau, A. “Emergency Diplomacy in Trade and Investment of Oil and Gas”, in A. Goldthau and J.M. Witte (eds), Global Energy Governance: The New Rules of the Game, Washington, DC: Brookings Press, 2010. Goldthau, A., and J.M. Witte (eds). Global Energy Governance: The New Rules of the Game, Washington, DC: Brookings Press, 2010. International Energy Agency. World Energy Outlook 2016, Paris: International Energy Agency, 2016. International Energy Agency. World Energy Outlook 2018, Paris: International Energy Agency, 2018. Jaffe, A.M., and K.B. Medlock III. “China, India and Asian Energy”, in J.H. Kalicki and D.L. Goldwyn (eds), Energy & Security: Strategies for a World in Transition, Washington, DC: Woodrow Wilson Centre Press, 2nd edition, 2013. Jansen, J.C., and A.J. Seebregts. “Long Term Energy Services Security: What Is It and How Can It Be Measured and Valued?”, Energy Policy, 38(4), 2010. Kalicki, J.H., and D.L. Goldwyn. Energy & Security: Strategies for a World in Transition, Washington, DC: Woodrow Wilson Center Press, 2013. Klare, M.T. “Petroleum Anxiety and the Militarization of Energy Security”, in D. Moran and J.A. Russell (eds), Energy Security and Global Politics: The Militarization of

34  The concept of energy security Resource Management, Routledge Global Security Studies, Abingdon, Oxon: Routledge, 2009. Konoplyanik, A. “Energy Security and the Development of International Energy Markets”, in B. Barry, C. Redgwell, A. Ronnne, and D. Zillman (eds), Energy Security: Managing Risk in a Dynamic Legal and Regulatory Environment, Oxford: Oxford University Press, 2004. Lall, M. The Geopolitics of Energy in South Asia, Singapore: The Institute of Southeast Asian Studies, National University of Singapore, 2009. Luft, G., and A. Korin (eds). Energy Security Challenges for the 21st Century: A Reference Handbook, Santa Barbara, CA: Praeger, 2009. Moran, D. “The Battlefield and the Marketplace: Two Cautionary Tales”, in D. Moran and J.A. Russell (eds), Energy Security and Global Politics: The Militarization of Resource Management, Routledge Global Security Studies, Abingdon, Oxon: Routledge, 2009. Moran, D., and J.A. Russell (eds). Energy Security and Global Politics: The Militarization of Resource Management, Routledge Global Security Studies, Abingdon, Oxon: Routledge, 2009. Nuttall, W.J., and D.L. Manz. A New Energy Security Paradigm for the Twenty First Century, Cambridge: Judge Business School, University of Cambridge, 2008. Sovacool, B.K. (ed). The Routledge Handbook of Energy Security, Abingdon, Oxon: Routledge, 2011. US Department of Energy. International Energy Outlook 2015, Energy Information Administration Report No. DOE/EIA-0484(2015), www.eia.doe.gov/oiaf/ieo/electricity.html Verrastro, F., and S. Ladislaw. “Providing Energy Security in an Interdependent World”, The Washington Quarterly, 30(4), 2007. Victor, D.G., and L. Yueh. “The New Energy Order: Managing Insecurities in the Twenty First Century”, Foreign Affairs, January 2010. Yergin, D. “Energy Security and Markets”, in J.H. Kalicki and D.L. Goldwyn (eds), Energy & Security: Strategies for a World in Transition, Washington, DC: Woodrow Wilson Centre Press, 2nd edition, 2013. Yergin, D. “Ensuring Energy Security”, Foreign Affairs, 85, 2006. Yergin, D. The New Map: Energy, Climate and the Clash of Nations, New York: Allen Lane, 1st edition, 2020.

2 Energy scenario of South Asian countries An analysis

Introduction Most of the countries of South Asia face similar problems as they are not being able to meet the increasing demand for energy in their respective countries. The purpose of this chapter is to find out and analyze the energy scenario in all these countries and the issues and challenges they are facing to ensure the energy security of their respective countries. Although the requirements of each of these countries are different, they all suffer from similar issues as they are trying to grapple with the rising demand for energy with increasing supply from abroad. This chapter evaluates the energy scenario of India, Pakistan, Nepal and Bhutan by discussing about the stakeholders in their energy sectors, the energy mix of these countries and the issues and challenges that each of these countries face. The purpose of analyzing these countries in the following manner is to get a holistic picture about the energy security situation in these four countries and to understand their energy policies.

India India is the largest economy in South Asia and one of the largest in the world. The country is the fifth largest consumer of fossil fuel in the world while its per capita energy consumption is about 24% of the world average consumption.1 After India opened its economy in the early 1990s, there has been a massive economic growth resulting in a huge demand for energy. The country has also one of the largest middle-class population in the world and despite a huge demand for energy, it is accessible to only a small segment of the population. Around 404 million people lack even the basic access to electricity while another 855 million people are dependent on biomass and other sources of energy.2 This lack of energy has a negative impact on India’s economic growth rate. The government has set a target of 8% growth to rid the country of poverty in the next 25 years.3 However, to reach that goal, the country would have to ensure that there are sufficient sources of energy to meet the country’s demand. India’s primary source of energy is coal, but due to various problems associated with coal in regard to the environment and health, the government has decided to rely less

36  Energy scenario of South Asian countries on it. Moreover, due to a lack of infrastructural development, it costs the government more to produce and transport coal than to import it from another country.4 India relies heavily on oil due to the huge demand for the fuel in the transport sector. Due to the increasingly high demand for oil, the country has to import a large amount of the fuel, leaving the country’s economy vulnerable due to the huge import bills.5 The matter worsens if there is a price shock or other supply disruptions. However, the recent discovery of huge deposits of natural gas will lower the dependence on oil.6 Moreover, the country also has the potential for shale gas deposits which might ensure the required energy mix necessary to meet the growing demand. Hydropower is another area which India is dependent heavily upon over the last 50 years.7 However, this sector is becoming difficult to develop due to the landtitle disputes, resettlement issues and water usage conflicts with the neighboring countries.8 Nuclear energy is another area the country has shown promise after signing the agreement with the US. However, due to nuclear accidents in various parts of the world, the government is skeptical over depending on this sector for its source of energy. Further, India is focusing on renewable energy but at a much lower scale. The government has also privatized the electricity sector in order to increase efficiency and lower corruption. However, old transmission lines, frequent power outages and lack of investment are holding this sector back.9 The government needs to formulate better policies to bring in greater foreign and private investment in this sector which will improve the infrastructural capabilities and efficiency of the grids. Moreover, better regulation is also required to ensure that investors are not discouraged from investing. The Indian government formulated the India Hydrocarbon Vision 2025 in the year 1999 to deal with the increasing demand for these resources. The Vision 2025 laid the foundation to augment domestic production and prescribed deregulation and active participation from the private sector both domestically and internationally.10 The government was of the opinion that since the country would be dependent on both oil and gas for a long time, the Indian economy would have to deal with the price and demand for energy in the international market.11 The Vision 2025 also advocated for a strong and enduring import policy to ensure regular supply of oil and gas at a sustainable price.12 Any sharp fluctuation in the world price or supply would affect the economy sharply especially for a country dependent on the import of fuels. Table 2.1  Impact of Electricity Shortage on GDP in South Asia Country

Economic cost ($US billion)

Impact of electricity shortage on GDP (%)

Bangladesh India Pakistan

11.2 86.1 17.7

5 4.1 6.5

Source: The World Bank Indicators, 2019 and the Author, 2020

Energy scenario of South Asian countries  37 Hydrocarbons account for about 42% of India’s commercial energy consumption.13 As a result, the country would have to depend on this fuel for a long time due to the high demand of the transport and the manufacturing sectors. Moreover, the share of oil and gas in the economy would be around 45% by the year 2025.14 According to experts, the dependency on oil would lower in the future while for gas it would increase.15 The Indian hydrocarbon resources are estimated to be around 29 BT, but so far only 6.8 BT are ready for production.16 Further, the recovery rate is as low as 28% compared to the world average of 40%.17 The country is currently getting most of its resources from only six out of the 26 sedimentary basins which cover around 3.14 million km2.18 As a result, only 35% of the basins have so far been explored.19 The Vision 2025 also encouraged national and private energy companies to engage with more IOCs in order to gain experience and technological help in exploring reserves in the country.20 Further, three national companies including Oil and Natural Gas Corporation (ONGC), Indian Oil Corporation (IOC) and the Gas Authority of India Ltd (GAIL) have over the years complemented each other in finding reserves at both home and abroad.21 The three companies work as a consortium for all the international oil and gas exploration and production, transportation and marketing projects overseas.22 They have also worked in joint ventures with various IOCs. The ONGC Videsh is the overseas arm of ONGC and it has been encouraged to produce greater quantities of equity oil from its ventures abroad. As a result, this company has been working mostly in Central Asia, Middle East, Latin America and Africa and its production of oil and gas has been increasing. The ONGC Chairman stated that We are always looking for new properties, anywhere in the world but obviously, the nearer is better, if it comes to a choice between gas and oil, then we prefer oil . . . I can’t say how much there will be equity production and where it will come from but we have the funds ready for when opportunities arise. We have 15 deals at the first stages of negotiation-but how many will materialize and at what time is uncertain.23 This shows the vision of the Indian oil and gas companies that are currently looking for resources overseas in order to meet the increasing demand for oil and gas at home. It is important for national oil and gas companies of India to find overseas reserves due to the increasing demand for oil and gas domestically. Due to India being a balance of payment deficit country, it has sometimes been vulnerable to the oil price shock. Although the global price for oil has fallen recently, the government has to ensure the adequate supply of fuel into the country. The global reach of the country to meet the growing need for resources has resulted in at least 30 countries being its supplier.24 Nigeria, along with Saudi Arabia, Kuwait, UAE and Iran accounts for 75% of its supply of oil, which is a high concentration of import sourcing.25 Table 2.2 shows the access of energy by various countries in South Asia.

38  Energy scenario of South Asian countries Table 2.2  Access of Energy in South Asia Country

Total % (2016)

Rural areas % (2016)

Afghanistan Bangladesh Bhutan India Maldives Nepal Pakistan Sri Lanka

84.1 75.9 100 86.1 100 90.7 99.1 95.6

79 68.9 100 81 100 85.2 98.8 94.6

Source: The World Bank Indicators, 2019 and the Author, 2020

Current stakeholders of the sector The Ministry of Power is responsible for formulating and implementing the various national policies of the electricity sector, including thermal and hydropower generation, transmission and distribution. The Ministry is also responsible for running the Central Electricity Authority, National Thermal Power Corporation and the Rural Electrification Corporation that finance farmers and agriculture-based industries. The North Eastern Electric Power Corporation Limited is responsible for the development of Northeast India’s hydro and natural gas resources. The Central Electric Authority is part of the Ministry of Power and is responsible for the technical coordination and supervision of power-related programs. Moreover, the electricity sector is regulated by the Central Electricity Regulatory Commission while the Power Grid Corporation of India is dedicated to look after the power transmission facilities in the country. In the oil and gas sector, the Ministry of Petroleum and Natural Gas has the main responsibility to overlook the exploration and exploitation of natural resources in India. It is also responsible for refining, distribution and the marketing of petroleum products and their import and conservation.26 The Ministry also has the task of pricing the petroleum and is associated with a dozen and more public and private sector companies. ONGC is the largest state-owned enterprise and is involved in upstream activities. ONGC is involved with the refining and retailing as well as exploration and production. The company is responsible for 80% of India’s oil and gas production and holds more than half of the hydrocarbon blocks of the country.27 It also controls 5% of the country’s refining capacity.28 ONGC Videsh is the subsidiary of ONGC and is focused on exploration and exploitation of resources abroad. The company has made investments of more than $5 billion abroad and is currently working on various projects in the Asia-Pacific region, the Middle East, Africa and Latin America.29 Indian Oil Corporation (IOC) is the most important player in the refinery business through its ownership and operation of ten of India’s 20 refineries.30 It has

Energy scenario of South Asian countries  39 a network of pipelines, petrol stations and distributors and is the major player in the country’s transportation and marketing of petroleum products.31 Meanwhile, Bharat Petroleum Corporation is India’s second largest downstream energy company and has refineries in Mumbai, Kochi and Numarlingarh.32 The company has a market share of 15% and controls 24% of the country’s petroleum marketing sector through the sale of branded fuels, compressed natural gas (CNG), liquid petroleum gas and lubricants at more than 8,000 outlets nationwide.33 The company also has a subsidiary called Bharat Petroresources Limited, which focuses on exploration of natural resources. This subsidiary company is currently involved in projects in Australia, Brazil, East Timor, Oman and Mozambique.34 The Hindustan Petroleum Corporation Limited is India’s other state-owned downstream petroleum company. The company has more than 8,000 retail outlets and accounts for 24% of India’s retail market and also owns two refineries in Mumbai and Vishakhapatnam.35 Oil India Limited is one of India’s largest upstream companies with a strong presence in the oil sector of Northeast India. The company is involved in the exploration, production and transportation of oil and also has the responsibility to look after 15,000 km of pipelines.36 The company is also involved in the production and sale of natural and liquid petroleum gas. In partnership with the other state-owned enterprises, the company is also involved in the exploration of petroleum blocks in Iran, Libya, Yemen and West Africa.37 Gas Authority of India Limited (GAIL) has the responsibility for transporting, distributing and marketing gas produced by ONGC and other state-owned corporations. The company owns around 78% market share in natural gas transmission and 70% market share in natural gas marketing.38 The company is responsible for operating 6,700 km of high-pressure pipelines, including the country’s two main interstate gas pipelines, which transport gas from western India to New Delhi.39 Currently, around 27 oil and gas exploration blocks and three coal-bed methane blocks are under its control.40 The Ministry of Coal has the complete jurisdiction over the exploration, development and pricing over the most important source of India’s energy. The Ministry operates through two companies, namely Coal India Limited and Neyveli Lignite Corporation.41 The subsidiaries of Coal India Limited are responsible for the production of 85% of coal in India.42 It is in fact the world’s largest coal production company and employs nearly 400,000 people.43 The Ministry of New and Renewable Energy was created in the year 2006 to oversee the country’s growing renewable energy sector. The Ministry mainly focuses on renewables in the urban and rural sectors and also advocates for greater research and development projects. There are four technical institutions, namely the Solar Energy Centre, the Centre for Wind Energy Technology, the Indian Renewable Energy Development Agency and the Sardar Swaran Singh National Institute of Renewable Energy, which are all under the Ministry and focus on research and development of biofuels.44

40  Energy scenario of South Asian countries

Energy mix of the country Currently, India is the fifth largest consumer of energy in terms of total primary energy consumption.45 The primary energy demand of the country in the year 2015 was around 621 Mtoe and is expected to double to 1,204 Mtoe by the year 2030.46 The country’s current energy mix includes coal (40%), biomass and waste products (26.3%), oil (25.4%), natural gas (5.5%), hydropower (1.5%), nuclear power (0.6%) and renewable energy sources (0.2%).47 These figures provided by the IEA are subject to controversy. Coal India’s dependence on coal will remain for the foreseeable future as it makes for about 40–41% of its fuel mix.48 The coal found in India is not of good quality and is highly polluting resulting in various local and international agencies stating the need to find alternative sources of energy for the country. In the year between 2012 and 2013, 79% of coal consumption was in the power generation sector.49 Some of the reasons for coal being popular are because of its cheap price and also due to the huge employment it generates. Most of the coal mines are situated in states like Assam, Bihar, Jharkhand and West Bengal.50 Most of these states are poor and their economies are heavily dependent on coal. As a result, the issue of coal is politically sensitive and hence policy makers from these areas hold a considerable amount of leverage on the government. India is the world’s third largest producer of coal, and there is a general consensus that its production of coal will increase in the future. According to the government’s Planning Commission, the power sector in the country would require about 600 MT of coal in the near future.51 The Planning Commission also predicts that the coal quotient in the country’s energy mix will have to expand to over 2 BT a year by the year 2031–2032 and perhaps beyond that.52 The IEA predicts that it will be double from its current consumption.53 The role of coal will become more pivotal in the future due to the government’s goal of expanding access to electricity. Since coal is the major source of domestic power generation, it will play a major role toward fulfilling that policy. However, the current coal production is not at pace with the demand due to the limited access to technology, expertise and adequate geological data.54 Further, a lack of reform also hinders this sector from functioning efficiently. According to experts, Coal India Limited’s dominant market position has resulted in a powerful lobby always against any form of reform. Moreover, since the government is in charge of both supply and demand, the price of coal has been kept artificially low compared to the world price.55 The government, in order to reform the sector, made a policy decision to award coal blocks held by Coal India Limited to other companies if they were not brought into production within the year 2017. As a result, the Coal Mines Nationalization Act was amended to sell 10% of Coal India Limited.56 Further, there was a successful IPO which raised around $3.5  billion for the company.57 Other reforms taken by the government included the company following international standards

Energy scenario of South Asian countries 41 in washing coal before delivery, the setting up of an independent regulatory body and the construction of power generation facilities to ensure competitive pricing by domestic producers.58 However, greater foreign investment and advanced technology are needed to make the coal sector more cost competitive. According to experts, India has coal deposits worth 105 years and with 5% growth rate in production, extractable coal will be exhausted in the next 45 years.59 Moreover, a large amount of India’s reserves is found in tribal areas and forests which the government is reluctant to exploit. Apart from the uncertainty in reserve, it is difficult for investors to invest in this sector due to the allocation of 26% of all revenues to communities affected by mining.60 Unrest among coal workers is also another problem that the investors have to face. All these factors make importing coal much cheaper than producing domestic coal. India is also trying to secure coal supplies through various overseas acquisitions. The International Coal Venture, which is a collaboration between the Steel Authority of India, Rashtriya Ispat Nigam Limited, National Mineral Development Corporation and the National Thermal Power Corporation, has bought mines in Australia, Indonesia and Mozambique.61 Petroleum The petroleum consumption in India has gradually increased over the years. Around 70% of petroleum have come to the country through import.62 Although the price of petroleum has gone down over the years, its overall price has placed substantial burden on the government. According to the country’s Director General of Foreign Trade, in the fiscal years 2010–2011 and 2011–2012, crude oil imports accounted for more than 25% of total imports.63 More than half of India’s crude oil comes from the Middle East including 18% from Saudi Arabia, 16% from Iran, 10% from Kuwait, 9% from Iraq and 8% from the UAE.64 The rapid growth of the country over the last seven years has resulted in greater demand for oil.65 The demand for oil in the country has risen by 5% a year over the last decade although the global demand has increased by only 1%.66 This demand is likely to continue with the IEA predicting a demand increase of nearly 4% a year over the next 30 years and reaching 5.1 MMBD by the year 2025 and 7.5 MMBD by the year 2035.67 Moreover, according to India’s Five Year Plan, the demand for oil may grow between 9% and 15% every year through to the year 2030.68 Another reason for the rapid rise of demand for oil is the transport and aviation sectors. The country’s automobile industry is growing at a rapid pace and according to experts, India’s transportation sector, which in the year 2005 was the source of 27% of the total primary oil demand, will account for nearly half of the total oil demand by the year 2030.69 However, according to some experts, once India moves toward service-oriented industry, the demand for oil will fall.70

42  Energy scenario of South Asian countries India has about 5.6 billion barrels of crude oil reserves and the majority of the domestic production comes from the Mumbai High Field which produces about 51% of the country’s oil.71 Oil reserves are also found in the Cambay Basin in the northwest and Assam-Arakan Basin in the Northeast.72 Despite a lot of interest from the IOCs in the exploration of oil, only a few companies have shown an interest to invest in this sector. However, around the year 2011, BP made an investment of $7.2 billion for a 30% stake in the oil and gas sector of Reliance Industries.73 This no doubt was a shot in the arm for this fledgling sector. The country is also trying to develop its refining and petrochemical production sector. India has the largest refining capacity in Asia with the Reliance Industries Jamnagar refinery being considered as the world’s largest refinery.74 The country is currently the largest exporter of refined petroleum products.75 Further, due to the high demand for oil in the domestic sector, the country has been investing abroad and has been purchasing oil and gas fields through its national oil companies. Moreover, due to the decline in domestic production and the jump in demand for oil, this was the only viable option to ensure the country’s energy security other than diversifying its fuel mix. Currently, the country has made investments in the Republic of Congo, Iran, Libya, Myanmar, Sudan, Syria and Venezuela. Natural gas India’s natural gas sector has picked up over the last 15 years. The natural gas production has been increasing from the 1980s and since then the country is under pressure from the international donors and other agencies to lower its emission rate due to its heavy reliance on coal. From the year 2010 onwards, India produced over 1.4 Tcf of gas, while domestic consumption was 1.8 Tcf.76 The remaining 400 Bcf was imported via LNG as India does not have any pipeline.77 The domestic production of gas is in the offshore with the Mumbai High Field and the Krishna– Godavari Basin as the primary domestic production regions.78 The production of onshore gas is mostly in Gujarat, Andhra Pradesh and Assam.79 According to experts, natural gas currently accounts for about 5.5% of domestic primary energy consumption and could grow in the future if discoveries take place in India’s southeastern coast.80 The power and fertilizer industries account for about 40% and 29% of the gas market, respectively.81 The fertilizer industry is also heavily subsidized by the government and as a result the price of gas is fixed at a very low rate. This results in very little incentive for exploration. Further, the price of gas in other subsidized gas-fired power sectors does not provide enough encouragement for gas exploration. The country’s demand for gas is expected to rise rapidly in the future. According to experts, India’s demand for gas is likely to increase to 3.4 Tcf by the year 2020 and to 5 Tcf by the year 2030 and during that time, it will account for almost 11% of the country’s primary energy consumption.82 Hence, that amounts to an annual increase of 5.4%.83 Moreover, the government intends to generate more electricity in the future and as per the India Hydrocarbon Vision 2025, gas will be

Energy scenario of South Asian countries  43 considered as the major source of energy for the country, replacing both coal and oil.84 Further, the penetration of annual gas in the transport sector will also reduce the pressure on oil. Currently, India has the fifth largest number of gas vehicles in the world after Brazil, Iran, Argentina and Pakistan.85 However, the heavy-duty commercial vehicles still use oil which is a cause for concern. Liquefied natural gas Currently, India has two LNG import terminals in Gujarat owned by Petronet and by a joint venture of Shell and Total.86 Two more facilities are under construction in Dabhol and Kochi.87 The Dabhol facility is owned by Ratnagiri Gas, GAIL and NTPC.88 The Kochi terminal is owned by Petronet, which is a consortium of stateowned companies and various international investors.89 India imports LNG under both long-term and spot contracts. Hydroelectricity Hydroelectricity was one of the major sources of energy for India for a long period of time. In the year 2012, the hydroelectric capacity accounted for about 23% of the total installed electric generation capacity.90 The role of hydroelectricity has slowly diminished over the years as the government wanted to diversify its sources of energy. However, the government wants to revitalize the sector according to its 11th Five Year Plan as the country was projected to cross the 50,000 MW barrier by the year 2013.91 Some of the reasons this sector is suffering are because the projects regularly run over budget and are always behind schedule. Further, the melting of the Himalayan glacier lowers the water supply and as a result there are questions about whether there will be enough water. India relies also on the import of hydropower from Nepal and Bhutan. The scarcity of lands, environmental issues and the opposition of displaced population have also resulted in various hydropower projects not seeing the light of day. The diversion of water from important rivers is also a cause of concern, particularly the Brahmaputra, which is a vital water source for both India and Bangladesh. Nuclear energy In order to diversify its energy mix, India pursued the development of both conventional and advanced nuclear technology. In the year 2009, atomic power accounted for about 2% of the country’s electricity capacity.92 Currently, India has 20 nuclear reactors in operation with a capacity of 4,391 MW and they are operated by the Nuclear Power Corporation of India Limited.93 Another five reactors with a capacity of 3,564 MW are currently under construction.94 The agreement with the US will increase the capacity of the country to grow by a further 63,000 MW by the year 2032.95 However, there is a strong opposition for developing nuclear capability to generate power because of the various nuclear accidents over the years.

44  Energy scenario of South Asian countries India produces most of its uranium domestically, but after signing the agreement with the US, India is pursuing uranium mining deals with Mongolia and Russia for its nuclear fleet. The agreement with the US will also help the country get civil nuclear technologies and recently, a number of international companies have signed agreements with the government to build nuclear reactors. Biomass More than 855 million people in India rely on traditional biomass for their cooking and heating needs.96 Although it is not important for power generation, it has a high potential for electricity generation. According to the IEA, the biomass generation capacity could be increased by 20 GW. The government, in order to increase the use of biomass in the country, is providing incentives to increase the biomass generation capacity. Further, through the government’s Biomass Power/ Cogeneration Initiative, the agricultural wastes are to be used for more power generation in the future.97 According to experts, 16 GW of power can be produced from rice husks and other residues that are currently left to rot.98 The government is also giving incentives to around 550 sugar mills to participate in increasing the use of biomass.99 Electricity India has an installed capacity of about 170,228 MW of electricity making it the fifth largest in the world.100 The power network of the country comprises five regions: northern, northeastern, eastern, western and southern.101 All these networks are interconnected and also have interregional connections through highvoltage stations. According to the Ministry of Power, around 48% of generating capacity is owned by the states, 31% by central organizations and 21% by the private sector.102 The growing deficit of power is a major concern for the government as it hinders the economic growth and stability of the country. According to experts, the peak load deficit in the country is about 12.6% which is up from 11.7% previously.103 The government is trying to expand the national grid and is encouraging the private sector to make significant contributions in this regard. Further the government has also unbundled state utilities and liberalized wholesale pricing.104

Issues and challenges The Indian economy opened in the year 1991 with the hope that it would generate greater investment both from the private sector and also from abroad. However, the power sector reform of 1991 was not a success as only 6,500 MW was built despite the proposal for 20,000 MW in the private sector.105 One of the major problems in the private sector investment has been the delays in financial closure of projects, frequent changes in government policies, conflicting policies of the states and the federal government, inadequate arrangement for ensuring

Energy scenario of South Asian countries 45 payment security and governance issues.106 The Electricity Act of 2003 has however revived the private sector investment as the Act makes it mandatory for the state-owned enterprises to unbundle their generation, transmission and distribution companies.107 Moreover, the government as per its National Electricity Policy intends to construct 100,000 MW of generation capacity, 60,000 km of extra-high-voltage transmission lines and an increase in interregional power transfer capacity from 9,500 MW to 37,000 MW.108 As a result, this would help realize the government’s goal of ensuring electricity access for all the households in the country. Despite plans to reform the various power sectors, one of the major setbacks for the government is being an inefficient user of energy. The reason for this is the price subsidy provided by the government to protect the consumers from the actual price. Providing subsidy also artificially lowers the market price and discourages investment from outside especially in fuel-efficient technologies. Although the government raised prices in the past, the consumer prices of liquefied petroleum gas, kerosene and electricity remain way below their actual market price. This has continued despite the Planning Commission’s Vision 2020 stating that “the future growth should be as resource efficient and environmentally benign as possible”.109 The country needs to also build a requisite domestic infrastructure for electricity generation and transmission facilities, oil and gas pipelines, transport and distribution networks and rail and port facilities. According to the IEA, India needs to spend around $2.4 trillion in infrastructure development in its energy sector.110 Moreover, $1.8 trillion alone would be needed for the improvement in the electricity sector out of which 49% would be required for the transmission and distribution sector.111 However, if the government fails to carry out these investments, it would find it difficult to have an efficient electricity grid and to explore and exploit natural gas and oil reserves in the country. India’s energy intensity is very high and this can be improved through proper pricing, conservation and by demand side energy consumption and management policies. According to experts, 90% of commercial buildings that do not exist today will exist in the year 2035 which is staggering.112 This growth represents the fact that the government has enormous scope for ensuring energy-efficient buildings being built to lower the projected future demand for energy. The government also needs to consider reforming the gasoline price and lowering the subsidy for kerosene. Although kerosene is used by the poorer segments of the population, it drains a huge amount of money from the government. Further, the government needs to also ensure that cheap kerosene is not smuggled out into the neighboring countries which will again increase the demand for kerosene in the local market. Moreover, price reform in the gas sector is also required as the government heavily subsidizes this sector in order to protect the transportation and the industrial sectors. Fertilizer factories tend to use huge amounts of cheap gas which puts more pressure on the government balance sheet. The government has to consider that subsidized fertilizers are often wasted by rich farmers, and it does not reach the poor. Further, subsidy in the electricity sector results in huge price fluctuations and demand patterns in rural India. One of the reasons for this is the tariff for

46  Energy scenario of South Asian countries agriculture being so low that the state electricity boards responsible for providing electricity are unable to recover the cost for providing the service to farmers. This in turn leads to the state electricity board being unable to look after their aging networks resulting in unreliable electric supply. The government needs to also focus more on domestic oil and gas exploration in order to meet the demand for oil and gas in the country. Moreover, depending too much on import will result in the country suffering during supply disruption or market volatility. As a result, for greater energy security, the government needs to encourage private exploration both at home and abroad. The government needs to also find ways to reconsider civil nuclear liability law in order to develop the nuclear sector. The law shifts a lot of burden on the investors and hence investors feel skeptical over investing in the nuclear sector. Moreover, the country needs to take greater advantage of the civil nuclear deal signed with the US.

Pakistan Pakistan has a huge supply of natural gas and hydropower resources. However, due to bad planning, high government subsidies and an increasing demand for energy have resulted in a shortage of supply in the country.113 Moreover, a huge population, urbanization and high unemployment have made governance difficult in Pakistan, and it has affected the economic growth of the country as well. According to experts, energy policy in Pakistan has failed because there was no continuity in the various policies taken by the government and due to the inability of the government to balance the productive and nonproductive use of electricity.114 After the partition from India, the economic growth of Pakistan has suffered due to the lack of growth in its energy sector. The government started a utility restructuring program to deal with the country’s old infrastructure in the electricity sector. Despite government’s action, it was difficult to achieve a sustained growth in supply as the hydropower development projects stalled due to the high cost of building a dam and also because of water disputes between Pakistan’s own provinces.115 In the year 1952, the country discovered a huge gas field in Sui with an estimated reserve of 8 Tcf of gas.116 Due to the huge discovery, the government made natural gas power station a priority and hence from the year 1960 onwards, new gas power stations were constructed in Multan, Hyderabad, Shahdara, Faisalabad and Sukkur.117 However, the government made the mistake of pricing the gas below the international price of oil which led to a rapid rise in consumption. The government also gave a lot of subsidies in this sector in order to increase the country’s commercial and industrial base. Moreover, the energy planners of the country were also under the impression that their energy future was secure and hence focused on developing the hydropower potential of the country.118 Moreover, the country’s economic planners were of the opinion that they would be able to sustain providing cheap electricity for the consumers while ensuring

Energy scenario of South Asian countries 47 rapid economic growth. As a result, they built a 15 MW coal plant and a gas pipeline to Quetta, in the western part of the country, linking the gas field in Sui. Further, they also decided against building any new power plants or pipelines as they were deemed sufficient.119 While there were strides made in the gas sector, the hydropower generation stalled. The government created Water and Power Development Authority (WAPDA), a semi-autonomous government-owned public utility to look after the water sector of the country. The signing of the Indus Basin Water Treaty in 1958 paved the way for increasing the hydropower generation capacity of the country.120 WAPDA was given the responsibility to accelerate electricity generation, transmission and distribution through the entire country. The water treaty signed with India also accelerated this. Pakistan also built two huge dams called Mangla and Tarbela on the Jhelum and Indus rivers.121 The water from these dams was diverted for irrigation purposes. Despite all the success, the country’s hydroelectric capacity suffered due to the government’s use of dams for irrigation. According to an expert, [D]ams on irrigation placed dual handicaps on the operation of the power houses . . . during the month of January. . . . the canals closed for annual maintenance and release from the dams were virtually reduced to a trickle.122 Moreover, during the month of February, the demand for irrigation increases which lowers the electricity generation capacity and this would continue until the snow melted in the Himalayas in June. This made WAPDA’s situation worse because all of WAPDA’s generation capacity came from hydroelectric power and as a result, any shortfalls in rain caused reduced water flows which in turn caused problems in power generation. The oil price shock of the 1970s also had a major impact on the country as it badly affected its economic growth. The oil price shock increased Pakistan’s current account deficit from $131 million in the year 1972 to nearly $1.2 billion in the year 1975.123 The country’s oil import bill rose from $5.8 billion in the year 1962 to $64.9 billion in the year 1973.124 Due to the oil crisis, the government wanted to divert its attention to the exploration of oil and gas in the country in order to reduce the import bill. The government signed a number of agreements with IOCs with the hope of finding new reserves in the country. The country wanted to also improve its refining capacity as oil was produced in the north and the refineries were in the south. In order to cut down on the transportation of oil within the country, the government wanted to build more refineries in the north. The country during the 1970s also wanted to diversify its energy mix and the government allocated funds to build a 600 MW light water reactor in Punjab.125 The Pakistan Atomic Energy Commission was also given the responsibility to build an additional 23 reactors.126 The IAEA supported Pakistan’s quest for investing in the nuclear power to meet its energy demands although there were opposition for this plan. Moreover, the country’s huge energy demand coupled with a lack of power resources and a deterioration of the balance of payments provided the country with reasons for developing commercial nuclear power.

48  Energy scenario of South Asian countries During the 1980s and 1990s, the government wanted to privatize the energy sector in order to bring in greater investment. The Sixth and Seventh Five Year Plans encouraged the growth of private investment by lowering the dependence on imported fuel.127 The Plans also called for more investment in the hydropower sector. The government also increased investment in electricity by 38% and planned the construction of an additional 6,558 MW of new electricity generation capacity.128 However, the actual increase in generation was only 2,574 MW.129 The country’s energy security situation worsened due to various political upheavals and the government undertook “Vision 2030” in order to deal with the energy security issue. The major goals of Vision 2030 were to enhance energy security through the diversification of supplies and greater investment in all the resources of the country including coal, nuclear energy, hydropower, oil, natural gas and renewable energy.130 The Vision 2030 was ambitious as the country’s economic growth rate was low, government was earning less from tax revenues and the rising military expenditures all had an impact on the economy.131 Further, the government during this time, cut fuel subsidies to 1.9% of GDP from 3.8% which was a good initiative to revive the economy. However, the electricity subsidies still accounted for 44% of the total subsidies and it continues to burden the country.132

Current stakeholders of the sector There are six ministries responsible for the country’s overall energy sector. They are the Ministry of Water and Power, Ministry of Finance, Ministry of Planning, Ministry of Petroleum and Natural Resources, Ministry of Science and Technology and the Alternative Energy Development Board.133 The Pakistan Atomic Energy Commission and the Private Power Infrastructure Board also play an important role in various energy policy matters. All these ministries and boards play an important role in the formulation of the government policies. However, there is a lack of coordination among all these entities resulting in policies which are difficult to implement. Table 2.3 lists the demand for various petroleum products in Pakistan.

Table 2.3  Demand of Petroleum Products in Pakistan

Petrol Diesel FO Jet fuel LPG Others

2012–2013

2016–2017

2017–2018E

2022–2420F

2029–2030F

3,341 6,829 8,473 804 528

6,738 8,484 9,560 843 1,209

7,875 9,563 9,204 851 1,306

16,706 13,820 4,062 903 1,852

30,410 16,820 2,208 959 2,343

Source: Author and data taken from SAARC energy outlook: 2030, SAARC Energy Centre, Islamabad, Pakistan

Energy scenario of South Asian countries  49 There are also a few companies partially owned by the government which also play an important role in the energy sector. These are the Oil and Gas Development Corporation, Pakistan Petroleum Limited, Pakistan State Oil, Sui Northern Gas Pipeline Company, Sui Southern Gas Company, the Water and Power Development Authority and Karachi Electric Supply Company.134 The government also broke down the transmission and distribution responsibilities relating to thermal power from WAPDA. Hence, a new institution called the Pakistan Electric Power Company (PEPCO) was created. The new electricity company’s main responsibility included managing the nine corporatized distribution companies, four generation companies and the National Transmission Dispatch Company.135 Further, PEPCO was given an independent chairman and a managing director in order to work independently as part of the government’s wider reform package. In terms of regulation, the Oil and Gas Regulatory Authority has the responsibility to look after the oil and gas sectors, while the Pakistan Nuclear Regulatory Authority oversees the nuclear sector.136 The major problems with all these intuitions are a lack of coordination and coherence in their policies. For example, PEPCO is run by bureaucrats and they can override any decision given by the Ministry of Water and Power, although technically it is under the Ministry. As a result, there are a lot of delays in the decision-making process and it becomes difficult to implement the various policies of the government.137 Moreover, the Chairman of the Pakistan Atomic Energy Commission reports directly to the President, while the nuclear energy requirements are presented to the Planning Commission.138 Hence, there is a lack of coordination among all these agencies. The National Integrated Energy Plan (NIEP) which envisages the energy plan from 2009 to 2030 tackles some of these institutional problems and advocates for an integrated energy policy for all the sectors including the upstream, downstream, nuclear, gas, coal and oil. It also advocates that the energy policies should be linked to the trading, foreign, economic and security policies of the country.139 The Plan also states that “a high powered body with legislative power, authority and necessary empowerment and resources are needed to drive Pakistan’s energy goals”.140 The creation of such a body will no doubt increase the efficient running of the energy sector of the country.

Energy mix of the country Pakistan’s primary energy supply was 82.8 Mtoe from 2008 to 2012. This comprised 32% of natural gas, 24% of oil, 6% of coal, 3% from hydropower and less than 1% from nuclear power.141 The rest 35% came from combustible renewables and waste such as biomass.142 The industrial sector of the country consumes about 43% of power followed by 29% by the transportation sector, 20% by residential consumers, 4% by the commercial sector while 2% by the agricultural and government sectors.143 Moreover, 60% of the total number of households are currently connected with the national electric grid and gas pipelines.144

50  Energy scenario of South Asian countries Hydropower Hydropower is one of the most important sources of energy in Pakistan. The reason for its importance is that it helps to maintain the requirements of the country in a secure and cost-effective manner. In 1947, there were only two hydropower projects of a collective capacity of 10.7 MW in Malakand and Renala.145 After the independence, there were problems in this sector due to the dispute with India, besides a lack of financial resources. However, the signing of the Indus Treaty by India and Pakistan proved to be a turning point in this sector. The treaty allowed India to claim three eastern rivers and Pakistan three western rivers and also allowed construction of replacement works called Indus Basin Project to compensate for the loss of eastern rivers’ water.146 In the year 1958, WAPDA took over the responsibility of hydropower development and increased the hydropower capacity to 52 MW.147 Further, by the year 1960, the capacity grew to 253 MW.148 The hydropower sector did not grow much over the last 60 years due to the politicization and a lack of policy decisions regarding the Kalabagh Dam. During this time, only the Ghazi-Barotha Hydropower Project was completed with a capacity of 1,450 MW.149 Further, with the 111 MW of power coming from the various Independent Power Producers (IPP), the current total hydropower capacity stood at 6,550 MW.150 Hydropower currently generates about 32.7% of the total installed power generation capacity in the country.151 However, the problem is the power generation capacity of hydropower varies during summers and winters due to the seasonal variations of reservoir levels of the major projects like Tarbela and Mangla. The maximum power generation capacity of Tarbela is 3,692 MW and 1,350 MW, respectively, while that of Mangla is 1,150 MW and 500 MW.152 Hence, WAPDA’s overall capacity also varies between 2,414 MW and 6,746 MW within the same year.153 Oil sector The country has 313  million proven oil reserves and is mostly dependent on foreign imports from Saudi Arabia, Iran and the UAE.154 The country imported around 82% of its oil in the year 2009.155 The demand for petroleum products is increasing and the country either needs to triple its refinery output or import a significant portion of its petroleum by the year 2030.156 As a result, Pakistan needs to focus more on the exploration of resources within the country in order to lower its reliance on import. Currently, domestic oil contributes to only 16% of the national requirement.157 According to the IEA, the country’s recoverable oil reserves are around 300 barrels.158 Gas sector The country has around 29 Tcf of natural gas reserves and a production of around 1.4 Tcf.159 Most of Pakistan’s gas production are located in Sind and Baluchistan.160 Pakistan’s most productive field is in Baluchistan producing around 231 Bcf of

Energy scenario of South Asian countries 51 gas a year.161 However, due to regional political violence and various other disputes between the provincial government and central government, the production has been stagnant in the region. As a result, the two fields in Sind known as the Zamzama and Quadripur have increased their gas production to make up for the Sui gas field in Baluchistan.162 Although Pakistan has the potential to further utilize its gas resources, lower wellhead prices and heavy subsidies for consumer products such as fertilizer, electricity and compressed gas have increased the demand dramatically. This might threaten the supply of gas in the future and might lead to import from Iran and Afghanistan through pipelines. The country’s transportation sector is also heavily dependent on gas and the demand is increasing rapidly. The supply crunch of gas is also caused by the heavy subsidy provided by the government which discourages private and international investment in this field. The lack of exploration due to shortage of funds is also responsible. Currently, the two transmission and distribution companies – Sui Northern and Sui Southern – signed a long-term “take or pay” contracts with gas producers in order to finance the field’s development and to build and operate the distribution infrastructure.163 Moreover, the exploration and development of gas in the Baluchistan province is stalling due to the political violence in the region. Further, there are disputes regarding royalty between the provincial and central government which make long-term infrastructural development in the region risky.164 International pipeline projects linking the region with Iran and India have also stalled due to the political violence which would have a negative impact on Pakistan’s energy supply requirements. Coal The country has an abundant reserve of coal in Sind, Tharpakar, and in the Thar Desert.165 The coal in the Thar Desert was discovered in the year 1992 and is around 175 billion tons, which is 95% of the country’s known reserves.166 However, despite having a huge reserve of coal, the country has been unable to use the resource due to a lack of planning and political squabbling between the provincial and the central governments. Moreover, environmental groups have also been vocal in their opposition to the exploitation of the resource due to the high sulfur content in coal. The government has a three-tier development plan with regard to the exploitation of coal for coal-fired power plants and mining. Moreover, it plans to upgrade the coal facility at Lakhra from 30 MW to 125 MW, build another 150 MW plant at the same location and three more facilities with the total capacity of 650 MW.167 The government has plans to also build an indigenous coal-fired lignite plant by using the coal from Thar Desert. The 300 MW plant using Thar coal is scheduled to have been completed by the year 2018 followed by an additional 300 MW facility by the year 2022.168 Moreover, the current legal and regulatory framework for mining coal is not clear in the country. Further, it is not clear whether the provincial government or

52  Energy scenario of South Asian countries the central government has complete jurisdiction to oversee the mining. A lack of foreign investment is also a problem as the country does not have the required funds to carry out mining in the region. The current legislation is also inconsistent. For example, the Mines Act 1923, which is currently in force, specifies work per day, sick leave and allows only one manager per mine.169 On the other hand, the Consolidated Mine Rules of 1952 goes into minute details like the selection of the canteen management committee.170 However, there is no mention of water use, licensing requirements or surveying standards. As a result, Pakistan needs a uniform law and clear jurisdictional guidelines for the efficient use and exploitation of its energy resources. Nuclear power Nuclear power plays a crucial role in dealing with the country’s energy demand and the increasing power crisis that is affecting its economic growth. However, ineffective policies are responsible for the sector not being able to fulfill its potential. This is due to the Pakistan Atomic Energy Commission forecasting the need for nuclear power leaving out the need for electric power.171 The country has 425 MW of installed capacity and the nuclear power accounts for about 2.5% of the country’s installed capacity.172 The government intends to increase the nuclear capacity to 8,800 MW by the year 2030.173 According to this projection, 900 MW was supposed to have been available by the year 2015 and an additional 1,500 MW by the year 2021.174 Moreover, the expansion includes four additional 300 MW reactors and seven 1,000 MW plants from China.175 However, since Pakistan is not a signatory to the Nuclear Non-Proliferation Treaty, most commercial companies will be unable to do business with the country, and hence it has to rely on China. Further, since China is dependent on the license for using the technology of international companies for their own nuclear projects, it might not be in a position to assist Pakistan. Electricity Electricity demand has skyrocketed in the country during the last ten years.176 According to experts, 53% of Pakistanis experience daily power cuts for more than eight hours.177 The capacity shortfall in the country is between 4,000 MW and 5,000 MW with power outages for nearly 18 hours a day.178 There have been riots in the country due to such power shortages. Among the electricity supplying entities, WAPDA has the largest share accounting for 56.6% of the total capacity.179 Out of WAPDA’s total capacity, 56.8% comes from hydropower, while the rest 43.2% comes from thermal power.180 The second most significant contribution is made by the Independent Power Producers (IPPs) that have a total installed capacity of 6,391 MW making up around 31.9% of the total capacity.181 Further, 98.3% of the IPP’s installed capacity comes from thermal power while the rest is from hydropower.182 The Karachi Electric Supply Corporation comes third with 1,756 MW of installed capacity and

Energy scenario of South Asian countries  53 contributes around 8.8%, while the Pakistan Atomic Energy Commission with its installed capacity of 462 MW contributes to around 2.3% of the total capacity. Renewable energy According to the IEA, renewables and waste accounted for about 35% of the total primary energy supply in Pakistan.183 Further, the Pakistan Council of Renewable Energy Technologies focused on electrification projects in remote areas such as the North West Frontier Province and the Federally Administered Tribal Area. In these areas, the Council installed 70 micro-hydro plants, developed low-power high-intensity solar power projects and used solar energy for small-scale rural electrification projects.184 Although these projects are all of lower scale, the country has a huge potential in this sector. Further, according to the government’s integrated energy plan, the potential for renewable energy in the country amounts to 346,000 MW of wind power, 2.9 million MW of solar power, 2,000 MW of small hydroelectric power, 2,000 MW of biogas, waste to power and cogeneration.185 The government wants the share of renewable energy in the primary energy consumption in the country to rise to 12% by the year 2022.186

Issues and challenges Pakistan urgently needs to carry out both institutional and domestic reforms in order to ensure its energy security in the future. Currently, the demand is not meeting supply as this has resulted in the country suffering from a lack of economic growth. The government needs to set up an integrated energy plan that will clarify the roles and responsibilities of all the energy sectors like coal, gas, oil, renewable energy and hydropower. Recently, the donors have also been advising the government to undertake these reforms and have also offered to provide technical assistance programs to help reform the various institutions.187 Table 2.4 gives the primary energy outlook of Pakistan for the period 2019–2030. A lack of vision and policy framework has resulted in the country not foreseeing the energy crisis that was bound to take place in the foreseeable future. Over the last 12 years, the country has experienced a rise in the electricity demand as the average annual economic growth rate has fallen.188 Further, the rise in the number of energy-intensive home appliances like air conditioners and refrigerators have also increased this demand. In fact, according to experts, air conditioners alone were responsible for the overall rise in the electricity demand.189 Moreover, a sudden change in the weather can cause the peak demand to fluctuate between 17,600 MW and 12,000 MW.190 During the years between 2000 and 2010, the national electricity supply base rose by 55%, however, no concrete measures were taken to generate more electricity.191 Corruption has also played a part in having an adverse effect on energy. Appointment of incompetent people in energy offices is a normal phenomenon and the government has done little over the years to deal with this problem.192

54  Energy scenario of South Asian countries Table 2.4  Primary Energy Outlook of Pakistan till 2030 FY19 FY20 FY21 FY22 FY23 FY24 FY25 FY26 FY27 FY28 FY29 FY30 Imported Electricity RE Nuclear Hydro Coal Gas-LNG Oil Gas

78 78 75 70 57 32

82 82 80 75 56 31

86 86 84 74 54 30

92 91 88 73 56 28

96 95 93 74 57 26

103.5 103 102 100 75 59 24

110.5 110 108 106 80 61 22

118 117.7 117 115 85 63 20

125.7 125 124 120 90 65 18

130.8 130 129 125 95 67 16

135.9 135 133 130 100 69 14

146 145 142 136 105 75 12

Source: Author and data taken from SAARC Energy Outlook: 2030, SAARC Energy Centre, Islamabad, Pakistan

Moreover, corruption affects not only the various energy institutions but also at the ministry level. For example, in appointing a chairman for a national regulatory agency, the selection committee sent a list of five candidates for approval to the Prime Minister’s office, but to everyone’s dismay the secretary to the Prime Minister was appointed the chairman despite his name not being there and hence violating all the selection criteria.193 The government has to also consider reforming the price of various energy products. Market reform of subsidies is required in order to encourage more foreign investment in the sector. Currently, the residential gas provided is heavily subsidized resulting in further pressure on the balance of payment of the government. Moreover, donors have been urging the government to remove all subsidies in order to receive donor assistance in the sector.194 Further, demand-side reforms like increased conservation measures are also necessary, but it could be complicated by the seasonal changes that affect the sector. For example, during the winter, residential demand surges create a lot of shortage and force the industries to buy expensive imported fuels.195 Moreover, the unmet demand of the industrial and power sectors equaled to 5 million tons of oil.196 The government needs to also focus more on the development of the coal sector. The coal sector can help the country to meet its demands for energy and can also provide them with energy security. However, the government needs to build various infrastructural facilities and undertake the reform of various legislative issues to ensure more foreign investment in the sector. Further, dealing with jurisdictional issues between the central and provisional government with regard to royalties can help increase the level of production in the coal mines.

Nepal Nepal is going through political turbulence since the last 20 years and this is having a negative impact on the economic growth of the country. The country’s GDP per capita is $427, which is the lowest in Asia. According to the IEA, 56% of Nepal’s population, which is roughly 16.5 million people, lacks access to

Energy scenario of South Asian countries 55 electricity.197 Moreover the per capita annual electricity consumption of 80 KW is among the lowest in the world.198 Further, the country’s energy infrastructure is in tatters which is resulting in chronic energy shortages. According to experts, the country has a lot of potential in terms of reliable energy. The country’s hydropower potential is estimated at 83,000 MW of which 42,000 MW is considered to be financially viable and developable.199 Despite the potential, the country has only 698 MW of installed hydropower capacity in the public sector, out of which 473 MW is connected to the grid.200 Moreover, another 167 MW of private generation capacity exists.201 Almost all power in Nepal is produced by the Nepal Electric Authority (NEA), which is owned by the government. The country also has a bright future in terms of exporting hydropower electricity to the neighboring countries. Moreover, various donor agencies have given aid in this sector in order to improve the country’s macroeconomic landscape.202 However, despite all the efforts, the country is suffering from internal unrest and economic stagnation which are stalling the development of the energy sector. Table 2.5 gives the primary energy consumption of the country. The first step the country took to develop its hydropower resources in the year 1911 was the building of 500 KW Pharping power plant.203 Thereafter in the 1960s, due to the country’s increasing geopolitical significance, other countries helped Nepal to develop its hydropower resources. The Soviet Union supported the building of 2.4 MW Panauti Project.204 The US on the other hand helped in the building of Nepal’s transmission infrastructure, which included the 66 KV BalajuHetauda-Birganj double circuit transmission lines and the 11 KV double circuit ring mains in Kathmandu.205 During the 1960s, several projects were sponsored by India that included the 9 MW Trisuli and the 12 MW Trisuli II projects.206 The Chinese and the World Bank also helped build projects like the Kulekhani I and Kulekhani II dams, which had a combined capacity of 69 MW.207 The government also embarked on various economic liberalization programs, which included policies to attract private investment. Moreover, the 1992 Electricity Act provided the legal and regulatory framework needed to increase the efficiency of the energy sector. The Act included the legal framework for licensing electricity suppliers and rules for safety, planning, inspection and regulation.208 The Electricity Tariff Fixation Table 2.5  Primary Energy Consumption of Nepal FY 13 FY 14 FY 15 FY 16 FY 17 FY 18 Traditional fuels Coal POL Hydro Net import of electricity Other sources (solar, biogas and others)

8.0 0.4 1.2 0.10 0.15 0.10

9.0 0.3 1.3 0.10 0.20 0.20

9.1 0.5 1.5 0.10 0.21 0.21

9.2 0.5 1.3 0.10 0.22 0.23

9.4 0.7 2.0 0.10 0.23 0.40

9.6 0.7 2.4 0.10 0.24 0.50

Source: Author and the data taken from SAARC Energy Outlook: 2030, SAARC Energy Centre, Islamabad, Pakistan

56  Energy scenario of South Asian countries Commission was created in the year 1994 to regulate retail tariffs and private sector companies.209 The government also released the hydropower development policy in 1992 which was forward looking and was formulated to increase investments in the hydropower sector. The policy included incentives for foreign investors, including a 50-year operation license, exemption of royalties for plants up to 1000 MW, tax credits and guaranteed autonomy for private investors.210 All these incentives increased foreign investment in the country. However, toward the year 2001, the new policy slowed the momentum which included a list of objectives including shortening the licensing facilities to 35 years, an incremental royalty scheme while the tax holiday was removed.211 The 2001 policy gave priority to rural electrification and the provision of electricity throughout the country at a reasonable price. Further, the political chaos in the country toward the beginning of this millennium has resulted in increasing power shortages which resulted in the government introducing new short-term and long-term programs. Some of these programs included providing independent power producers a flat rate for all the power purchase agreements for up to 25 MW and a seven-year tax holiday.212 Moreover, the government decided to import more power from India and also build a 200 MW thermal plant.213

Current stakeholders of the sector The Nepal Electricity Authority (NEA) is the largest power producer providing electricity to about 1.7 million people through nearly 2,000 km of transmission lines.214 The NEA is also responsible for the public sector power plants through the merger of three government institutions: the Electricity Department, the Electricity Development Board and the Nepal Electricity Corporation.215 Further, the NEA is responsible for 75% of the country’s total electricity generation together with the transmission and distribution of power throughout the country.216 The Department of Electricity Development was established in the year 1993 under the Ministry of Water Resources through the Electricity Regulation Act of 1993.217 In the year 2000, this department was merged with the new Department of Electricity Development under the Ministry of Water Resource.218 In the year 2009, the Department of Electricity Development was merged with the Ministry of Energy. The main responsibility of the department is to give licenses, development and operation of hydropower projects, surveying and planning potential projects and monitoring the compliance of the conditions of the licenses.219 The Water and Energy Commission Secretariat was established in 1975 to formulate various policies to develop and conserve energy resources for government hydropower projects greater than 10 MW.220 However, this institution was not able to work properly due to other institutions formulating their own policies without any coordination. As a result, the importance of this institution declined. However, in the year 2008, there was an attempt to make this institution the main authority to oversee all water resources development.221

Energy scenario of South Asian countries 57 The Electricity Tariff Fixation Commission (ETFC) regulates electricity transmitted through the grid. It was created through the Electricity Act of 1992. The tariff structure depends upon the various sectors of the economy, and in the case of residential consumers, it is determined through the amount of electricity consumed. However, industrial tariffs are less expensive than those of commercial and residential sectors.222 The ETFC is not being able to carry out its objective due to its lack of technical capacity. Moreover, there are conflicts of interest within the institution and is also sometimes undermined by the NEA.223 Another important entity in Nepal is the Butwal Power Company Limited (BPCL), which is a privately owned Norwegian power generation and distribution company founded in the year 1996. It currently has 36,000 customers and its operation is relatively small compared to the NEA.224 The company generates most of its revenue from selling excess electricity to the NEA and by providing engineering and consultancy services.225 The Nepal Oil Corporation is responsible for the oil sector of the country and was set up in the year 1970. It is responsible for import, transportation, storage and distribution of all petroleum products through the country.226 Further, it has monopoly to sell and distribute petroleum products and buys most of its oil from the international market.227

Energy mix of the country The country’s energy mix includes biomass and waste products making up 86% of the total supply, oil make up 8%, 3% by coal and 3% by hydropower.228 The low share of hydropower in the country’s energy mix despite having so much potential shows the underdevelopment in this sector. Although hydropower accounts for 3% of the total energy supply, it accounts for 99% of electricity generation.229 Moreover, the government intends to diversify its energy mix as the country is too reliant on hydropower and the sector being unable to lower power shortages. As a result, the government has decided to set up diesel generators. Moreover, the World Bank is helping the country develop its two diesel-powered thermal generators at Hetauda and Biratnagar.230 Hydropower The hydropower capacity of Nepal is estimated to be around 23,000 MW, but only 698 MW of hydropower capacity has been developed.231 Moreover, around 76% of the hydropower capacity is produced by the NEA with the remainder provided by the Independent Power Plants and the small-scale renewable energy projects.232 Moreover, the country has around 17 hydropower stations with a capacity greater than 5 MW.233 Out of the 17, 11 are owned by the government.234 The power plant owned by the NEA is dependent on the available river flows and therefore they cannot meet the demand during winters. The largest hydropower stations are 144 MW Kali Gandaki, the 69 MW Marsyangdi, the 70 MW Middle Marsyangdi and the 60 MW Kulekhani I facilities.235

58  Energy scenario of South Asian countries The largest privately owned power station is the 60 MW Khimti Khola station owned and operated by Himal Power Limited.236 The NEA currently has five more power stations under construction and eight more proposed projects, which if built will add 2 GW of capacity to the country’s hydropower supply.237 One of the major drawbacks in this sector is that most of the hydropower projects are not being finished on time due to political and civil unrest in the country. As a result, the power generation in the country suffers, which has a negative impact on the country’s economic growth. The donors are also frustrated with the political situation in the country and often make conditions to the government to provide guarantee to finish the project on time.238 Oil sector There is very little chance of finding any hydrocarbon reserves in the country. The government has over the years invited IOCs to conduct seismic surveys to find out whether there are any hydrocarbon reserves in the country. In the year 1998, an American firm called Texana Resources Corporation was given the exploration rights and in the year 2004, Cairn Energy was given exploration rights to another block of fields. However, due to political unrest, none of the ventures by the IOCs was successful.

Issues and challenges Nepal has to undertake a lot of institutional reforms in order to make efficient use of the country’s energy resources. Further, most of the country’s institutions are politicized and lacks transparency resulting in most of the policies not being implemented properly. For example, the Department of Electricity Development is both a hydropower promotion agency and the agency with oversight of license compliance.239 This leads to a conflict of interest and this dual role of the department has to be stopped for better policy implementation. Further, the country requires more foreign investment in its energy field to increase the generation capacity. As a result, the 1992 policy giving favorable terms toward foreign investors like the 50 years’ license, tax holiday and royalty which were taken away by the 2001 Hydropower Policy need to be restored.240 Hence, in order to make the country’s hydropower sector a success, the government needs to spend more money on various infrastructural development and proper financial and feasibility studies and finish various hydropower projects on time. Further, licenses for power projects are given to politically connected consortiums with no technical background to develop a hydropower project. As a result, after getting the license, these powerful consortiums sell their license for a profit which has a detrimental impact on the country’s economy. For example, the license for a 175-MW power plant has been cancelled due to the licensees failing to complete the project.241 Further, the NEA is not being able to work efficiently because of its huge unskilled manpower and also because of its precarious financial position. The

Energy scenario of South Asian countries  59 NEA is also not being able to finance the building of a new transmission capacity in remote parts of the country. Moreover, new Independent Power Plants also cannot be built due to capacity overload.242 Bureaucracy and red tape also need to be removed from various governmental institutions. It takes a long time for investors to get environmental permits because of the lack of trained staff.243 The difficulty in getting environmental permits results in the Independent Power Plants not being able to lease government land for projects.244

Bhutan Bhutan is a landlocked country and is dependent on India for most of its trade in energy and other products. The energy sector is the main power behind the economy with electricity and water accounting for 20% of the GDP and 51% of the country’s export.245 Bhutan has over the years undertaken several hydropower projects to revitalize its economy. The government has decided to complete ten hydropower plants by the year 2020 with a combined installed capacity of 11,576 GW.246 The Indian states bordering Bhutan like Himachal Pradesh, Arunachal Pradesh and Sikkim have often been attracted by Bhutan’s legal and regulatory framework for developing hydropower in their states.247 Bhutan, from the 1960s, has effectively pursued the exploitation of the hydropower sector to develop its economy and the energy sector. The efficient use of hydropower has doubled the economy and accelerated its growth. Political stability and transparency have also helped the country. Moreover, the Asian Development Bank has provided around $100 million to fund two hydropower projects in the country.248

Current stakeholders of the sector The Ministry of Agriculture oversees the consumption of combustible renewables while the Ministry of Economic Affairs is responsible for policy formulation, planning, coordination, implementation of projects, exports and fossil fuel imports.249 Both these ministries are responsible for the country’s energy sector. Further, the Ministry of Economic Affairs also oversees the Department of Energy.250 The Department of Energy on the other hand is responsible for all the policy implementations in the entire energy sector. Moreover, the Department of Trade is responsible for the import of oil and other petroleum products, while the Department of Geology and Mines manages and controls the mining of minerals and coal.251

Energy mix of the country Around 60% of Bhutan’s population does not have access to commercial sources of energy.252 Further, 72.5% of the country is covered by forests and renewable energy sources such as biomass, fuel wood and waste products. Biomass covers around 91% of residential energy consumption, while the residential sector consumes nearly 47% of the total energy.253 The tenth Five Year Plan of the country

60  Energy scenario of South Asian countries 800 700 600

165

139

144

400

165

176

300

98

107

67

234

236

237

239

2014

2015

2016

2017

153

500

187 172 134

200 100 0 Biomass

Coal

Hydro

POL

Other

Figure 2.1  The Energy Mix of Bhutan Source: Bhutan Energy Directory, 2018

forecasts the hydropower potential at 23,760 MW of which around 1,500 MW has been exploited.254 The country’s dependence on biomass is likely to decrease as the government is planning for rural electrification. Figure 2.1 shows the different types of fuel used for different activities in Bhutan. Hydropower Almost 99% of the country’s electricity is generated from hydropower.255 During the 1980s, the country built its first hydropower plant, the 336 MW Chukka Hydropower Plant.256 Due to India’s huge need for electricity, Bhutan used this opportunity to develop its hydropower sector. The country exports 80% of its hydroelectricity to India.257 The Tala Hydroelectric Plant was entirely financed by India and opened in the year 2007. The plant has a capacity to produce around 1,020 MW of power and the dam earns around $900 million annually for the country.258 The country despite having a huge investment in the hydropower sector still has a lot of unfulfilled potential. One of the reasons the country is not being able to reach its hydropower capacity is because of the problem of transporting electricity in the country due to its mountainous terrain. The current transmission lines are built on an ad hoc basis and are not part of an integrated transmission network.259 The lack of an integrated network has also resulted in them not being able to meet the growing energy demand in the eastern part of the country.260

Issues and challenges Bhutan lacks skilled professionals to take care of its energy sector. One of the reasons for this is insufficient funding as the government cannot afford to train

Energy scenario of South Asian countries 61 adequate staff to carry out various technical works in the power plants. As a result, the country has to depend on foreign engineers and consultants which results in the government spending more money on foreign staff. The government has decided to set up a vocational training center to deal with this issue. The country also has a lot of coal deposits but due to the country’s strict environmental guidelines, the government is not considering exploiting this resource. However, it should consider diversifying its fuel mix and not become overly reliant on hydropower for its economic survival. Moreover, the government should find additional markets other than India in order to maximize its revenue from export. The country currently imports commercial fuels like diesel, gasoline, kerosene, liquid petroleum gas and lubricating oil.

Conclusion In this chapter, the energy scenario of the four South Asian countries was discussed in order to analyze their current energy landscapes. All the four countries are trying to exploit their natural resources fully as they are not being able to match the supply of energy with the demand in their respective countries. Further, the demand for energy in all the countries except Bhutan has increased exponentially over the last ten years resulting in the countries looking for natural resources to meet their high demand. All the countries suffer from some form of energy insecurity, and they need to diversify their energy mix in order to protect their energy security. India, for example, is dependent on imported oil and gas, Pakistan is also dependent on the import of petroleum products while Nepal also needs imported source of energy to meet their growing demand. However, the lack of policy implementation and bureaucracy results in these South Asian countries not making efficient use of their resources. Further, the subsidies given by the countries in order to lower the price of natural gas are also having a harmful effect in the respective countries. Due to the fixing of lower price in order to protect their domestic industrial sectors, these countries are discouraging foreign investment. A lack of foreign investment on the other hand has resulted in these countries not being able to explore and exploit their natural resources. Hence, they are not being able to deal with the energy crunch they are currently facing. Moreover, most of the institutions in these countries lack good governance and hence institutional reforms are also required for greater transparency and to lower red tape.

Notes 1 “Total Primary Energy Consumption”, International Energy Statistics, U.S. Energy Information Administration, http://eia.doe.gov/cfapps/ipdbproject/iedindex3.cfm?tid= 44&pid=45&aid=2&cid=ww,CH,IN,US,&syid=2004&eyid=2008&unit=MBTUPP 2 Ibid. 3 Supra, see note 1.

62  Energy scenario of South Asian countries 4 S. Sethi, “India’s Energy Challenges and Choices”, in L. Noronha and A. Sudarshan (eds), India’s Energy Security, New York: Routledge, 2009. 5 Ibid, p. 29. 6 S. Narayan, “Oil and Gas Policies in India”, in M. Lall (ed), The Geopolitics of Energy in South Asia, Singapore: Institute of Southeast Asian Studies, 2009. 7 C.K. Ebinger, “The Geo-politics of Indian Energy”, paper presented at 20th World Energy Conference, Rome, Italy, 2005. 8 Ibid, p. 5. 9 Ibid, p. 6. 10 A. Panagariya, “India: Emerging Giant”, Conference Proceedings, Rome, Italy: Oxford University Press, 2008, p. 35. 11 Ibid, p. 40. 12 Ibid, p. 41. 13 Supra, see note 1. 14 Ibid. 15 Ibid. 16 Ibid. 17 Ibid. 18 Ibid. 19 Ibid. 20 Supra, see note 10, p. 42. 21 Ibid, p. 43. 22 Ibid, p. 44. 23 M. Thakkar, “ONGC Drills Country’s First Shale Gas Well”, Economic Times, January 10, 2011. 24 Ibid. 25 Ibid. 26 Supra, see note 23. 27 Ibid. 28 Ibid. 29 Ibid. 30 S.P. Gupta, “Report of the Committee on India Vision 2020”, Planning Commission, Government of India, 2002, p. 74. 31 Ibid, p. 75. 32 Ibid, p. 76. 33 Ibid, p. 77. 34 Ibid, p. 78 35 Ibid, p. 79. 36 Ibid, p. 80. 37 Supra, see note 30, p. 81. 38 Ibid, p. 82. 39 Ibid, p. 83. 40 Ibid, p. 84. 41 “Energy Statistics: 2017”, Central Statistics Office, Ministry of Statistics and Program Implementation, Government of India, 2017, p. 65, www.mospi.gov.in. 42 Ibid. 43 Ibid. 44 International Energy Agency, World Energy Outlook 2018, Paris: International Energy Agency, 2018, p. 213. 45 Ibid. 46 Ibid, p. 214. 47 Ibid. 48 Supra, see note 44.

Energy scenario of South Asian countries  63 49 Ibid, p. 215. 50 Ibid. 51 Supra, see note 30. 52 Ibid, p. 85. 53 Ibid, p. 86. 54 “BP Statistical Review of World Energy: 2018”, p.  33, https://www.bp.com/en/ global/corporate/news-and-insights/press-releases/bp-statistical-review-of-worldenergy-2019.html. 55 Ibid. 56 N. Banskota, South Asia Trade and Energy Security: The Role of India, Irvine, CA: Universal Publishers, 2012. 57 Ibid, p. 42. 58 Ibid. 59 Supra, see note 56. 60 Ibid, p. 44. 61 Ibid, p. 45. 62 Supra, see note 54. 63 Ibid, p. 37. 64 Ibid, p. 49. 65 Ibid. 66 Ibid. 67 Ibid, p. 50. 68 Ibid, p. 51. 69 Ibid, p. 52. 70 Ibid, p. 35. 71 Supra, see note 56, p. 55. 72 Ibid. 73 V. Bajaj and J. Werdigier, “BP to Pay Reliance $7.2  Billion for Indian Oil Fields Stake”, New York Times, February 2011. 74 Supra, see note 56, p. 57. 75 Ibid. 76 Supra, see note 54, p. 45. 77 Ibid, p. 40. 78 Ibid, p. 41. 79 Ibid, p. 42. 80 Ibid, p. 43. 81 Ibid. 82 Supra, see note 54, p. 48. 83 Ibid. 84 Ibid. 85 Ibid. 86 Ibid, p. 51. 87 Ibid, p. 52. 88 Ibid. 89 Ibid. 90 Supra, see note 56, p. 70. 91 Ibid, p. 70. 92 Supra, see note 56, p. 73. 93 Ibid. 94 Ibid. 95 Ibid. 96 International Energy Agency, World Energy Outlook 2017, Paris: International Energy Agency, 2017, p. 223.

64  Energy scenario of South Asian countries 97 Ibid. 98 Ibid, p. 224. 99 Ibid. 100 Ibid, p. 224. 101 Ibid, p. 225. 102 Supra, see note 41, p. 54. 103 Ibid, p. 55. 104 Ibid. 105 Supra, see note 56, p. 90. 106 Ibid, p. 91. 107 Ibid, p. 92. 108 Ibid, p. 93. 109 Ibid, p. 94. 110 Supra, see note 56, p. 95. 111 Ibid, p. 96. 112 Supra, see note 7, p. 76. 113 Ibid, p. 110. 114 Supra, see note 7, p. 112. 115 Ibid, p. 113. 116 Ibid, p. 111. 117 T. Azahar, The Quest for Power: Pakistan’s Policy Options for the Nineties, Lahore: Ferozsons, 1991. 118 Ibid, p. 49. 119 Ibid, p. 50. 120 Supra, see note 7, p. 51 121 Ibid. 122 Supra, see note 117, p. 52. 123 A. Rashid, Descent into Chaos, London: Viking Penguin, 2008. 124 Ibid, p. 56. 125 Ibid, p. 57. 126 Ibid, p. 58. 127 “The 11th Five Year Plan: 2013–2018”, Ministry of Planning, Development and Special Initiatives, Government of Pakistan, https://extwprlegs1.fao.org/docs/pdf/ bhu168575.pdf 128 Supra, see note 123, p. 48. 129 Ibid. 130 Ibid. 131 Ibid. 132 Supra, see note 123, p. 55. 133 Ibid, p. 56. 134 Ibid, p. 60. 135 Ibid, p. 62. 136 Supra, see note 123, p. 63. 137 Ibid, p. 64 138 “Pakistan in 21st Century: Vision 2030”, Planning Commission, Government of Pakistan, 2007. 139 Ibid, p. 43. 140 Ibid, p. 45. 141 “Pakistan and Power”, unpublished working paper, Asian Development Bank, 2005. 142 Ibid, p. 14. 143 Ibid, p. 16. 144 Ibid, p. 18. 145 Ibid, p. 20.

Energy scenario of South Asian countries 65 146 Supra, see note 141. 147 “Energy Security Action Plan”, Government of Pakistan, 2014, https://www.epd.gov. hk/epd/SEA/eng/file/energy_index/pakistan.pdf. 148 Ibid, p. 45. 149 Supra, see note 138, p. 32. 150 Ibid, p. 54. 151 Ibid, p. 55. 152 Supra, see note 147, p. 24. 153 Ibid, p. 26. 154 Ibid, p. 27. 155 Ibid. 156 Ibid. 157 Supra, see note 138, p. 58. 158 Ibid. 159 International Energy Agency, World Energy Outlook 2016, Paris: International Energy Agency, 2016, p. 204. 160 Ibid. 161 Ibid. 162 Supra, see note 147, p. 207. 163 Ibid, p. 208. 164 Ibid. 165 Supra, see note 138, p. 155. 166 Ibid. 167 Supra, see note 147, p. 60. 168 Supra, see note 147, p. 61. 169 Ibid. 170 Ibid. 171 F. Bokhari and J. Lamont, “China Plans Fifth Nuclear Reactor for Pakistan”, Financial Times, November 8, 2010. 172 “Nuclear Power in Pakistan”, World Nuclear Association, www.world-nuclear.org/ info/inf108.html 173 Ibid. 174 Ibid. 175 Ibid. 176 A.G. Pasha, “Economist Costs of Power Outages”, Beaconhouse National University Institute for Public Policy, Lahore, Pakistan, 2008, p. 6. 177 Ibid, p. 7. 178 Ibid, p. 10. 179 Ibid, p. 13. 180 Ibid, p. 14. 181 Ibid. 182 Supra, see note 171, p. 15. 183 Ibid, p. 16. 184 Ibid, p. 17. 185 Ibid, p. 24. 186 Ibid. 187 Supra, see note 123, p. 120. 188 Ibid, p. 124. 189 Ibid, p. 125. 190 Ibid, p. 126. 191 Ibid, p. 127. 192 Supra, see note 138, p. 128. 193 Supra, see note 138, p. 130.

66  Energy scenario of South Asian countries 194 Ibid, p. 131. 195 Supra, see note 147, p. 94. 196 Ibid. 197 International Energy Agency, World Energy Outlook 2016, supplementary tables, www.worldenergyoutlook.org 198 Ibid. 199 Asian Development Bank, Country Partnership Strategy Nepal (2010–2014): A Strategy for a Country in Transition, Bangkok: Asian Development Bank, 2009, p. 95. 200 Ibid, p. 96. 201 Ibid, p. 97. 202 Supra, see note 197. 203 “Energy Sector Synopsis Report 2010”, Water and Energy Commission Secretariat, Government of Nepal, July 2010, p. 70, https://energyefficiency.gov.np/downloadthis/wecs_energy_sector_synopsis_report_(2010)_(english).pdf. 204 Ibid, p. 71. 205 Ibid, p. 72. 206 Ibid, p. 73. 207 Ibid, p. 75. 208 Ibid, p. 80. 209 Ibid. 210 Nepal Electricity Authority, Annual Report 2018, Katmandu: Nepal Electricity Authority, 2018, p. 80. 211 Ibid, p. 81. 212 Ibid, p. 83. 213 Ibid, p. 84. 214 Ibid, p. 86. 215 Ibid, p. 87. 216 Ibid. 217 Ibid, p. 120. 218 Ibid. 219 Supra, see note 203, p. 123. 220 S.B. Pun, “Hydropower Development in Nepal: Lessons from Past Models”, Hydro Nepal: Journal of Water, Energy, and Environment, (2), 2008, p. 5. 221 Supra, see note 220, p. 6. 222 Ibid, p. 7. 223 Ibid, p. 8. 224 Ibid. 225 Ibid. 226 Ibid, p. 9. 227 Ibid, p. 10. 228 Supra, see note 210, p. 71. 229 Ibid, p. 72. 230 Ibid, p. 73. 231 Supra, see note 199, p. 102. 232 Supra, see note 199, p. 104. 233 Ibid, p. 105. 234 Ibid. 235 Ibid. 236 Ibid, p. 110. 237 Ibid. 238 Ibid, p. 111. 239 Ibid, p. 134. 240 Supra, see note 199, p. 135.

Energy scenario of South Asian countries 67 241 Supra, see note 203, p. 120. 242 Ibid, p. 121 243 Ibid. 244 “Overview of Energy Policies in Bhutan”, 2011, p. 10, https://admin.indiaenvironmentportal.org.in/files/RE%20Policy%2065%20(As%20submmited%20to%20 GNHC%20on%2011%20April%202011).pdf. 245 Ibid, p. 11. 246 Ibid, p. 12. 247 Ibid. 248 Supra, see note 244, p. 15. 249 The Government of the People’s Republic of Bangladesh, Statistical Yearbook of Bhutan, 2010, Dhaka: Government Press, 2010, p. 165. 250 Ibid, p. 166. 251 Eleventh Five-Year Plan of Bhutan, vol. 1, Main Document, 2013, p.  114, https:// www.gnhc.gov.bt/en/wp-content/uploads/2017/05/TenthPlan_Vol1_Web.pdf. 252 Supra, see note 249, p. 166. 253 Supra, see note 249, p. 167. 254 Supra, see note 244, p. 15. 255 Ibid, p. 16. 256 Ibid, p. 17. 257 Supra, see note 249, p. 121. 258 Supra, see note 251, p. 122. 259 Ibid. 260 Ibid.

Selected bibliography Asian Development Bank, Country Partnership Strategy Nepal (2010–2014): A Strategy for a Country in Transition, Bangkok: Asian Development Bank, 2009. Azahar, T. The Quest for Power: Pakistan’s Policy Options for the Nineties, Lahore: Ferozsons, 1991. Bajaj, V., and J. Werdigier, “BP to Pay Reliance $7.2 Billion for Indian Oil Fields Stake”, New York Times, February 2011. Banskota, N. South Asia Trade and Energy Security: The Role of India, Irvine, CA: Universal Publishers, 2012. Bokhari, F., and J. Lamont. “China Plans Fifth Nuclear Reactor for Pakistan”, Financial Times, November 8, 2010. Dash, K.C. “The Political Economy of Regional Cooperation in South Asia”, Pacific Affairs, 69(2), 1996. Ebinger, C.K. Energy and Security in South Asia: Cooperation or Conflict? Washington, DC: Brookings Institute Press, 2011. Ebinger, C.K. “The Geo-politics of Indian Energy”, paper presented at 20th World Energy Conference, Rome, Italy, 2005. “Energy Sector Synopsis Report 2010”, Water and Energy Commission Secretariat, Government of Nepal, July, 2010. https://energyefficiency.gov.np/downloadthis/wecs_ energy_sector_synopsis_report_(2010)_(english).pdf. “Energy Security Action Plan”, Government of Pakistan, 2014, https://www.epd.gov.hk/ epd/SEA/eng/file/energy_index/pakistan.pdf “Energy Statistics: 2017”, Central Statistics Office, Ministry of Statistics and Program Implementation, Government of India, 2017, www.mospi.gov.in

68  Energy scenario of South Asian countries Gupta, S.P. “Report of the Committee on India Vision 2020”, Planning Commission, Government of India, 2002. International Energy Agency. World Energy Outlook 2016, Paris: International Energy Agency, 2016. International Energy Agency. World Energy Outlook 2016, supplementary tables, www. worldenergyoutlook.org International Energy Agency. World Energy Outlook 2017, Paris: International Energy Agency, 2017. International Energy Agency. World Energy Outlook 2018, Paris: International Energy Agency, 2018. Narayan, S. “Oil and Gas Policies in India”, in M. Lall (ed), The Geopolitics of Energy in South Asia, Singapore: Institute of Southeast Asian Studies, 2009. Nepal Electricity Authority, Annual Report 2018, Katmandu: Nepal Electricity Authority, 2018. “Nuclear Power in Pakistan”, World Nuclear Association, www.world-nuclear.org/info/ inf108.html. “Overview of Energy Policies in Bhutan”, 2011, https://admin.indiaenvironmentportal. org.in/files/RE%20Policy%2065%20(As%20submmited%20to%20GNHC%20on%20 11%20April%202011).pdf “Pakistan and Power”, unpublished working paper, Asian Development Bank, 2005. “Pakistan in 21st Century: Vision 2030”, Planning Commission, Government of Pakistan, 2007. Panagariya, A. India: Emerging Giant, Oxford: Oxford University Press, 2008. Pasha, A.G. “Economist Costs of Power Outages”, Beaconhouse National University Institute for Public Policy, Lahore, Pakistan, 2008. Pun, S.B. “Hydropower Development in Nepal: Lessons from Past Models”, Hydro Nepal: Journal of Water, Energy, and Environment, (2), 2008. Rashid, A. Descent into Chaos, London: Viking Penguin, 2008. Sethi, S. “India’s Energy Challenges and Choices”, in L. Noronha and A. Sudarshan (eds), India’s Energy Security, New York: Routledge, 2009. Tenth Five-Year Plan of Bhutan, vol. 1, Main Document, 2013, https://www.gnhc.gov.bt/ en/wp-content/uploads/2017/05/TenthPlan_Vol1_Web.pdf. Thakkar, M. “ONGC Drills Country’s First Shale Gas Well”, Economic Times, January 10, 2011. “The 11th Five Year Plan: 2013–2018”, Ministry of Planning, Development and Special Initiatives, Government of Pakistan, https://extwprlegs1.fao.org/docs/pdf/bhu168575.pdf The Government of the People’s Republic of Bangladesh. Statistical Yearbook of Bhutan: 2010, Dhaka: Government Press, 2010. “Total Primary Energy Consumption”, International Energy Statistics, U.S. Energy Information Administration, http://eia.doe.gov/cfapps/ipdbproject/iedindex3.cfm?tid=44&pi d=45&aid=2&cid=ww,CH,IN,US,&syid=2004&eyid=2008&unit=MBTUPP

3 The geopolitics of energy in South Asia

Introduction The energy security of all the South Asian countries is strongly related to the geopolitics of the region. All the countries have their own plans and agenda about how to ensure their respective energy security. As a result, in order to attain those objectives, there is a clash of different strategies which causes friction and distrust. In this geopolitical web, other Western and Asian nations are involved as well, which makes the energy situation more challenging than ever. Further, each and every country has their own internal politics to deal with which also makes the situation more complicated. This chapter discusses all these factors and uses international relations theories to analyze the behavior of the countries in the region and evaluate the thinking process behind the energy security strategy enacted by them. The chapter discusses the geopolitical situation surrounding the energy security of India, Pakistan, Bangladesh, Nepal and Bhutan. The international relations theories of neorealism and neoliberalism are used to analyze the behavior of these countries. This is followed by an analysis of the role played by the US and China in the region. The chapter then highlights the two important pipeline projects which could have been pivotal in improving the energy security of the region. This is followed by a discussion on the role of SAARC in South Asia.

India India is the largest country in South Asia and is both an important regional and an Asian power. The country shares common borders with all the South Asian countries as 17 Indian states share international borders. India makes use of all these borders and intends to harness energy cooperation between all the regional countries. The setting up of various joint ventures with Bangladesh, importing hydropower from Nepal and Bhutan, considering building a pipeline through Afghanistan, Pakistan and India are all strategies that the country wishes to pursue in order to diversify its energy mix. Further, sharing resources with the neighboring countries also implies that certain geographical locations and physical infrastructure have to be shared. However, this also means sharing one’s sovereignty

70  The geopolitics of energy in South Asia which might be a politically sensitive issue causing various governments to navigate through this rough terrain. The country has been in a difficult position over the last decade due to the high demand for energy in order to accelerate its economic growth. The supply crunch has resulted in the country not being able to grow at the rate expected by the government. India is already exploiting its resources within the country as it is heavily dependent on coal and the import of oil from overseas. The government has been trying to diversify its energy mix to lower its dependence on one fuel for its power generation capacity. This has resulted in the government trying to import not only from the neighboring countries but also from elsewhere. Indian national oil companies have been encouraged by the government to look for and acquire resources from abroad in order to ensure a secure supply of energy in the country. Table 3.1 lists the various energy resources in the South Asian countries. The goal of India in terms of finding energy abroad is based upon the following factors: i) mobilization of resources abroad in order to increase domestic production and diversify the foreign sources of oil and gas supply, ii) ensure that the current ties with suppliers are intact and consolidated, iii) hedging against the risks posed by the external market, iv) flexible strategies to deal with the challenges posed by other countries and their national oil companies and v) promoting regional cooperation.1 In terms of its domestic policies, the government intends to diversify the energy mix while rationing consumption when needed. The government also intends to reduce energy intensity and embrace advanced technology to conserve which in turn will enhance domestic production.2 India is one of the major actors in the global oil and gas market. In Asia, the country is ranked after China as the emerging market for the supply of energy resources. A lot of IOCs are interested in the exploration and exploitation of natural resources in the country. The government’s New Exploration and Licensing Policy (NELP) has resulted in the government awarding 100 contracts.3 ONGC is the national oil company working to double its oil and gas reserve in the country within the next 20 years to 12 BTOE from the current 6 BTOE.4 Table 3.1  Energy Resources in South Asia Country

Oil reserves Gas reserves Coal Hydropower Biomass* (Mt) (bcm) reserves (Mt) potential (GW) (million tonnes)

Afghanistan 0 Bangladesh 4 Bhutan 0 India 763 Maldives 0 Nepal 0 Pakistan 50 Sri Lanka 14–18

49.6 232.2 0 1,488.5 0 0 542.6 0

66 293 0 90,276 0 1 3,064 0

394,000 4,000 263,000 2,638,000 0 733,000 475,000 21,000

Source: World Energy Resources, 2016, London: World Energy Council, 2016

18–27 0.08 26.6 139 0.06 27.04 NA 12

The geopolitics of energy in South Asia 71 The country wants to also import gas from Myanmar through Bangladesh although that has stalled due to the reluctance of the latter. In the tripartite meeting in Yangon in 2005, there was an agreement that India would import gas from Myanmar through Bangladesh. The joint press statement stated that the Government of Myanmar agrees to export natural gas to India by pipeline through the territory of Bangladesh to India and it would be operated by an international consortium. . . . [T]he route of the pipeline may be determined by mutual agreement of the three Governments with a view to ensuring adequate access, maximum security and optimal economic utilization.5 This was significant as India for the first time focused on cooperation between the neighboring countries in order to get an efficient supply of natural resources. Moreover, the agreement is a clear move away from bilateral agreements that the country focused on and the agreement was negotiated by the Ministry of Petroleum and not the Ministry of External Affairs.6 However, the deal did not go ahead due to Bangladesh linking the agreement with their other demands including i) transmission of hydroelectricity from Nepal and Bhutan through India, ii) corridor for the movement of commodities between Nepal, Bhutan and Bangladesh through India and iii) to reduce the trade imbalance between India and Bangladesh.7 Although India agreed to fulfill certain demands, the deal ultimately collapsed and hence the agreement only included Myanmar and India. In this scenario, it would have been better for India to include Bangladesh as it would have lowered their cost of building the pipeline. Moreover, Bangladesh wanted to take advantage of its geographic position in order to make India agree on certain demands, which it has failed in the past. India missed a golden opportunity to agree on the demand of Bangladesh as it would have made the cooperation between the two countries stronger with regard to the energy sector. According to experts, “it was a forgone good opportunity to make substantive geo-strategic and socio economic gains in the long run”.8 Further, the transit corridor with Bangladesh is vital for India. This is because Northeast India has been lagging behind in both economic growth and energy supply in comparison to the other parts of India. For example, Assam, which was once a rich state, has become a backward state. However, recently there has been a lot of cooperation regarding energy with Bangladesh. India is exporting electricity to Bangladesh worth up to 500 MW through its national grid.9 The government of Bangladesh has also allowed India transshipment to the country’s Northeast through the Bangladesh territory at a nominal rate. This is no doubt vital for India to reduce the cost of development in the Northeast and for promoting a long-term sustainable framework. The closeness with Bangladesh over the last 11 years has been a geostrategic gain for India as it not only helped it to export electricity and gain foreign exchange in return but has also helped it to have a direct link with the country’s Northeast through the Bangladesh territory. Recently, the government of Bangladesh is considering

72  The geopolitics of energy in South Asia allowing India to use its ports to supply petroleum and other necessary energy products to Northeast India. Energy shortages have also been a major problem that India has to deal with for the last decade in order to continue with the country’s economic growth target. Since the country is dependent on imported oil, any instability in the international market has a negative impact on the country’s supply. As a result, the country is trying to diversify its sources of supply, stabilize price and develop new technologies to become energy efficient.10 Moreover, India can be an important factor in the regional market of West Asia and the Persian Gulf. Political instability is the first important aspect that India has to consider. The western part of Asia is a high-risk region due to the nature of its culture, politics and institutions. The rise of extremism has further increased this risk. The regional hydrocarbon industry is also facing the issue of capacity expansion due to cash crisis. As a result, cross-investment is an important strategy for producing countries as it gives the producers the security of demand for their products. Hence, Indian companies have taken advantage of this as most of the country’s national oil companies have made investments abroad and have now achieved a global profile because of their foreign investments. The investments made by the Indian companies have also included exploration and exploitation of natural resources abroad, which will give the country a firm footing to secure its supply of hydrocarbon resources. Moreover, there is an intense competition with China regarding the acquisition and participation of various projects involving hydrocarbon resources. Further, due to the absence of mutual cooperation, there is always a possibility that this competition may lead to some form of conflict. One possible way to deal with such conflict is to work jointly with Chinese national oil companies which will serve the interest of both the countries. Currently, the Chinese national oil companies such SINOPEC are far ahead of India in regard to the acquisition and development and exploration of hydrocarbon resources abroad. In most of the projects that both the countries bid for, it is normally the Chinese companies that succeed. The reason for this is that the Chinese companies have the total backing of their government, which also gives benefits like infrastructural development and other soft loans to the country they are bidding in which the Indian companies cannot. Hence, the Indian companies need to find a new strategy to deal with the aggressive Chinese techniques, if they want to succeed in acquiring hydrocarbon resources abroad. Moreover, the plan for building pipelines in both Northeast India and South East Asia can also provide the energy security for India. The government has plans to bring natural gas from remote areas to the high areas of consumption to diversify the supply of its energy resource.11 These projects not only will enhance the cooperation between India and South East and North East Asian countries but would also create a sense of community which could enhance the country’s energy security. The country also needs to deal effectively with domestic insurgency in Manipur, Tripura and other Northeastern states as there are significant reserves of natural

The geopolitics of energy in South Asia  73 resources in these areas. Due to a lack of security because of insurgency in these areas, both domestic and international energy companies are reluctant to carry out various exploration projects. According to experts, China and Myanmar are responsible for sponsoring these rebel groups inside India.12 As a result, the country needs to deal with these issues effectively for the exploitation of its natural resources. The role of India in South Asia can be categorized as neorealist in nature. The country is the largest and militarily the strongest in the region and wants to dominate its backyard. Most of the energy deals that the country has signed with Bangladesh, Nepal and Bhutan benefit India more than the latter. For example, India lacks the willingness to allow Bangladesh to import hydroelectricity from Nepal and Bhutan through India despite the venture benefiting all the countries involved. As a result, although the country is willing to cooperate with its neighbors, it will only negotiate on its own terms which is a neorealist trait. Further, India’s policy of supporting bilateral rather than multilateral cooperation due to its hegemonic power is another sign that the country is willing to use its superior strength to fulfill its demand from its neighbors. For example, India is to some extent responsible for the ineffectiveness of the SAARC due to its reservations about the motives of the other South Asian countries. Further, India’s control of the energy trade and the political environment within its boundary or adjacent to it does not cause any problem to cooperate because it does not depend on others for help. Moreover, the country also monitors the activities of other countries through its own security agencies which is a realist trait.

Pakistan The country’s energy mix is dependent on gas and due to the government not being able to deal with the supply crunch, the economic growth of the country is suffering. Pakistan imports 80% of its 127.75 million barrels of oil per annum from abroad, which makes up a third of its import bill and makes the country’s balance of payment vulnerable.13 As a result, the country suffers when there is volatility in the world oil market. This has resulted in Pakistan focusing more on gas in its energy mix and the government has given incentives to the transport and power generation sectors to switch to gas. The country’s gas sector has one of the most extensive infrastructures with 8,200 km of transmission network. The largest consumers of gas are power (36.4%), fertilizer (21.6%), industries (19.1%), households (17.8%) and commercial (2.7%).14 Although the country has 28 Tcf of gas reserves, the demand and supply gap has increased from the current 10 MMSCMD to 90 MMSCMD by the year 2017. As a result, more investment is required in the country’s gas fields in order to increase their level of production. However, the country has threats to its energy security due to lack of sufficient energy, inconsistent supplies, unfavorable prices and a significant degree of dependence upon its imported fuel.15 Moreover, there have been significant incidences of sabotage which disrupts the supply of gas and gas installations as

74  The geopolitics of energy in South Asia well. The Sui field producing about 28 MMSCMD of gas, which amounts to 45% of the national production, is prone to militant attacks.16 The gas pipelines in this region are at most times attacked by tribal militants which results in the shutdown of production quite regularly.17 For example, in the year 2011, the production of gas was suspended for a week due to security issues, which resulted in the daily loss of $0.3 million for the country’s power generation system.18 The problems in Pakistan’s energy-rich province of Baluchistan are also giving headaches to the government. According to experts, the central government’s policy of not sharing adequate amount of royalty with the Balochis has resulted in the region’s simmering anger toward the central government.19 For example, in the year 2005, the production from Sui Gas Field accounted for about $1.4 billion in government revenue out of which only $116 million have been given to the province of Baluchistan as a royalty.20 A new insurgency by the Baluchistan Liberation Army started in the year 2003 and continues till today.21 This has badly affected the country’s energy security. Figure 3.1 helps us understand the different fuels that are used for power generation in the countries of South Asia. The central government is again going for a head-on collision with the provincial government of Baluchistan with the building of the Gwadar Port. The lands that have been acquired by the government were allegedly forcefully purchased without adequate compensation from the poor fisherman in the area and this has again ignited fresh allegations about the government not respecting the rights of

Coal

a an k iL Sr

an

ep al Nuclear

Pa ki st

al M Gas

Figure 3.1  Power Generation Mix of South Asia Source: SAARC Energy Centre, 2019

N

a di In

ut a

ve s

Oil

di

Bh

Hydro

n

Af gh an is ta n Ba ng la de sh

100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%

Renewable

The geopolitics of energy in South Asia 75 the local Baloch.22 The port is being built with the help of China and will be a major energy transportation hub for the countries of the Middle East, Asia and Africa. Although there have been plans to build pipelines going through Pakistan into India, most of the plans have been shelved due to security concerns. The political problems with the country’s old enemy India have also resulted in Pakistan not being able to cooperate with its neighbor in order to fulfill its energy needs. Further, if the pipeline projects were materialized, then the country would have been able to earn valuable foreign exchange as a transit country and would have also been able to take gas from the pipelines at a concessional rate. It is also important for Pakistan to improve its ties with India for greater energy security. The country has already signed a water treaty in the 1950s which still holds. This shows that both the countries in respect to water sharing in the Indus River have not let politics and war spoil their water sharing agreement. As a result, Pakistan should also use similar strategy when dealing with hydrocarbon resources with India because it would greatly improve its supply security which in turn would enhance its economic growth. Pakistan’s most important ally in the energy field is China. One of the major goals of China is to ensure that Pakistan’s energy security is not compromised to counter the hegemony of India in the region. China has helped Pakistan in its civil nuclear program, which has improved this sector. Moreover, the country is also trying to diversify its primary energy mix by increasing its civil nuclear capability for power generation. The Chinese companies are also helping the country to build the Gwadar Port in Baluchistan, which would also improve the country’s energy security. The China–Pakistan Economic Corridor (CPEC) includes Chinese road infrastructure investments of $30 billion which will increase the bilateral trade between the two countries.23 This might be a source of concern for India as it is not comfortable with China in its backyard and will consider this as an indirect challenge toward India’s hegemony in the region. However, Pakistan needs the support of China for its energy and economic growth in order to counter India and protect its strategic importance. The Chinese support has also become more imperative for Pakistan due to US closeness with India in the field of energy and also for fighting terrorism. Pakistan’s actions in fulfilling its energy needs are a mixture of both neorealism and neoliberalism. Being a nuclear armed country, Pakistan dominates the energy landscape of Afghanistan and cooperates with India only when required. For example, the independence movement in Baluchistan and the militancy problem in Khyber Pakhtunkwa have resulted in the government using the armed forces to control the volatile situation in these two regions. This in turn has affected the country’s energy production as these regions are rich in minerals. However, Pakistan believes that cooperation in the field of energy promotes common good and is best suited when its participants or members include benign hegemonies. For example, the creation of South Asian Energy Centre in Islamabad shows the country’s willingness to cooperate. The role of Pakistan highlights that power might be necessary for the formation and maintenance of cooperation, but it is not the only criteria because different members within a cooperative

76  The geopolitics of energy in South Asia setting have different interests and all these interests and expectations too play a big part in cooperation and should not be overlooked.

Bangladesh The country’s natural gas value chain has become insecure and vulnerable over the years. Moreover, four gas fields in the country supply around 80% of the country’s total gas production.24 The Bibiyana gas field alone produces around 45% of the gas.25 Recently, gas deficit of about 600 MMCFD has resulted in the Chattogram region failing to supply gas to the various industries in the area.26 As a result, the gas sector of Bangladesh has become ineffective over the last eight years which is having a negative impact on the country’s energy security. Further, overdependence on the gas sector without any form of diversification has thrown Bangladesh toward the current predicament. Though the country through its Power System Mega Plan has opted for fuel diversification, it will be difficult for Bangladesh to have a secure and sustainable gas supply in the near future. The availability of cheap domestic gas has helped Bangladesh make a rapid economic growth over the last decade. However, due to the quick depletion of gas reserves, the country is currently suffering from a supply crunch. The reason for this is that the country failed to execute plans for the depletion of its natural gas reserves and also could not implement the required exploration and development of untapped gas resources both onshore and offshore. Moreover, taking advantage of cheap gas available in the country, the number of inefficient power-intensive industries increased which further exacerbated the gas constraint. Table 3.2 shows the share of different countries in the primary energy supply. Bangladesh used 8.2 Tcf of gas between the years 2000 and 2015 and only discovered 1 Tcf of gas over the same period.27 Further, 23 operating gas fields now have a production capacity of 2,740 MMCFD with a deficit of about 600 MMCFD.28 Moreover, at the current rate of use, the entire gas reserve would be depleted by the year 2030 if no new gas reserves are discovered.29 The lack of gas supply has already caused 1,000 MW of gas-based power generation remaining idle. Further, Petrobangla also cannot supply the additional 125–150 MMCFD of gas.30 According to experts, the gas supply chain has been suffering due to poor governance, poor planning and inefficient management.31

Table 3.2  Share of Primary Energy Supply Country

Oil

Gas

Coal

Hydropower

Biomass

Nuclear

Renewables

Bangladesh India Nepal Pakistan Sri Lanka

14.4 26 17.3 26.7 45.8

57 5.2 0 24.9 –

4.9 44.3 6 10.3 12.6

0.2 1.4 3 2.3 2.9

23.5 21.2 73.7 33.1 38.3

– 1.1 – 2.5 –

– 0.8 – 0.2 0.4

Source: World Energy Balance 2019, Paris: International Energy Agency, 2019

The geopolitics of energy in South Asia 77 In order for Bangladesh to have a secure supply of energy, it has to import energy from abroad. Due to the relationship with neighboring India improving over the last eight years, the country is importing 500 MW of electricity from India.32 In return Bangladesh is allowing India to use the country for transshipment of energy products to Northeast India.33 Further, India is also interested to facilitate smooth energy and electricity transfer from Nepal and Bhutan to Bangladesh through India’s northeastern and eastern regions. Bangladesh could also use its Chinese connection to improve the country’s coal sector and develop other infrastructures which could make efficient use of the country’s energy resources. However, Bangladesh’s relationship with China is not seen positively by India and the US. According to an US expert, Bangladesh is categorized as a country with strong Chinese influence and with significantly higher proportion of Chinese investment and trade, its geo-political position means that India and Bangladesh face the same challenges. . . . being lower riparian states, India and Bangladesh need to carefully guard their interest in terms of energy security and Chinese water management projects . . . especially Chinese dam construction on the Brahmaputra at Zangmu in Tibet.34 Bangladesh’s relationship with China is overblown as both India and the US are worried about Bangladesh leaving their sphere of influence. In reality, although there are a lot of Chinese investments in the country, the current government in Bangladesh is much closer to India than China in terms of energy, geopolitics and economic needs. However, one important aspect that also needs to be considered is that the dams India is building have a negative impact on both the environment and the agricultural sectors of Bangladesh. Moreover, Bangladesh is receiving substantial help in the energy sector from Japan. The Japan–Bangladesh cooperation in the Bay of Bengal Industrial Growth Belt could also stop Bangladesh being overreliant on both India and China and could be an important part of its foreign policy strategy. As a result, the government could encourage more Japanese investment in the country’s energy sector, as Japan is also in need of energy and Bangladesh could be an important supplier for Japan, provided the country can help Bangladesh in the exploration of its natural resources. Further, the energy decision-making in the country is influenced by powerful actors both inside and outside the country. In terms of decision-making within the country, various corporate interests concerned with oil and gas utilization, transmission or exploration have always tried to manipulate decisions which will help them. For example, those involved in using gas for electricity generation and fertilizer production have always lobbied against lowering subsidies in the gas sector or exporting gas. Some of these lobbyists were employed by the IOCs and these included political and bureaucratic decision makers. Moreover, some of the external influence in the country’s energy decisionmaking process are the IOCs and lobbyists protecting the interests of Western countries. The IOCs have a high stake in the decision-making process because

78  The geopolitics of energy in South Asia they have invested millions of dollars in exploring, producing and marketing gas under the Production Sharing Contract.35 As a result, they lobby for and encourage decisions that facilitate their participation in the gas sector, which in turn will make their investment profitable. Further, they have a lot of economic clout on their local business associates, politicians and bureaucrats to influence the decisions advantageous to them. Bangladesh’s Energy Minister once said that the “prerogative to take decisions on the controversial issue of gas export is on the government of Bangladesh and not on the operating multinational company”.36 Moreover, the respective countries of these companies also work with them through the diplomatic and political channels and various ministries. A good example of this is the role of the US government in supporting UNOCAL and other US companies.37 For example, the US sent its senior official from the Department of Energy to specifically resolve the problems arising out of the issue of cost recovery as UNOCAL was purportedly unhappy over Petrobangla’s refusal to accept a long list of expenses UNOCAL has submitted, amounting to about 50% of the total, which had crossed the limit of the indicative budget for cost recovery.38 However, the US government’s decision to support the oil and gas companies is not confined to Bangladesh alone. Energy is a major source of concern in its foreign and strategic initiatives. Other countries have also devoted a lot of time to court the Bangladesh government to promote not only their national interests but also the interest of their private sector companies. The UK, India, China and Japan have also shown a keen interest in Bangladesh’s energy sector for the past decade. India has very recently encouraged its public and private sector oil companies to get actively involved in Bangladesh’s energy sector. Bangladesh on the other hand has also tried to encourage other countries to invest in its energy sector to balance the influence of the powerful Western countries. The IOCs have been the major players in Bangladesh’s gas sector since its independence. Most of the gas fields currently run by the IOCs produce the maximum amount of gas in the country. However, there is this distrust on the IOCs originating from the US and other Western countries that are making profit at the cost of the country’s precious resource. Further, encouraged by certain groups in the country, people are also made to believe that the IOCs are not interested in helping Bangladesh develop faster and achieve high growth. In fact, some of the reasons highlighted by this group of people against the IOCs are as follows: i) the IOCs have exaggerated the size of gas reserves to build a case for gas export,39 ii) the IOCs are only interested in discovering gas and petroleum for export and will make their profits and leave and are not interested in reinvesting their profits either in exploration activity or in expanding and consolidating the industrial sector of Bangladesh40 and iii) the IOCs have managed to corrupt and pressurize the government to sign PSCs for oil and gas exploration which are advantageous to them than to Bangladesh.41 The distrust toward the IOCs has also been reinforced due to the nonpayment of compensation in the case of Magurchara gas blowout accident. There was an aggressive lobbying by the IOC with the support of the US Embassy and other international financial institutions like the World Bank and the Asian Development

The geopolitics of energy in South Asia  79 Bank which have also increased the negative perception about the IOCs in general. Further, the statement of the then US Ambassador made things worse as he stated that gas resources in Bangladesh could become a development multiplier . . . and that gas in the ground is not wealth and that it is only a potential asset that must be converted into an economic good that can be bought and sold . . . and further for it to become a marketable good, someone must risk the capital to discover the gas, develop the field and put in place the associated infrastructure.42 This statement of the Ambassador was taken out of context by a section of the media against the IOCs although the US Ambassador made a point that since the investors are taking the financial risk, they should be given appropriate compensation since such exploration will help Bangladesh in terms of creating more jobs, schools and improve the overall infrastructure. This resource nationalism movement had been led by groups that included intellectuals, journalists, leftist political groups and Islamic organizations. These groups in fact stated that it is our duty to mobilize public opinion through the holding of meetings and symposiums, workshops and seminars and disseminate its deliberations prominently in the media.43 Moreover, these groups called strikes and protest demonstrations and even demanded the holding of a referendum. Such mobilization has resulted in the creation of a situation where major political parties took advantage. As a result, all these political issues have badly affected the image of the country with the IOCs which in turn have resulted in them showing very little interest to come back to the country for new exploration. In order to ensure the country’s energy security, Bangladesh needs to diversify its primary energy source mix. The country is currently heavily dependent on gas and without new investment from the IOCs, the prospect of finding any new gas reserve is bleak. Further, the government also has to decide its coal policy. Instead of exploiting the country’s coal, the government has decided to import coal from India. Currently, the government needs to take some hard policy decisions regarding institutional reforms in order to make the country more energy efficient and less reliant on import. Bangladesh should use its strategic position for its benefit and should consider having an open mind about allowing investment by any entity provided it serves the interest of the country and is financially viable. Bangladesh’s willingness to collaborate with all its neighbors in order to protect its energy security shows the country’s neoliberal traits. Although all the energy deals that the country has signed with India do not fully protect the country’s interests, Bangladesh to some extent will make relative gains from this bilateral energy cooperation. Moreover, Bangladesh will be willing to trade off its decision-

80  The geopolitics of energy in South Asia making and other political autonomy in order to make those gains in energy trade which will serve its interest more. Further, the country will cooperate where there is mutual gain and even if they gain less than the other countries because it serves their purpose.

Nepal and Bhutan Nepal is a landlocked country and has to rely on India for most of its needs. The country suffers from a lot of political turmoil and as a result does not have a coherent energy policy. Nepal is heavily dependent on hydropower and currently, the country is suffering due to a lack of power generation capacity which is having a negative impact on the economy. However, although there were bilateral problems with India before, the visit by the Indian premier to Nepal after more than 17 years has renewed their energy ties.44 The renewed ties between the two countries have resulted in the proposed 400 KW Muzzafarpur–Dhalkebar transmission system, which will interconnect the grids of both the countries.45 The grid would be able to produce about 40 GW of clean energy.46 Further, the Nepalese rivers of Marsyangdi and Karnali have a great potential for hydropower generation. China is also investing in the 750 MW hydropower project in Nepal, while other investments include the renovation of Kathmandu’s Ring Road and the opening of ports in the country.47 India is investing around $1.2 billion in a power plant on the river Marsyangdi, which will generate about 600 MW of electricity and a $1.4 billion power plant on the Upper Karnali and Arun 3, which is a 900 MW hydropower project in the eastern part of the country.48 Both China and India are heavily involved in the energy sector of the country. China wants to have greater influence in Nepal in order to bring it under its sphere of influence. However, there is a stiff resistance from India in this regard as it considers Nepal as part of its backyard and is disturbed by the presence of China in the region. Nepal should use this opportunity to maximize its benefit by not being overly reliant on India. Further, having the option of getting assistance from China will also allow it to be in a stronger bargaining position with India. Bhutan on the other hand has a strong trade link with India as it supplies 80% of India’s hydropower.49 There is an abundance of hydropower in the country and the government should have a coherent policy to develop them. Currently, Bhutan has ten hydropower project proposals with India with the latter providing 60% of the cost.50 The country already produces 1 GW out of the total of 1.5 GW from hydropower, with the plan to increase export to India from the current 1,200 MW to 5,000 MW by the year 2020.51 Bhutan currently needs to ensure its energy security as there is a supply crunch for domestic consumption of energy. Further, it should try to diversify its export market as most of its export now end up in India. Since India is also trying to lower its dependence on hydropower from Bhutan, the country should find an alternative buyer for its export. China and Nepal could be a good option for the country and they could negotiate with both the countries in order to diversify its export.

The geopolitics of energy in South Asia 81

Sri Lanka Pakistan Nepal Maldives India Bangladesh South Asia 0

20

40

60

80

South Asia

India

Nepal

Bangladesh

Maldives

Pakistan

100

120

Sri Lanka

Figure 3.2  Energy Import Percentage of South Asia Source: SAARC Energy Centre, 2019

Both Nepal and Bhutan have shown their neoliberal traits by cooperating with their neighbors as they have more to gain from cooperation. The energy deals that the countries have signed with India and China will increase their energy security by diversifying their sources of energy supply. Further, they are reciprocating by sharing their hydropower resources with their neighboring countries. Figure 3.2 shows the amounts of various fuels that are imported in the countries of South Asia.

The role of the US Energy is a major part of the US foreign policy initiative. The US has a major presence in the Gulf and also in Central Asia due to the country’s efforts to control the smooth uninterrupted flow of energy to other countries. The US companies play an important role in the world energy scene as most of the large IOCs originate from the US. These oil companies are also regularly helped by the US administration through its diplomatic channels in order to protect the interest of the companies. The US oil companies also generate a lot of influence and support from international financial institutions like the World Bank and the International Monetary Fund (IMF), which help them to carry out projects in risk-prone areas of the world.

82  The geopolitics of energy in South Asia However, the scramble for energy has taken a new turn. As there is a growing demand for energy to accelerate the economic growth in developing countries, the Western countries are facing a lot of pressure from emerging and stable Asian powers regarding the supply of energy. The new Asian market, the rise of new suppliers beyond the Gulf, technological innovations and the current low price of oil have all reconfigured the balance of power.52 The largest consumers of energy in Asia are China, Japan and India while Saudi Arabia, Iran and Iraq are the leading suppliers for these energy-thirsty Asian countries.53 Moreover, other Asian countries like South Korea, Malaysia and Indonesia are also major consumers of oil and tend to get their supplies from the UAE, Kuwait and various Central Asian republics.54 According to an expert Asia already buys two-thirds of all the oil produced in the Persian Gulf and that share will continue to rise by approximately 75%. . . . meanwhile the West’s share of Gulf Oil will drop from just under a quarter today to just over a tenth in the future . . . the strategic upshot is that the two most anti-Western corners of the globe are inexorably coming together over energy and money over the coming years. . . . increasingly the Middle-East becomes dependent on economic stability in Asia and Asia on politicalmilitary stability in the Gulf . . . if either side of the equation fails, the energy market is put at risk.55 Despite all the closeness between the Asian countries and the Persian Gulf, the US has an important strategic role as a consumer and protector in this region. The US is not dependent on the hydrocarbon supplies from Asia, but it considers energy as an important tool for its strategic interests in the continent. Further, it considers that its influence is required to meet its energy imports from the Gulf. According to experts, the US being the only superpower considers its control over energy being necessary to check the erosion of the country’s global dominance.56 Moreover, without having any influence would result in China, Russia and Iran dominating the region. The US has also realized that there are a lot more global players in the energy field than there were in the past. The emergence of China and other Asian countries together with the old foe Russia has resulted in the US changing its overreliance on the import of oil from the Persian Gulf and South America. The country is focusing more on nuclear power due to its superiority in the sector and shale gas in order to diversify its energy mix. However, despite calls for diversification of its energy mix, the country is still dependent heavily on hydrocarbon resources. Moreover, the influence of Russia and China is particularly alarming for the US as it is a challenge to its supremacy. Russian exports now reach Eastern Europe and Asia and it is also trying to control the Central Asian energy and their routes which is detrimental to the US’s regional clout. Further the US strategy to build pipelines like the Baku-Tbilisi Ceyhan pipeline and other pipelines in Central and South Asia has been successful in increasing its influence and regional clout

The geopolitics of energy in South Asia  83 in these regions. However, all the pipeline projects have not been successful due to the geopolitical and security concerns in the Central and South Asian region. Further, the US has a huge role in South Asia. The aim of the US is to ensure that the South Asian region does not get under the influence of the Chinese. As a result, the country has courted both Pakistan and India. India is a strategic partner of the US due to the former’s economic power and a stable democracy which is beneficial to the US interest. Pakistan on the other hand is an ally in fighting terror and works hand in hand with the US in fighting the Taliban in Afghanistan. Moreover, Pakistan is a major ally of China as the latter helps Pakistan in terms of both its energy needs and economic development. One of the major problems of the US in dealing with Pakistan has been their shortsightedness in not helping the country in its economic development. Further, the problem in Pakistan to a large extent is influenced by a lack of access to energy in the country.57 According to experts, the US policy makers still do not fully accept the idea that providing adequate, affordable, reliable and sustainable electricity creates jobs and prospects for economic development and therefore must be a cornerstone and not a sidebar for US national security policy.58 Further, the US is more busy giving Pakistan military aid than improving its infrastructural capabilities. An economically solvent Pakistan will be an asset for the US, just like India has been. In the case of India, the US has not only encouraged more trade with the country but also signed the noncommercial use of nuclear energy which has not only enhanced India’s energy security but brought both the countries closer despite Russia being a close ally to India. The US opposition to the Iran–Pakistan–India pipeline was not ideal. The US was concerned that the revenue from the pipeline could fuel Iran’s nuclear program ambitions, but it failed to consider that the project would have been extremely helpful for energy-starved Pakistan and India. Since the natural gas reserve in Pakistan is stagnant at the moment, the gas pipeline from Iran could have provided the country with its energy security and would have also reduced the carbon emissions.59 The US had also made a blunder in not supporting the energy project with Iran involving India, as this would have improved the country’s reputation in Pakistan which is at an all-time low at the moment. Further, the lack of foresight from the US and the leaders of India and Pakistan has often led to the lack of provision for clean and environmentally safe energy, which in the long run could have been used as a cornerstone for economic, political and social stability in the region.60 The US had also been an important partner for exploration and exploitation of natural resources in Bangladesh. The US companies have been at the forefront of exploration and production in the country for a long time. The US government has also given technical and financial assistance to the national oil companies of Bangladesh. As a result, their involvement in the energy sector has reaped benefits for both the parties. However, despite Bangladesh being a good partner to the US in terms of various energy collaborations, its assistance has not been fully exploited by the former. The reasons being the US has to ensure that top legal, technical and policy experts need to be added in the local institutions of Bangladesh. This will

84  The geopolitics of energy in South Asia reduce the time required for many policy decisions. Currently, it takes days to get appointments with ministers and other high officials. Bangladesh is an important ally for the US as it is one of the very few moderate Muslim countries in the world and can also play a pivotal role in South Asia with its strategic location near India and accessibility to the Bay of Bengal. The increased investment by the Chinese in the domestic energy and infrastructural development is a cause of concern for the US. Further, due to Bangladesh’s current closeness with India in regard to its energy and overall security, the US has taken a backstage role in dealing with the issues that the country is facing as it considers India as an ally. The geopolitical stance of the US in South Asia is realist in nature as the country wishes to counter the aggressive role of China in the region. The country has bilateral energy-related agreements with India, Pakistan and Bangladesh as it seeks more US companies to invest in the region. As a result, cooperation with the South Asian countries is essential in controlling the Indo-Pacific, as the region will hold economic clout in the future. However, one of the major problems with the US realist strategy is the country is willing to cooperate in areas of energy trade which serves only its interest rather than the interest of the host country. For example, the US stance against the Iran–Pakistan–India pipeline due to the involvement of Iran was a major blow for Pakistan, as the country was suffering due to the lack of energy. Further, Pakistan could also not defy the US as the country receives military aid from the latter.

The role of China China has a growing influence in South Asia as it considers the South Asian region as its backyard as it has borders with most of the countries of the region. As a result, it considers the region as an important place to do business and also an important supplier of its energy. Further, the country is also in competition with India for the supply of natural resources abroad as it regularly competes with Indian national oil companies for acquiring resources in many parts of the world. Both India and China are suffering from supply crunch and wants a secured supply of energy to meet the growing domestic demand for hydrocarbon resources. Currently, the Indian companies are not being able to keep up with the Chinese national oil companies due the latter’s aggressive policies abroad and the direct help it receives from the government. The Chinese oil companies are also used by its government for buying strategic assets abroad in order to get a secured supply of energy for the country. Between the years 2010 and 2012, Chinese national oil companies won gas deals in Kazakhstan and Ecuador worth $12.5 billion outbidding Indian companies.61 Further, the country is expanding its foreign asset portfolio to include oil and uranium, and the decision-making process in the country is not filled with layers and hierarchy which makes it easier for the country to take quick decisions in acquiring assets abroad.

The geopolitics of energy in South Asia 85 However, despite the competition with India, the trade relations between the countries are at an all-time high. The two countries reached an agreement to enhance trade between the two to $100 billion by the year 2016 up from $60 billion in the year 2010.62 Moreover, business deals worth up to $16 billion were negotiated in electricity, steel and wind energy.63 Chinese investment in the electricity sector of India is substantial, but the government of India is trying to find a balance between protecting domestic jobs from Chinese firms while ensuring that there is enough technical capacity in the country to meet its growing domestic electricity need.64 China is also a close ally of Pakistan and helps the country for both its energy need and economic development. Chinese infrastructural developments in the country are worth billions of dollars and it is also helping Pakistan with civil nuclear technology in order to diversify the country’s energy mix. According to experts, China saw the US–India nuclear accord as a brazen attempt by the US to seize the Indian market.65 Moreover, China is helping Pakistan build a world-class port in Gwadar in Baluchistan which will be an energy hub for countries in the Middle East, Asia and Africa. China’s geopolitical ambition in Pakistan revolves around its cold war with India and the country uses Pakistan as an ally to balance the power in South Asia. China has also invested in the hydropower sector of both Nepal and Bhutan. Further, due to the political turmoil in Nepal, the country has been suffering from increasing energy crisis. In this regard, China is helping Nepal to diversify its energy mix and this included investing in the country’s hydrocarbon sector. However, this closeness with Nepal is not seen positively by India as it considers Nepal as its backyard. Further, there is competition between both China and India in investing in Nepal’s energy sector. Bhutan also plays a crucial role in the production of hydroelectricity as it supplies 80% of India’s hydropower import.66 However, India, in order to protect its energy security, is trying to develop its own hydropower and hence Bhutan is looking for a new buyer for its hydropower resources. As a result, China has seen this as an opportunity to invest in Bhutan’s hydropower sector in order to increase its import of hydropower from Bhutan. Further, China is investing in Bhutan’s national electricity grid in order to increase the country’s power generation capacity. The role of China in the region has been both neoliberal and neorealist in nature. The country has shown its neoliberal traits by signing various bilateral agreements with Pakistan, Bangladesh, Nepal and Bhutan. The Chinese investment in the energy fields of these countries has been immense, and it has increased the energy generation capacity in all these countries. Further, the Chinese strategy of cooperation even if it is of little benefit to it shows the country’s willingness to negotiate for relative rather than absolute gains. However, all these investments made in the energy sectors of the various countries of South Asia also involve terms and conditions which are not always favorable to the host nation. For example, all the Chinese investments in Bangladesh are

86  The geopolitics of energy in South Asia carried out by Chinese energy companies who are not always qualified to carry out certain work. However, the government is sometimes pressured to choose Chinese companies in order to get the required investment. As a result, in these scenarios, China acts as a neorealist as it seeks to make absolute gains through its involvement in the energy sector of the region.

The Iran–Pakistan–India gas pipeline The Iran–Pakistan–India (IPI) gas pipeline has been a controversial project although it was financially viable and would have served the interest of all the parties involved. Iran was supposed to have been the producing country, Pakistan the transit country, while India would have been the importing country. As a transit country, Pakistan would also have been able to take a portion of the gas from the pipeline as its tariff or else could have charged separate tariff altogether. However, there were setbacks during the negotiation as there were conflicts over wellhead prices, transit fees, security and pressure from the US as it endorsed Turkmenistan–Afghanistan–Pakistan–India (TAPI) pipeline as their designated choice instead of the IPI pipeline.67 The feasibility of the IPI pipeline was first discussed during the 1950s. At first, India gave a tepid support toward the building of the pipeline when the relations between India and Iran were not ideal and further India was worried about a pipeline coming through Pakistan. However, due to the Gulf War in the year 1991, there was a cut in the supply of oil which forced India to think alternatively about its gas supply. As a result, India signed a memorandum of understanding with Iran in the year 1993 and accepted the offer of importing gas from the country. Further, an improvement in the relationship between India and Iran worried Pakistan and hence it did not agree to the proposal of being a transit country. However, in the year 1996 the World Bank again studied the financial viability of the IPI project and in the year 2003, BHP Billiton, the Australian mining company took an interest in the project. The BHP Billiton report recommended the construction of a 44-inch pipeline carrying gas from Asalouyeh in Iran near the South Pars field to Gujarat (India) via Baluchistan (Pakistan).68 The project would have been worth about $4 billion with allocation around 21 Bcf/day for Pakistan and about 31 Bcf/day for India.69 Although the Indian government was interested despite strong reservations within the opposition in India and from the US, the Indian government went ahead with negotiations with Iran and Pakistan.70 However, the problem with Pakistan regarding Kashmir, pipeline security, wellhead prices and transit fees prevented any progress in the project.71 However, negotiations continued regarding the project till the year 2007, but there were other points of contention which lowered the chance of the project ever completing. The increase in the global commodity prices increased the cost of the project to $7 billion which frustrated India.72 Moreover, Pakistan also raised its annual transit fee to $700 million.73 Further, an LNG agreement between India and Iran was cancelled due to disagreements regarding pricing. In the year 2005, India also voted against Iran’s nuclear policies at the IAEA in

The geopolitics of energy in South Asia 87 order to please the US, as India was then negotiating with the US regarding civil nuclear cooperation.74 Thus, as the cost of the project rose, the end use consumer prices also went up. The price for gas delivered to the Pakistan border in the year 2004 had been $2/MMBTU and by the year 2007 this has gone up to $5/MMBTU excluding the transit and transportation fees payable to the transit country.75 Moreover, the deterioration of relationship between India and Iran and an impasse with Pakistan regarding the transit fees and pipeline security created problems during negotiations. As a result, there was a suggestion to change the design and the routing of the pipeline.76 Hence, due to the negotiation hitting an impasse, Iran built a domestic pipeline in order to deal with its own domestic demand. The excess capacity of the Iranian pipeline was offered to both India and Pakistan. However, India was discouraged by the reduced gas offtake of 2.2 Bcf/day and Pakistan also raised concerns over the new border price of $8 MMBTU.77 The lack of cooperation from India resulted in Pakistan and Iran pursuing a pipeline without India. In the year 2010, Iran completed the 900-km IGAT-7 pipeline for supplying gas to Pakistan after meeting the country’s domestic needs.78 Moreover, with nearly 16% of the world’s proven gas reserves located in Iran and also being close to the subcontinent, Iran should be the logical gas supplier to India.79 However, due to Iran’s isolation from the international community, it was difficult for India to pursue this project. Moreover, in the US, the Iran–Libya Sanctions Act and Iran Sanctions Extension Act have made it difficult for US companies to participate in the project. However, the visit to Iran by the Indian Prime Minister can kickstart the new energy cooperation between the two countries. Moreover, in the year 2008, the civil nuclear agreement with the US made the IPI pipeline a foreign policy dilemma for India. Since the US was helping India develop the civil nuclear program, it was indirectly expected of India to play a more responsible role in various international affairs. However, India was worried that the country’s absence in the project will result in China taking its place which would be strategically problematic for the country. Further, both Iran and Pakistan wanted to include China in the project in order to pressurize India. The IPI project was always fraught with problems and as made clear by the WikiLeaks in the year 2010, the US always thought that the IPI pipeline was very unlikely and that Pakistan didn’t have the money to pay for either the pipeline or the gas.80 Moreover, Iran was more focused on domestic needs rather than optimizing foreign gas exports.81 Further, the neorealist attitude of both the US and India is also to blame for the project not seeing the light of day. The US stance of isolating Iran and the Indian stance of punishing Pakistan for its alleged terrorism links have resulted in the project being scrapped.

The Turkmenistan–Afghanistan–Pakistan–India Gas Pipeline (TAPI) The TAPI pipeline was always difficult to implement due to the various geopolitics involved in building the pipeline. The pipeline project was viewed as an US

88  The geopolitics of energy in South Asia initiative to connect Central Asia with South Asia. However, it took a long time for the project to see the light of day due to the transportation of gas through Afghanistan and Pakistan. Moreover, the pipeline was technically feasible although it will cross some of the highest terrains in the world. In the year 2010, India, Turkmenistan, Pakistan and Afghanistan signed a framework agreement to build the TAPI pipeline, while in the year 2012, India, Pakistan and Turkmenistan signed the Gas Sales and Purchase Agreement (GSPA). The State Gas Company of Turkmenistan, Turkmengas, GAIL, an Indian company and Inter State Gas System, a private company from Pakistan signed the agreement on behalf of their governments.82 The 1,680-km-long pipeline is to be built at an estimated cost of $7.6 billion.83 The proposed pipeline would start from Dauletabad gas field in Turkmenistan and after a stretch of 145 km will enter Afghanistan and after traversing 735 km in Afghanistan and 800 km in Pakistan will reach India.84 Further, the gas from Turkmenistan would be delivered at an estimated price of $10 per unit, including $3 as transportation charges and tariffs.85 Moreover, the pipeline would have the capacity to deliver 90 MMSCMD of gas of which India and Pakistan would receive 38 MMSCMD while Afghanistan will receive the remaining 14 MMSCMD of gas.86 The Asian Development Bank was interested to finance the project, and the US was also supporting the project as part of its New Silk Road Project connecting Central Asia with South Asia. However, India was hesitant getting into a project where it had to rely on Pakistan for the supply of gas. Moreover, many in Pakistan were also against India being part of the project. Further, some Pakistani officials also blamed India for its indecisiveness regarding its involvement as the reason for the project not starting. India’s major concern was with the pricing of the project. Proposed import of gas into India must be able to compete with the subsidized gas prices and cheap coal and LNG imports.87 In the case of TAPI pipeline, Turkmenistan was offering gas four times the price of domestic gas in India.88 There were also concerns about whether Turkmenistan had enough gas to export. Turkmenistan’s competing pipeline projects included Turkmenistan– China Pipeline (opened in 2009) and the existing pipeline connections with Iran and Russia. Further, there was also talks about building additional pipeline links from Turkmenistan to both Iran and Russia.89 However, the worry about whether Turkmenistan had enough gas to export was unfounded as the gas field for TAPI has around 16 Tcf of gas and another gas reserve of 14 Tcf was also discovered in the country.90 Further, the cost of the project ranged between $3.3 billion and $10 billion.91 Although there were promises of commercial funding there have been no concrete proposals about funding. The security challenge of the pipeline is the most worrying part of the project as it will pass through Helmand province of Afghanistan and Baluchistan province of Pakistan. Both these two regions are unstable as there have been militant attacks making it difficult for the stakeholders involved to provide a foolproof security for the pipeline. Moreover, Iran was not too keen on the project because it views the project as an attempt by the US to keep Iran out of the regional energy game. The Iran–Pakistan–India (IPI) pipeline was thought to be a competing pipeline

The geopolitics of energy in South Asia  89 although that has not materialized yet as the pipeline would have connected West Asian countries with South Asia. Moreover, both India and Pakistan need gas from Iran and Central Asian countries. As a result, Iran is against the pipeline being built in the region. Further, the recent dispute between India and Pakistan has deteriorated the relationship between both the countries, and there is a deep mistrust between the two. Hence, it would be a challenge to get both the countries on the same table. China is also another important actor in the region. The country plays an important role in Turkmenistan’s energy sector. China is already importing a considerable amount of gas from Turkmenistan and currently Turkmenistan exports about 65 Bcm of gas every year to China.92 Further, China and Afghanistan are considering building a pipeline to deliver the Turkmen gas via Afghanistan’s north and through Tajikistan into China.93 The TAPI pipeline has to overcome a lot of obstacles to be built. Initially, the construction was supposed to have been completed and operational by 2014, but till now very little has happened. The current geopolitical situation is pretty intense in South Asia for the project to be successful. Moreover, the neorealist role of India and Pakistan is also to blame as both the countries are adamant about showing their strength in the region. Further, both the countries are of the opinion that cooperation does not serve their interest of absolute gain as their sense of relative loss varies.

Role of SAARC All the countries of South Asia have some form of energy security issues although their extent varies from country to country. The SAARC was set up more than 30 years ago for regional cooperation among all the South Asian countries. The region has the potential to become one of the most important regions of the world, but lack of trust between the members has held back this regional organization and the countries from achieving their true potential. Further, greater cooperation among all the South Asian countries could have led to more gas pipelines, greater trade in hydroelectricity, trade in coal- and gas-fired electricity which in turn would have enhanced the energy security of all the countries in the region. Moreover, the SAARC in the year 2004 coined the phrase “Energy Ring” of interconnected energy systems in the region, which would enhance the energy security of all the countries. The recommendation made during the twenty-fifth session of the Council of Ministers approved the report whereby all the countries decided to do the following: i) exchange of energy information, ii) produce environment-friendly energy, iii) creation of a regional power grid and iv) cooperation regarding renewable energy.94 The SAARC Energy Centre (SEC) was set up in Islamabad in March 2006. The goal of the SEC was to improve and strengthen South Asian countries’ capacity to address regional and global energy issues together and facilitate energy trade within the SAARC and to promote the efficient use of energy in the region.95 Further, the main objective of setting up the SEC was to create a regional institute of excellence for the coordination and facilitation of various energy-related

90  The geopolitics of energy in South Asia programs in South Asia. The SEC conducted the following programs such as: i) program on energy trade between SAARC countries,96 ii) program on integrated assessment of energy, transport and environment,97 iii) program to minimize oil imports through improvements in energy efficiency and fuel substitution,98 iv) program to successfully implement technology transfer and v) program on rural electricity for poverty alleviation.99 However, despite having the SEC, there has been no noteworthy use of the institution in order to facilitate the flow of energy between the countries. Although the institute has tried its best to provide new ideas through which the countries of South Asia can get interconnected through the creation of an integrated grid, very little has been done to make this plan a reality. However, the signing of the SAARC Framework Agreement on Energy Cooperation (Electricity) in the year 2014 is a step toward the right direction. Since all the countries of the SAARC except Bhutan are energy deficient, the SAARC Framework agreement has provisions exclusively for cooperation in the field of electricity. Further, according to experts “given that electricity is only one segment of energy security, establishing firmer bonds with states which have abundant resources in the extended neighborhood must be the strategy of all the countries of South Asia”.100 Although it has been more than six years since the SAARC Framework Agreement on Energy Cooperation (Electricity) has been signed, there has been very little regional cooperation in that regard with no work at the ground level. The delay in implementing the agreement is due to the internal turmoil that most of the countries are facing at the moment, besides a lot of technical and regulatory issues involved in energy trading. One of the major drawbacks of SAARC is the geopolitical issues currently plaguing this regional organization. Although there are a lot of bilateral agreements and cooperation between countries in the region, there is very little multilateral cooperation between the countries. This neorealist attitude is due to the enmity between India and Pakistan. Further, despite India having sound bilateral relationship with all the countries except Pakistan, the former finds very little incentive to work according to the SAARC Framework of regional cooperation because it denies absolute gain in its various endeavors. The improvement of ties with Bangladesh has also been a positive aspect for India as it can now use Bangladesh to supply energy to India’s energy-starved Northeast region. However, the neorealist position of India in the Indo-Bangla energy cooperation worked due to the neoliberal attitude of Bangladesh cooperating despite India gaining more from the various energy deals. In the context of South Asia, carrying out bilateral agreements between each other will not solve the energy security problems that the countries are currently facing. The biggest roadblock for cooperation in the SAARC is the enmity between India and Pakistan, as it has polarized South Asia and has also drawn big powers from outside. The lack of cooperation has resulted in each country trying to fight for itself in order to ensure its own energy security and this weakness has been used by the Western countries and other Asian powers to fulfill their own interest. This has only made South Asian countries weaker.

The geopolitics of energy in South Asia  91

Conclusion The purpose of this chapter was to highlight some of the geopolitical issues currently faced by the South Asian countries. The chapter shows that most of the South Asian countries are currently suffering from supply crunch and that in order to meet their domestic demand, countries have gone abroad to secure their energy resources. Further, greater diversification of the energy mix is required in order to protect the energy security of the countries. The neorealist and neoliberal behavior of the five countries in the region was also analyzed to understand their role from the perspective of international relations. The role of India and Pakistan are neorealist in nature as both the countries try to portray their power in order to fulfill their energy needs. However, India being the stronger of the two countries acts like a hegemon in the region as most of the energy agreements signed between it and the other smaller countries tend to benefit the former. Further, the role of Bangladesh, Nepal and Bhutan is also important, but they tend to have more neoliberal traits due to their size and economic power. As a result, these three countries tend to cooperate more to enhance their energy security. The role of the US and China was also discussed and it showed the importance of both these countries in the energy sector of South Asia. There is an intense competition for energy resources between India and China and so far, China is way ahead of India in terms of acquiring energy assets abroad. Moreover, the role of the US in building various pipelines in the region has been controversial as it tended to support projects which serve its interest rather than the interest of the countries in the region. The attitude of both the US and China can be classified as different forms of neorealism as both the countries intend to use their power to fulfill their interests in the region. While the US uses its status as the only superpower in the world, China uses its economic and strategic might to influence the various governments in the region. However, greater cooperation is required among the countries of South Asia as without cooperation, the energy security of these countries cannot be ensured.

Notes 1 S. Sethi, “India’s Energy Challenges and Choices”, in L. Noronha and A. Sudarshan (eds), India’s Energy Security, New York: Routledge, 2009. 2 Ibid, pp. 20–21. 3 Ibid, p. 24. 4 Supra, see note 1, p. 26. 5 R.K. Batra, “Natural Gas Pipelines: Geopolitics, Affordability, Security Dimensions of India’s Energy Security”, in L. Noronha and A. Sudarshan (eds), India’s Energy Security, London: Routledge, 2009. 6 Ibid, p. 10. 7 Ibid, p. 11. 8 Supra, see note 1, p. 28. 9 Ibid.

92  The geopolitics of energy in South Asia 10 A. Rashid, Taliban: Militant Islam, Oil, and Fundamentalism in Central Asia, New Haven, CT: Yale University Press, 2001. 11 H. Peimani, “Politicking over Central Asia’s Pipelines”, Journal of Energy Security, March 2011. 12 Supra, see note 11, p. 23. 13 N. Banskota, South Asia Trade & Energy Security: The Role of India, Universal Publishers, 2012, p. 29. 14 Supra, see note 11, p. 30. 15 Ibid, p. 31. 16 Supra, see note 11, p. 33. 17 Ibid, p. 34. 18 Ibid. 19 Ibid. 20 ESCAP, Regional Cooperation for Energy Access and Energy Security in South and South-West Asia, New Delhi: Economic and Social Commission for Asia and the Pacific, 2013. 21 O. Gippner, Energy Cooperation in South Asia: Prospects and Challenges, Kathmandu, Nepal: South Asia Watch on Trade, Economics and Environment, 2010. 22 Supra, see note 20, p. 24. 23 M. Lall, The Geopolitics of Energy in South Asia, Singapore: The Institute of Southeast Asian Studies, National University of Singapore, 2009. 24 S. Sufi, “Challenges of Petrobangla Companies”, Energy & Power, November 16, 2019. 25 Ibid, p. 28. 26 Ibid, p. 29. 27 Supra, see note 23, p. 30. 28 Ibid, p. 31. 29 Ibid. 30 Supra, see note 23. 31 S. Islam, “Energy Cooperation between India and Bangladesh”, in The Geopolitics of Energy in South Asia, Singapore: The Institute of Southeast Asian Studies, National University of Singapore, 2009. 32 Ibid. 33 M.A. Hossain, “Exploration Failure Outshines Golden Decade”, Energy & Power, February 1, 2020. 34 Ibid, p. 5. 35 Supra, see note 31, p. 145. 36 Supra, see note 23, p. 30. 37 Ibid, p. 31. 38 Ibid. 39 C.K. Ebinger, Energy and Security in South Asia, Cooperation or Conflict? Washington, DC: Brookings Institution Press, 2011. 40 Ibid, p. 145. 41 Supra, see note 39, p. 147. 42 Ibid, p. 148. 43 M.S. Huda and S.H. Ali, “The Energy Politics of the Asia-Pacific Region”, in K. Hancock and J. Allision (eds), The Oxford Handbook of Energy Politics, New York: Oxford University Press, 2019. 44 P.S. Ghosh, “An Enigma that is South Asia: India Versus the Region”, Asia-Pacific Review, 20(1), 2013. 45 E. Gonsalves, “Regional Cooperation in South Asia”, South Asian Survey, 13(2), 2006. 46 Supra, see note 44, p. 205. 47 Ibid, p. 206.

The geopolitics of energy in South Asia  93 48 49 50 51 52

Ibid, p. 208. Supra, see note 43, p. 105. Ibid, p. 107. Ibid, p. 108. D. Yergin, “Energy Security and Markets”, in J.H. Kalicki and D.L. Goldwyn (eds), Energy & Security: Strategies for a World in Transition, Washington, DC: Woodrow Wilson Centre Press, 2nd edition, 2013. 53 A.M. Jaffe and K.B. Medlock III, “China, India and Asian Energy”, in J.H. Kalicki and D.L. Goldwyn (eds), Energy & Security: Strategies for a World in Transition, Washington, DC: Woodrow Wilson Centre Press, 2nd edition, 2013. 54 Ibid, p. 284. 55 Ibid, p. 287. 56 Ibid, p. 288. 57 J.R. West and R. Alkadiri, “Iraq, Iran and the Gulf Region”, in J.H. Kalicki and D.L. Goldwyn (eds), Energy & Security: Strategies for a World in Transition, Washington, DC: Woodrow Wilson Centre Press, 2nd edition, 2013. 58 Ibid, p. 230. 59 Ibid, p. 231. 60 Ibid, p. 235. 61 F. Sobhan, “Cooperative Security Framework in South Asia: A Bangladeshi Perspective”, in N. Nayak (ed), Cooperative Security Framework for South Asia, New Delhi: Pentagon Press, 2013. 62 Supra, see note 43, p. 112. 63 Supra, see note 43, p. 113. 64 Ibid, p. 118. 65 Supra, see note 52, p. 287. 66 Supra, see note 45, p. 213. 67 Supra, see note 53, p. 237. 68 C.I.A. Siddiky, Cross-border Pipeline Arrangements: What Would a Single Regulatory Framework Look Like? Netherlands: Kluwer Law International BV, 2011. 69 I.A. Siddiky, “The International Legal Instruments for Cross-border Pipelines”, in K. Talus (ed), Research Handbook on International Energy Law, Edward Elgar Publishing, 2014. 70 Ibid. 71 Supra, see note 53, p. 238. 72 Ibid. 73 Supra, see note 52, p. 295. 74 Ibid, p. 296. 75 Supra, see note 52, p. 297. 76 Ibid. 77 Supra, see note 70, p. 298. 78 Ibid, p. 299. 79 Ibid. 80 M. Kugelman, “Can the TAPI Pipeline Be Any More Than a Pipe Dream?”, The Diplomat, December 17, 2015. 81 A.J. Mahmood, A.R. Zafar, R.A. Ahmed, and S. Razzaq, “Pakistan’s Overall Energy Potential Assessment, Comparison of LNG, TAPI and IPI Gas Projects”, Renewable & Sustainable Energy Reviews, 31, 2014. 82 Supra, see note 81, p. 185. 83 Ibid, p. 186. 84 Ibid, p. 187. 85 Supra, see note 80. 86 Supra, see note 81, p. 91.

94  The geopolitics of energy in South Asia 87 Supra, see note 68, p. 92. 88 R. Osmani, “TAPI Gas Pipeline: Are Sino-US Relations a Zero-sum Game?”, The Central Asia-Caucasus Analyst, January 19, 2016. 89 Ibid. 90 Ibid. 91 Supra, see note 88. 92 Supra, see note 68, p. 95. 93 Ibid. 94 M. Dubey, “SAARC and South Asian Economic Integration”, Economic and Political Weekly, 42(14), 2007. 95 Ibid, p. 1238. 96 Ibid. 97 Ibid, p. 1239. 98 Ibid. 99 Ibid. 100 Ibid, p. 1240.

Selected bibliography Banskota, N. South Asia Trade & Energy Security: The Role of India, Irvine, CA: Universal Publishers, 2012. Batra, R.K. “Natural Gas Pipelines: Geopolitics, Affordability, Security Dimensions of India’s Energy Security”, in L. Noronha and A. Sudarshan (eds), India’s Energy Security, London: Routledge, 2009. Dubey, M. “SAARC and South Asian Economic Integration”, Economic and Political Weekly, 42(14), 2007. Ebinger, C.K. Energy and Security in South Asia, Cooperation or Conflict? Washington, DC: Brookings Institution Press, 2011. ESCAP, Regional Cooperation for Energy Access and Energy Security in South and SouthWest Asia, New Delhi: Economic and Social Commission for Asia and the Pacific, 2013. Ghosh, P.S. “An Enigma that is South Asia: India Versus the Region”, Asia-Pacific Review, 20(1), 2013. Gippner, O. Energy Cooperation in South Asia: Prospects and Challenges, Kathmandu, Nepal: South Asia Watch on Trade, Economics and Environment, 2010. Gonsalves, E. “Regional Cooperation in South Asia”, South Asian Survey, 13(2), 2006. Hossain, M.A. “Exploration Failure Outshines Golden Decade”, Energy & Power, February 1, 2020. Huda, M.S., and S.H. Ali, “The Energy Politics of the Asia-Pacific Region”, in K. Hancock and J. Allision (eds), The Oxford Handbook of Energy Politics, New York: Oxford University Press, 2019. Islam, S. “Energy Cooperation between India and Bangladesh”, in The Geopolitics of Energy in South Asia, Singapore: The Institute of Southeast Asian Studies, National University of Singapore, 2009. Jaffe, A.M., and K.B. Medlock III, “China, India and Asian Energy”, in J.H. Kalicki and D.L. Goldwyn (eds), Energy & Security: Strategies for a World in Transition, Washington, DC: Woodrow Wilson Centre Press, 2nd edition, 2013. Kugelman, M. “Can the TAPI Pipeline Be Any More Than a Pipe Dream?”, The Diplomat, December 17, 2015. Lall, M. The Geopolitics of Energy in South Asia, Singapore: The Institute of Southeast Asian Studies, National University of Singapore, 2009.

The geopolitics of energy in South Asia  95 Mahmood, A.J., A.R. Zafar, R.A. Ahmed, and S. Razzaq, “Pakistan’s Overall Energy Potential Assessment, Comparison of LNG, TAPI and IPI Gas Projects”, Renewable & Sustainable Energy Reviews, 31, 2014. Osmani, R. “TAPI Gas Pipeline: Are Sino-US Relations a Zero-sum Game?”, The Central Asia-Caucasus Analyst, January 19, 2016, https://www.cacianalyst.org/publications/ana lytical-articles/item/13321-tapi-gas-pipeline-are-sino-us-relations-a-zero-sum-game?. html. Peimani, H. “Politicking over Central Asia’s Pipelines”, Journal of Energy Security, March 2011. Rashid, A. Taliban: Militant Islam, Oil, and Fundamentalism in Central Asia, New Haven, CT: Yale University Press, 2001. Sethi, S. “India’s Energy Challenges and Choices”, in L. Noronha and A. Sudarshan (eds), India’s Energy Security, New York: Routledge, 2009. Siddiky, C.I.A. Cross-border Pipeline Arrangements: What Would a Single Regulatory Framework Look Like? Netherlands: Kluwer Law International BV, 2011. Siddiky, I.A. “The International Legal Instruments for Cross-border Pipelines”, in K. Talus (ed), Research Handbook on International Energy Law, Cheltenham: Edward Elgar Publishing, 2014. Sobhan, F. “Cooperative Security Framework in South Asia: A Bangladeshi Perspective”, in N. Nayak (ed), Cooperative Security Framework for South Asia, New Delhi: Pentagon Press, 2013. Sufi, S. “Challenges of Petrobangla Companies”, Energy & Power, November 16, 2019. West, J.R., and R. Alkadiri. “Iraq, Iran and the Gulf Region”, in J.H. Kalicki and D.L. Goldwyn (eds), Energy & Security: Strategies for a World in Transition, Washington, DC: Woodrow Wilson Centre Press, 2nd edition, 2013. Yergin, D. “Energy Security and Markets”, in J.H. Kalicki and D.L. Goldwyn (eds), Energy & Security: Strategies for a World in Transition, Washington, DC: Woodrow Wilson Centre Press, 2nd edition, 2013.

4 Energy scenario of Bangladesh Policy priorities and challenges

Introduction The last ten years has seen Bangladesh making good progress in adding various energy mixes to its supply of energy for domestic consumption. The GDP of the country grew at 6% in the year 2018 despite the worldwide economic meltdown.1 This was possible due to certain policy level decision by the government to increase the production of energy, implementing short-term projects for electricity generation and the flexibility of the industrial sector. The country now has a plan to increase its energy security and lower its reliability on imported energy. The purpose of this chapter is to discuss and analyze the various policy priorities of the government and the challenges it faces to implement those strategies. The first part of the chapter discusses the impact of the energy sector on the economy of Bangladesh followed by a discussion on the various energy sectors of the country. The energy policy of the government is then analyzed in detail to understand the various measures taken by the policy makers in order to enhance the energy security of Bangladesh.

Contribution of power in the GDP The country has been growing between 5% and 6% over the last three years and as a result, the demand for power stood at 7%.2 Due to poor infrastructure and shortage of power supplies, the GDP did not grow sufficiently. However, the contribution of power in the GDP is quite minimal. In the years 2012–2013 and 2013–2014, the contribution of power and the energy sector in the GDP was only 1.58% and 1.70%, respectively.3 Although the rate of contribution has increased, the increase is minimal. Moreover, the increase in demand for gas as the main fuel source has caused vulnerability in the energy sector due to the fast depletion of the resource. The National Energy Policy (NEP) has suggested reducing the dependency on gas and developing the coal sector in order to increase the diversification of energy resources to meet the country’s energy needs.4 Further, the rate of GDP has decreased over the last year due to shortage of power in the energy sector. Between the years 2011 and 2018, the rate of GDP has been around 6.52% to 6.20%.5 As a result, the growth rate has slightly decreased.

Energy scenario of Bangladesh  97 During this time, the demand for electricity grew by 9–12%.6 Increased industrialization and a lack of investment in the power sector have also caused the GDP to fall as the country is not being able to supply adequate power to the industrial sector with its current output. Although the NEP has focused on some of these issues, no adequate measures have been taken by the government to deal with these issues. Figure 4.1 shows the different types of fuels that are used in Bangladesh by the various sectors.

Furnace oil 21% Regional grid 5%

Hydro 2% Diesel 8%

Coal 33%

Gas 33%

Figure 4.1  Current Fuel Mix of Bangladesh Source: “The Power Sector Master Plan 2010 and 2016”, Sustainable and Renewable Energy Development Authority and Power Division, Ministry of Power, Energy and Mineral Resources, Government of the People’s Republic of Bangladesh, March, 2015 and the Author, 2020

The current energy scenario The previous government between the years 2001 and 2006 and also the caretaker government between the years 2007 and 2009 tackled the issue of power shortage through purchasing electricity from quick rental power plants.7 The current government followed a similar strategy of setting up and buying power from quick rental power plants. As a result, by the end of the year 2013, the government was buying power worth 3,000 MW.8 Further, this is a good achievement for the government because the current capability of these quick rental power plants is around 7,000 MW while during peak summertime the demand for power is around 4,000 MW.9 However, the current approach of the government on quick rental power plant to meet the energy demand is not sustainable in the long run. One of the reasons being the government has to spend a considerable amount of money to buy power from private quick rental power plant companies. The average cost of production in rental power plants rose from Tk.2.5/kWH in the year 2008 to Tk.6.3/kWh in the year 2014.10 This resulted in the government increasing the tariff for power. Moreover, the total subsidy in the power sector has been over $2 billion.11

98  Energy scenario of Bangladesh Many government agencies including the Bangladesh Power Development Board (BPDB) brought this unsustainable position to the attention of the policy makers in the year 2011, but the government failed to heed the advice of the BPDB officials. One of the aspects of the energy scenario in the country is the unique demand and supply position of electricity in the country. There is a huge seasonal variation in that, for example, in the year 2013, the lowest demand for energy was met with 3,800 MW generation, while the highest was 8,000 MW.12 The winter demand is about 5,000 MW while the requirement during summers is 7,500 MW.13 As a result, the cooling load is around 2,500 MW, but the annual growth is about 700 MW.14 This demand for power is met by power plants that work for 24 hours which are known as base plants, while the 12-hours power plants are known as intermediate plants and the 8-hour power plants as peaking plants. Moreover, different sources of energy are used to run these power plants. Another aspect is domestic consumption which takes the maximum amount of electricity that is produced. In fact, around 50% of the energy produced in the grid is used for domestic consumption and this is steadily increasing.15 However, the return of supplying energy for domestic use is minimal whereas supplying around 1,000–2,000 MW of electricity to industrial outlets will add around $10 billion to the country’s GDP.16 Further, the government is delaying such unpopular policy decision of lowering the use of electricity for domestic consumption resulting in the country losing out on economic output. Table 4.1 lists the fuel mix of Bangladesh in the PSMP of 2010 and 2016. Table 4.1  Fuel Mix of Bangladesh in the PSMP of 2010 and 2016 Fuel

Contribution/PSMP 2010

Proposed Contribution/PSMP 2016

Domestic coal Imported coal Gas/LNG Nuclear, power import & others Liquid fuel

29.07% 21.71% 20.00%

1% 34% 35% 25%

6.35%

5%

Source: “The Power Sector Master Plan 2010 and 2016”, Sustainable and Renewable Energy Development Authority and Power Division, Ministry of Power, Energy and Mineral Resources, Government of the People’s Republic of Bangladesh, March, 2015 and the Author, 2020

The government has to increasingly grapple with various other sources of energy in order to meet the demand. Around 37% of energy comes from biomass and this is normally used for cooking.17 Moreover, the use of gas amounts to 45% of total energy and around 73% of this resource is used by the industrial sector.18 Further, the country does not also receive a substantial amount of energy from the hydropower sector, while the renewable energy in the form of solar power makes about 140 MW at peak demand. The use of renewable energy is also not sustainable at the moment due to the high cost involved.

Energy scenario of Bangladesh  99 Due to the overreliance on gas to meet the energy demands, there is a shortfall in the overall production of the resource. The gas reserve of the country is around 15 Tcf and the current supply is around 2,500 MMSCFD.19 As a result, there is a shortfall of around 700 MMSCFD.20 Moreover, during the last nine years, the various exploration agencies of the country could add only around 200 Bcf of new gas which is going to last for only three months with the current demand in the country. Hence, the government policy should have been to encourage greater investment from the IOCs to explore more areas close to the Bay of Bengal. Instead, the government relied heavily on the state-run BAPEX (Bangladesh Petroleum Exploration & Production Company Limited) to carry out all the exploration resulting in a very few gas-finds in the country due to lack of technological know-how. The lack of government decision relating to the considerable amount of coal deposits is also another factor causing the shortage of supply. According to experts, around 3.2 billion tons of high-quality coal reserves are unexploited in the northwest of the country.21 Further, the Power Development Board (PDB) road map shows that about 11,000 MW of power will come from this coal from the year 2030 onwards.22 However, till date no measures have been taken by the government to exploit this primary energy available in the country. Instead, the government is focusing on importing coal and LNG and cross-border trading. A nuclear power plant is also being built in Rooppur to deal with the country’s energy demands. The country did not have any shortage of power till the year 1996. Till then the annual shortfall of power during peak demand was between 700 MW and 1200 MW.23 In the current scenario, the worst shortfall of the country is around 1,000 MW. This shortfall could have been adequately dealt with by setting up a few coal-fired power plants which could have adequately met the demand for the next couple of years. The country’s base load is currently around 3,500 MW and out of this, the combined cycle gas generation is around 1,800 MW with an efficiency rate of around 50%.24 The immediate necessity of the country could have been dealt with if the government started two projects in Bibiyana. These projects could have generated around 1,000 MW of the base load necessity.25 The Power Sector Master Plan 2030 (PSMP) focused on the diversification of the energy mix and the ways to keep government cost within the acceptable limit. The PSMP suggests coal fulfilling 50% of the energy mix for the production of 39,000 MW, 25% by gas, 10% by oil and 15% from the import of hydro, nuclear and other renewables.26 Although the plan for gas, coal and oil seems sound, the 15% expected from renewables seems far-fetched as there is no concrete plan in place regarding how to attain that amount from the renewables sector. Moreover, out of the entire coal generation, 11,000 MW will be produced from local coal. However, the cost of producing around 300 MW of electricity from imported coal will result in the cost of production being Tk.8–9/kWh whereas that of local cost would have been Tk.6–7/kWh.27 The import of LNG and the supply of local gas are also not feasible at present. Figure 4.2 shows the different fuels that will be used in Bangladesh in the year 2041.

100  Energy scenario of Bangladesh RE/Import 15% Nuclear energy 10%

Liquid fuel 5%

Gas 35%

Coal 35%

Figure 4.2  The Fuel Mix of Bangladesh in 2041 Source: “The Power Sector Master Plan 2010 and 2016”, Sustainable and Renewable Energy Development Authority and Power Division, Ministry of Power, Energy and Mineral Resources, Government of the People’s Republic of Bangladesh, March, 2015 and the Author, 2020

The government is correct in its assessment of the needs of the country and its plan is sustainable in terms of the fuel mix. However, implementing the plan will be the real challenge. Moreover, the lack of policy decision regarding coal might upset the current plan of the government if it does not start exploiting the resource. Bangladesh is also currently importing 500 MW of power from India.28 This is a great achievement for the government as it will not only increase the energy sufficiency of the country but also improve its relation with the neighboring country. The government is receiving power as per the contract signed with India while the country is also paying back its relevant dues. However, if this new relationship with India can bring in a further 3,500 MW of power into the country as expected under the PSMP of the government, it would lead to a greater interconnectedness between the South Asian countries which would boost the energy sector of the other countries as well. Moreover, Bangladesh in return could also allow India transit facilities for its hydropower energy flowing into Northeast India provided it gets the right amount of money, which is around Tk.6/kWh. The World Bank prescription regarding the reform in the energy sector has also resulted in the government trying to assess the need of base load, intermediate load and peak load. The World Bank also prescribed the government to invest more on the peaking plants. For example, the seasonal demand during evening peak times during the summer is 2,400 MW. This is cooling load and is increasing every year due to a greater number of people using air conditioners in their households. As a result, during the winter months the additional capacity is lying idle and the government is losing a huge amount of revenue from it.29 Moreover, the quick rental power plants during the peak demand runs at only 15% of the capacity when they are contracted to run at 80%.30 The reason for this is due to the lack of base load support.31

Energy scenario of Bangladesh 101 Due to Bangladesh’s huge urban population, the domestic consumption of gas is more than that of the industrial sector. Different countries take different measures to reduce the gap between peak and off-peak demands and try to balance the seasonal variation of gas more effectively. The foreign donors have been pressing the government to make efficient use of power in the urban areas and until the large base load power plants are introduced in the system, dependency on the liquid fuel would rise.32 Moreover, improving in all the sectors of the economy is also required like in household appliances, fans and air conditioners and so on. According to Japan International Cooperation Agency (JICA), assessing the future demand of power in Bangladesh is extremely important. JICA supported the PSMP of 2010 whereby power will come from 25% imported coal, 10% from imported oil, 9% from cross-border import and another 3% from nuclear fuel import.33 As a result, 50% of the power is coming from imported fuel which in the long run is a problem for the country’s energy security. Moreover, if the government is importing LNG, the imported fuel percentage will reach 55%.34 According to JICA, Bangladesh might open itself to price volatility and supply disruption due to the overdependence on outside sources for its energy needs.35 One of the reasons the government is depending too much on outside sources for its fuel mix is that it has failed to reach any decision regarding the use of coal for its energy consumption. The use of coal for consumption is politically difficult for the government as most of the coal is in agrarian lands which might cost the livelihood of the people as 70% of the population is dependent on agriculture.36 Moreover, lack of involvement of the IOCs is also a cause for concern and the government policy makers need to focus more on these two issues for greater energy security. Table 4.2 shows the current fuel mix of grid-connected power generation in the country. Table 4.2  Present Fuel Mix of Grid-Connected Power Generation Fuel

Capacity (MW)

% of Total

Coal Gas HFO Hydro imported Total

200 7,900 2,635 230 600 12,547

1.59% 62.96% 21.00% 1.83% 4.78% 100%

Source: The World Bank Indicators, 2019 and the Author, 2020

The policy in the gas sector The state-run national oil company, Petrobangla signed six Production Sharing Contracts (PSC) in the year 1974 with various IOCs. Most of the early explorations were based on offshore exploration. The six companies conducted seismic survey and drilling, and Kutubdia was discovered by Union Oil during that time.

102  Energy scenario of Bangladesh However, there was a long gap of 15 years when the IOCs were again invited for offshore exploration and drilling due to gas shortage. The first bidding for exploration took place in the year 1993 and the second round of bidding took place in the year 1997. These two rounds of bidding resulted in new discoveries of gas fields in Sangu, Moulavi Bazar, Bibiyana and Bhangura fields.37 As a result, ten PSCs were signed and out of these, two has expired and the rest eight are still in operation. There has been no dispute in regard to the production of gas from these fields between the IOCs and Petrobangla. However, the first dispute between Petrobangla and Chevron took place in the year 2004 regarding an interpretation of the contract. Petrobangla and Chevron went to international arbitration which Petrobangla won in the end. The IOCs now supply more than 60% of the daily production of 2,500 MMCFD.38 There has been no dispute between the IOCs and Petrobangla for the last 17 years, which gives confidence to the IOCs for more investment in the country. Moreover, there is a negative perception about foreign oil companies taking undue advantage of the PSCs and the fact that such contracts do not protect the interest of the country. However, this is baseless as the five major fields of Petrobangla, namely Titas, Habiganj, Bakhrabad, Rashidpur and Kailashtila, hold around 85% of the reserve and were bought from the Shell Oil Company in the year 1974 for $10  million.39 The price of such acquisition currently would be around $192 billion.40 The payments made to the IOCs are also reasonable. The IOCs receive cost recovery and the actual price as part of their share of profit. When there are investments in the new processing plants, drilling and other ventures, the combined payment for the cost recovery and profit gas goes up to around 70% of the daily production.41 When the major cost is recovered, the IOCs gets paid 30% of the daily production. The IOCs received a payment between $35 million and $50 million per month depending on the cost recovery.42 The IOCs supplied 0.438 Tcf of gas from daily production of 1,200 Mcf and Petrobangla paid around $500 million for their services.43 As a result, the average cost of the IOC gas comes to around $1.0/Mcf.44 This is in fact the price of the entire gas including Bangladesh’s share of profit gas. However, for the sake of argument, even if we consider $3/Mcf paid for the recovery of the gas and the profit share of the IOCs, there is a 30% difference in the price Petrobangla pays to Bangladesh Gas Fields Company Limited (BGFCL) and Sylhet Gas Field Limited (SGFL) for the old gas. Even BAPEX will find it difficult to survive with $1/Mcf for the gas it produces.45 Further, the cost of replacing local gas with LNG would cost $16/Mcf which is more than 160 times of Petrobangla’s gas production cost.46 Although the cost of finding new gas would cost more if IOCs are given the responsibility instead of Petrobangla, the risk is worth taking as they have the technological know-how to find new gas reserves. The regional gas price also plays an important determining factor in deciding the gas price for the IOCs in Bangladesh. In India, the IOCs are now offered at $8/ Mcf while the average Indian market price is around $5/Mcf.47 Myanmar offers gas to China at $4.25/Mcf at the wellhead and together with the transportation

Energy scenario of Bangladesh  103 cost, it would cost the Chinese around $12/Mcf.48 As a result, in all the gas markets, the prices are comparatively higher than what is now offered in Bangladesh to the IOCs. Moreover, despite the IOCs producing 400 MMCFD out of 500 MMCFD from the existing reserves in Bangladesh, there is still a daily deficit of around 700 MMCFD.49 The aforementioned figures show that the actual production capacity of BAPEX has not increased over the last ten years and they have also not been able to make any new discoveries. BAPEX has spent around Tk.500 crores which is around $60 million in the last seven years of exploration.50 Despite this exploration effort, it has found only around 200 Bcf of new gas which amounts to about three months of supply.51 The main problem is BAPEX lacks the technological know-how and the capacity to go for such large-scale exploration in a mature basin like Bangladesh. Hence, greater involvement of IOCs is required for more gas discovery in the country as it is more cost-efficient for the government. Table 4.3 shows that fuel mix on the basis of installed capacity. Table 4.3  Fuel Mix on the Basis of Installed Capacity Fuel

Total generation: (MW)

% of Total

Natural gas Furnace oil Diesel Power import Coal Hydro Grid solid

11,026 5,223 1,370 1,160 524 230 39

56.340% 26.695% 7.000% 5.930% 2.6800% 1.180% 0.1900%

Source: The World Bank Indicators, 2019 and the Author, 2020

Although there is currently a debate regarding whether the IOCs should be allowed to go for onshore and offshore survey and exploitation, there is no doubt allowing them would be in the greater national interest and also to implement the government’s current NEP. For example, GAZPROM drilled ten wells from known fields which should have added 250–300 MMCFD of production, but it added only 80 MMCFD.52 This shows that the wells are fast losing their pressure and hence finding new gas reserves is a must. Failure to find any new gas reserves would result in the country suffering from double the deficit it is currently facing which will have an adverse effect on the economy.

The policy on coal The development of coal has been one of the major policy decisions that the government has refrained from taking so far. The reason being the exploration of coal is politically sensitive as most of the coal reserves are situated in places near agricultural lands. Further, the environmentalists have also advocated about the

104  Energy scenario of Bangladesh harmful effects of the resource on the environment. However, the government’s dilemma regarding the social impact of exploiting the resource since the Phulbari incident of 200553 is causing the country to import expensive fuel. The economy of the country is still not ready to cope with the increasing amount of imported fuel, and according to experts “politicians are still not ready to come to a consensus regarding the national energy priority even at the expense of economic development”.54 Many committees have been set up by the government to formulate a coal policy without any substantial input from the policy makers. Most of the committee members recommended exploiting the resource by using advanced technology which will greatly reduce pollution and is also environmentally friendly. However, the detractors have voiced their opinion at the beginning for exporting coal as it might be harmful for the country’s energy security. Now that the government has decided against export and wanted to use the coal resources, the opponents of the policy have now focused their argument on the environment and the harmful effect it has on agriculture. There are currently two coal-related projects which will come into effect during the years 2019–2021. Some of the major challenges that the government is going to face are financing the projects, building import infrastructure and transportation requirements. However, till now, the government has not taken any steps in that regard. Moreover, if the government wants to build a coal-based power plant as envisaged under the NEP, then it has to acquire land and impose strict environmental measures, and the plant has to be located near the mine. Once mining starts, the government will not have any problem financing the project because of coal being a cheap primary energy.55 The local coal will also produce cheap electricity as the price will not be more than Tk. 5/kWh. Further, the government has to ensure protection against environmental degradation and use advanced technology in order to ensure the safety of people living around the coal mine. In a densely populated country like Bangladesh, it becomes difficult to implement such measures due to the scarcity of land and also because of the negative perception people have about coal mining. However, a cost–benefit analysis between agriculture and coal production shows that the country will greatly benefit from the production of coal. According to the Global Agriculture Information Network (GAIN), Bangladesh’s rice production has been around 35.4 million tons in between the years 2013 and 2014 from 11.7 million hectares of land.56 The average yearly yield from these numbers comes to be 4 tons/hectares.57 If we compare that with mining, the Phulbari project area is around 6,000 hectares and out of which 5,000 hectares are agricultural lands. As a result, if 5,000 hectares are acquired by the government, the annual crop loss is 24,000 tons (6000 × 4).58 The current price of rice in the international market is $375/ton and hence it would cost the country about $9 million to $10 million.59 On the other hand, the Phulbari coal mine project has the potential to produce 4,000 MW electricity over a period of 30 years.60 There will be both domestic and industrial consumers for this gas and it would also boost the supply of energy for the country. According to experts, the GDP generated by the industrial sector in

Energy scenario of Bangladesh 105 2012 was $0.792 million/GWh.61 If we assume 1,000 MW plant running 350 days a year at 75% capacity, it would generate 6,300 GWh (1000×0.75×350×24/1000) which would roughly generate about $5 billion in GDP contribution every year from the industrial sector.62 As a result, the government should seriously consider shifting from the agricultural base to the industrial base due to the high density of population in the country. Further, one of the aspects that the government needs to consider regarding coal exploitation is the management of regional aquifer over the coal mines of the country. As a result, the government already sought the help of international agencies to advise them regarding the conditions of the aquifers if the coal mining project goes ahead. After investigating the problems in the Boropukuria mine, the international agencies concluded that the mine could be developed using surface mining technique managing the aquifer water.63

Price of fuel and the subsidy The proper price of fuel and the subsidy provided by the government are important factors in the energy market. In fact, according to experts, proper “price and market structure is the key for ensuring uninterrupted supply of any product”.64 Most of the developed countries have government interventions which try to control the wholesale price of gas. This results in artificially stimulating the demand and restricts supply which in turn leads to gas shortages and results in imports of gas from other countries at a very high price. Due to this, there is energy inefficiency as government has to decide which industries to allocate the very little gas available resulting in government discriminating against certain industries due to political considerations. These policies normally take place with downstream industries under government ownership as the government tries to control export to avoid leakage of the subsidies given to these industries by regulated gas prices.65 The price of gas in the year 1974 was around Taka 3.7/Mcf and the price of oil was $10.41/Bbl and the exchange rate between the Dollar and Taka was 8.08.66 In terms of energy parity, 1,000 cubic feet of gas is equivalent to 0.1765 Bbl of oil.67 If we take this into account, the price of gas in Bangladesh was $0.46 Mcf for power sector and in terms of equivalent price for oil, this was $1.83/Mcf.68 The gas price was set at one fourth of the oil price and this was the beginning of subsidy in the energy sector. Bangladesh was dependent on oil for its energy during the 1970s. However, due to the increasing price of oil in the 1970s, most IOCs were looking to shift their focus on gas. Further, Bangladesh decided to shift its focus due to the high cost of oil during that time. As a result, a lot of steel mills and other energy-dependent industries tried to switch their fuel choice. During the 1980s and 1990s, most of the power plants converted to gas as their main fuel. Hence, the use of gas jumped from 0.3 Tcf in the 1970s to 1 Tcf in the 1990s.69 The government also missed a trick by not raising the price of gas to the level of oil it was replacing. Although it reduced the import bill in the short term, it had a negative impact in the long run.

106  Energy scenario of Bangladesh The government heavily subsidizes the gas price for electricity generation at the moment. Further, this sector is the highest user (50%) and despite system loss due to pilferage, the subsidy in electricity tariff along with the gas subsidy did not allow the government to save any money.70 Further, unlike oil, the local price of gas was not related to the international price yet. The four ways of determining the gas price in the country was by i) cost of service, ii) border price, iii) long-run marginal cost and iv) alternate fuel cost.71 The cost-based pricing includes exploration, development and production, transmission and distribution.72 This pricing also leaves a reasonable profit so that the companies can reinvest in the future. Further, since gas is not traded internationally, the price in the border is also another way of finding out the actual price of gas. While the long-run marginal cost is the cost of supplying a unit of energy if the consumption is sustained indefinitely in the future.73 The alternate fuel approach is normally used for electricity generation. Today, a $1 gas is producing electricity at Tk. 2.3/kWh, while furnace oil using power plants are producing the same at Tk. 14.74 Moreover, the domestic gas is supplied at Tk. 450 at an estimated use of 85 m3/month.75 The imported LNG at $15/Mcf will cost Tk. 3,700 per month and even a limited supply of two bottles of LPG will cost at least Tk. 2,500 per month.76 Further, gas-based captive power produces electricity at Tk. 2.4/kWh whereas the industrial supply from the grid is around Tk. 7/kWh.77 All these prices show the heavy subsidy given by the government in a regulated marked on political and other social considerations. Moreover, kerosene and diesel have always been subsidized by the government. Kerosene is mostly used by poor people and its price has always been kept in line with diesel to stop any form of adulteration. Diesel is heavily subsidized by the government because of its use in the agricultural sector. However, the agricultural sector uses only 30% of diesel.78 Petrol is also cross-subsidized and its price is kept above the market price.79 The pressure on the government exchequer also grew when the government started importing furnace oil for the oil-based power plants. Moreover, due to the drop in world oil price, the government has been urged to lower the price of oil in the country. However, the government till date has not lowered the price of oil as it wants the state-run oil company, Bangladesh Petroleum Corporation (BPC) to recover the losses it has incurred over the last two decades. As a result, time has come for the government to decide whether it should switch to market-based oil pricing. If the government does decide to implement the reforms, then it needs to ensure that the price of transport does not rise. The transport sector in the country is run in an arbitrary manner, and hence this sector needs to be regulated before the government decides to switch on market-based oil pricing. The control of prices may sometimes result in fuel shortage, wastage and even environmental damage to some extent. Although short-term subsidies are easy to withdraw, a country like Bangladesh which has a history of government subsidies, would find it difficult. The reason being there will be a strong resistance from the civil society, workers’ unions and the poorer segments of the population. As a result, a tremendous amount of political will is required on the government’s part to withdraw the subsidy. The withdrawal of subsidy might affect the economy of

Energy scenario of Bangladesh 107 the country in the short run, but in the long run it would be beneficial as the government would be saving a lot of money. The government also needs to find out whether the people of the country are actually benefiting from this subsidy and if so, which segment of the population are benefiting the most. Once the government can find this segment of the population, it can then device a mechanism through which it can help them. For example, Sri Lanka in the year 1979 tripled the cost of kerosene by introducing a system whereby a low-income household is able to receive six liters of kerosene for free every month.80 This quota was not increased but the actual consumption of kerosene went down in Sri Lanka by 25%.81 The government could use this form of mechanism to withdraw subsidy from this sector.

Conclusion This chapter discussed the various policies regarding the energy sector of Bangladesh together with the government’s National Energy Policy. The role of the energy sector toward the GDP of the country is extremely important as the country is trying to reach a growth level of 7–8%. However, this can only be achieved if the government has a pragmatic energy policy which is achievable. Although the current energy policy of the government is quite pragmatic, some of its policies might not be achievable due to the current world scenario of energy and due to the pricing issues. The energy policy advocates for diversifying the energy mix of the country and relies heavily on imported coal without having a clear and coherent policy regarding local coal. Importing coal from outside is not only going to be costly, but it would also lower the country’s energy security. In the case of the gas sector, the government needs to involve the IOCs for greater exploration in the offshore and onshore areas of the country. Currently, BAPEX is carrying out all the exploration which is not bearing any fruit for the country. Moreover, due to the rapidly decreasing gas reserve in the country, the government should also seriously consider the option of generating electricity from coal rather than gas. The recent agreement with India no doubt improves the supply of electricity in the country, and perhaps the government could sign similar deals with other friendly neighbors. The government should also consider its position of heavily subsidizing the various energy sectors of the country. The heavy subsidy of gas and furnace oil puts extra pressure on the government, and the current subsidy structure of the government might not be sustainable in the future. As a result, a strong political decision has to be taken regarding whether there is a scope for partially withdrawing subsidy at the beginning to make the energy sector more self-reliant.

Notes 1 International Energy Agency, World Energy Outlook 2018, supplementary tables, www.worldenergyoutlook.org. 2 Ibid.

108  Energy scenario of Bangladesh 3 Ibid. 4 “Potential and Prospects for Regional Energy Trade in the South Asia Region”, Asian Development Bank Energy Sector Management Assistance Program, March 2008, p. 15. 5 Supra, see note 1. 6 Ibid. 7 The average life of a quick rental power plant is between three years to fifteen years and it runs on furnace oil or diesel fired. As a result, they are fuel inefficient and completely runs on imported oil. 8 S. Sufi, “Exploration Scorecard Looks Miserable”, Energy & Power, February 1, 2018. 9 Ibid, p. 17. 10 Ibid, p. 18. 11 Supra, see note 8, p. 20. 12 S. Sufi, “Challenges of Petrobangla Companies”, Energy & Power, November 16, 2019. 13 Ibid, p. 27. 14 Ibid, p. 28. 15 Ibid, p. 29. 16 Ibid. 17 R. Armstrong, “HRD: AN Urgent Need of Time”, Energy & Power, November 16, 2019. 18 Ibid, p. 11. 19 Ibid, p. 13. 20 Ibid, p. 14. 21 M.A. Hossain, “Infrastructure Imbroglio”, Energy & Power, April 16, 2018. 22 Ibid, p. 14. 23 Ibid, p. 15. 24 Ibid, p. 17. 25 Ibid, p. 20. 26 “The Power Sector Master Plan 2030”, Sustainable and Renewable Energy Development Authority and Power Division, Ministry of Power, Energy and Mineral Resources, Government of the People’s Republic of Bangladesh, March 2015. 27 Ibid, p. 30. 28 Ibid, p. 31. 29 Supra, see note 26, p. 15. 30 Ibid, p. 17. 31 Base load support is the minimum level of demand on an electrical supply system over a period of 24 hours. Base load power sources are those plants that can generate dependable power to consistently meet demand. 32 Supra, see note 26, p. 17. 33 Ibid, p. 20. 34 Ibid, p. 22. 35 Ibid, p. 25. 36 Supra, see note 21, p. 26. 37 M. Miah, “BAPEX Needs Partner”, Energy & Power, November 16, 2019. 38 Ibid, p. 12. 39 Ibid, p. 13. 40 Ibid, p. 14. 41 Supra, see note 26, p. 23. 42 Ibid, p. 15. 43 Ibid, p. 17. 44 Ibid, p. 18. 45 Supra, see note 26.

Energy scenario of Bangladesh  109 46 Ibid. 47 C.K. Ebinger, Energy and Security in South Asia: Cooperation or Conflict? Dhaka: Brookings Institution Press, 2011. 48 Ibid, p. 78. 49 Ibid, p. 79. 50 Supra, see note 37, p. 15. 51 Ibid, p. 16. 52 Supra, see note 37, p. 17. 53 Ibid, p. 16. 54 Supra, see note 47, p. 87. 55 Supra, see note 37, p. 17. 56 Supra, see note 37, p. 18. 57 Ibid, p. 19. 58 Ibid, p. 20. 59 Ibid. 60 A. Kumar, “India-Myanmar Gas Pipeline: With or Without Bangladesh”, paper 1474, South Asia Analysis Group. 61 Ibid, p. 54. 62 Ibid. 63 Ibid, p. 55. 64 Supra, see note 26, p. 89. 65 M. Hossain, “Energy Efficiency: The Future of Power Generation”, Energy & Power, December 1, 2019. 66 Ibid, p. 19. 67 Ibid, p. 20. 68 Ibid, p. 21. 69 Ibid, p. 20. 70 Supra, see note 26, p. 54. 71 Ibid, p. 55. 72 Ibid. 73 N. Banskota, South Asia Trade & Energy Security: The Role of India, Oxford: Universal Publishers, 2012. 74 Ibid, p. 55. 75 Ibid, p. 56. 76 Ibid, p. 57. 77 Supra, see note 73, p. 58. 78 Supra, see note 65, p. 78. 79 Ibid. 80 S. Islam, “Energy Cooperation between India and Bangladesh”, in M. Hall (ed), The Geopolitics of Energy in South Asia, Singapore: Institute of Southeast Asian Studies, 2009. 81 Ibid, p. 141.

Selected bibliography Armstrong, R. “HRD: AN Urgent Need of Time”, Energy & Power, November 16, 2019. Asaduzzaman, Md. “Review of Electricity Laws and Regulations of Bangladesh”, Journal of Energy and Natural Resources Law, Abindgdon, Oxon: Routledge, October 2020. Banskota, N. South Asia Trade & Energy Security: The Role of India, Irvine, CA: Universal Publishers, 2012. Ebinger, C.K. Energy and Security in South Asia: Cooperation or Conflict? Washington, DC: Brookings Institution Press, 2011.

110  Energy scenario of Bangladesh Hossain, M.A. “Energy Efficiency: The Future of Power Generation”, Energy & Power, December 1, 2019. Hossain, M.A. “Infrastructure Imbroglio”, Energy & Power, April 16, 2018. International Energy Agency. World Energy Outlook: 2018, supplementary tables, www. worldenergyoutlook.org. Islam, S. “Energy Cooperation between India and Bangladesh”, in M. Hall (ed), The Geopolitics of Energy in South Asia, Singapore: Institute of Southeast Asian Studies, 2009. Kumar, A. “India-Myanmar Gas Pipeline: With or Without Bangladesh”, paper 1474, South Asia Analysis Group. Mamun, A.A., and M.M. Rahman, “Hydropower Development along Teesta River Basin: Opportunities for Cooperation”, Water Policy, 22, 2020. Miah, M. “BAPEX Needs Partner”, Energy & Power, November 16, 2019. “Potential and Prospects for Regional Energy Trade in the South Asia Region”, Asian Development Bank Energy Sector Management Assistance Program, March 2008. Rahman, M.M., and M.S. Hossain, “Hydropower Development along the Major River Basins in South Asia: Benefits for Bangladesh”, Sustainable Water Resources Management, 6(6):116, 2020. Sufi, S. “Challenges of Petrobangla Companies”, Energy & Power, November 16, 2019. Sufi, S. “Exploration Scorecard Looks Miserable”, Energy & Power, February 1, 2018. “The Power Sector Master Plan 2030”, Sustainable and Renewable Energy Development Authority and Power Division, Ministry of Power, Energy and Mineral Resources, Government of the People’s Republic of Bangladesh, March 2015.

5 Issues and challenges facing the energy sector of Bangladesh

Introduction The energy sector of Bangladesh is currently facing a lot of challenges to ensure a sustained supply of energy to transform the country into a middle-income country by the year 2021. This is commonly known as the “Vision 2021”, a term coined by the government. The policy makers of the government are also trying to ensure that the country can diversify its sources of energy mix due to the fast depletion of gas reserves in the country. The current gas reserves in the country will run out within the next 15 years which is a serious concern for the government as the country is heavily dependent on gas. This chapter discusses some of the issues faced by the government to implement the Vision 2021 strategy and also some of the challenges that it will face in order to implement them. The chapter begins with a discussion about the various goals of the government in order to achieve the Vision 2021 program. It then analyzes the Power Sector Management Plan 2030 in order to understand the issues and challenges that the policy makers need to take into account in order to increase the energy security of the country. The functions of the state companies in the exploration of resources are also discussed in detail together with the energy efficiency of the various energy sectors of Bangladesh.

The issues Vision 2021 The government’s Vision 2021 entails transforming the country into a middleincome country by the year 2021. In order to be considered a middle-income country, Bangladesh needs to make rapid progress in its supply of energy to boost the industrial sector and hence the GDP. As a result, the government has already invited expressions of interest (EOI) from various IOCs to partner with the national oil company, Petrobangla and BAPEX to explore the onshore and offshore areas of the country. The government has also not clarified its position regarding the exploitation of coal to meet the country’s energy needs.

112  Challenges facing the energy sector All the governments after the 1990s have taken comprehensive energy sector development activities for exploration and exploitation of natural gas and also set up power plants to deal with the problem of load-shedding. One of the largest gas fields in the country, Bibiyana was discovered in the 1990s and power plants like the 450 MW Meghnaghat, 360 MW Haripur, 100 MW Khulna, 100 MW Baghabari and 100 MW Haripur furnace oil-based power plants were set up over the last two decades to supply the required need of power in the country.1 The work of the Rooppur nuclear power plant has also started to diversify the energy mix of the country. Despite all these measures by the government, the industrial sector of the country was affected by the lack of power supply. As a result, the government created the tax-free generator import facility in order to assist the industrial sector. Moreover, the gas supply was diverted to the industrial sector as the national grid had a higher supply capacity than demand during this period. However, due to the demand for power increasing at a rapid pace, the government failed to amend its policy of supplying gas for captive power generation.2 The government in the year 2009 introduced a new policy whereby captive power generation facilities were provided only on a case-by-case basis and not on a wholesale level. This was done due to the constraint in gas supply, and further, the government decided against any new gas connection for domestic consumers.3 The policy of rationing gas to fertilizer companies and diverting the saved gas for increased power generation was also taken in order to reach the short-, mediumand long-term power generation objectives. Although the installed capacity of power generation was 5,000 MW, the actual generation capacity was around 3,200 MW during the year 2010.4 However, this capacity has increased to 11,625 MW, and it is now possible to generate 7,681 MW including 500 MW imported from India through the power grid connectivity.5 The failure of Petrobangla in supplying only 1,000 MMCFD of gas is a problem as it is not being able to fulfill the demand of 1,200 MMCFD. The gas production capacity of the country has increased from 1,750 MMCFD in the year 2009 to 2,650 MMCFD in the year 2015.6 The government is also in the planning process to set up more imported liquid-based power plants to deal with the shortage of supply issues. It has already extended the agreements to some existing liquid fuel-based power plants and is also considering the extension of agreements with the other vendors. The lack of exploration for natural resources is one of the major concerns among the policy makers and experts. The country has a lot of primary resources, but a lack of exploitation has resulted in a shortage of supply. Though 5 Tcf of gas was used over the last six years, only 1 Tcf of gas was found over the same period of time.7 The country’s only offshore gas field in Sangu is completely depleted and no new gas could be discovered in the offshore. An IOC has also relinquished its rights in some of the blocks after completing a seismic survey as the government failed to agree with them over the proposed gas price in the PSC. Other IOCs have signed a Joint Venture (JV) Agreement with Petrobangla and are in the process of evaluating the findings from the surveys

Challenges facing the energy sector  113 in their allocated blocks. Further, no progress has taken place in some of the offshore blocks in Kutubdia. Petrobangla has also earlier announced its intention of conducting a survey in the Bay of Bengal. The company intended to start offshore bidding by the first half of the year 2017 after analyzing the data and information expected from the survey. However, the delay in signing the client survey agreement with the IOCs will defer the commencement of the bidding. The government has also undertaken various gas exploration projects throughout the year 2020. BAPEX is expected to drill 14 exploratory wells and 15 development wells over this time period.8 EOI has also been sought from various IOCs for JV agreements for exploring oil and gas in four blocks in the Chattogram region. However, there is a concern regarding the technical capacity of BAPEX drilling 29 exploratory wells in the next four years. The government has also recently stated that the areas outside BAPEX will also be let out for block bidding.9 But till now, Petrobangla has not been able to work on the specifics as it has not received any recommendation from the Ministry of Natural Resources in this regard. According to Petrobangla officials, there is very little chance of finding any new gas in the onshore areas of the country.10 The current gas reserve of the country is around 14.55 Tcf and the estimated gas demand was be around 4,023 MMCFD in the year 2019.11 As a result, Petrobangla was in a position to supply around 2,713 MMCFD.12 Considering the current demand and the leftover reserve, Petrobangla was able to supply around 2,863 MMCFD by the year 2017, but from the year 2019 onwards the supply was reduced to around 2,681 MMCFD.13 As a result, the deficit was be around 1,342 MMCFD, and the private sector gas demand during this period would be around 2,086 MMCFD, while the power generation would require 442 MMCFD.14 Further, since LNG import was not ensured during this time, the country faced a severe power crunch in the year 2019. According to an expert, Petrobangla is supposed to ensure a 3 Tcf of gas reserve to facilitate the use of 1 Tcf of gas every year in consideration of sustainable energy security . . . however they have failed to do so.15 Moreover, there are doubts about how much new gas can be added by Petrobangla considering the fast-depleting reserves in the country. The Petrobangla is also considering setting up a 500 MMCFD capacity floating LNG terminal with the help of some major IOCs. It has already sent the proposal to the Ministry of Natural Resources for the evaluation of the project. However, there are questions regarding whether Petrobangla would be able to start and finish the project within the next five years considering its previous track record. The prospect of domestic gas making any significant contribution over the next couple of years is also bleak. As a result, importing LNG would be considerably more expensive for the government. There are also questions regarding the domestic market being able to absorb the price shock.16 For example, an Indian

114  Challenges facing the energy sector company has given a proposal for setting up an 850-MW LNG-based power plant in Maheskhali.17 However, the power tariff for such a plant would be around Tk. 8.50 per/kwh, which is a high price to pay at the moment.

The power sector management plan The Power Sector Management Plan (PSMP) of the government envisages that by the year 2030, the power generation capacity of the country would be around 34,700 MW.18 Out of this, 50% is to be based on the use of coal. Domestic coal is expected to contribute around 29% (11,250 MW) and imported coal 21.7% (8,400 MW), gas and LNG contribution would be 22.8% (8,850 MW), Nuclear Power 6.98% (10,400 MW), imports 9.04% (3,500 MW) and others will contribute 10.48% (2,700 MW).19 The government is also assuming that the Vision 2021 will be implemented through ensuring power for all. The generation capacity of the power supply is targeted at 24,000 MW by the year 2021.20 However, the government is reviewing its current energy plan as the current plan is overdependent on the contribution of coal, and hence the import target may be increased to 10,000 MW from the current 3,500 MW.21 The government has already started work on the import of coal for power generation. The total generation capacity including both private and public is around 10,000 MW.22 Work on coal sourcing has not started yet, but the plan is to get 2,640 MW of power from the imported coal-based power plants by the year 2021.23 According to some experts involved in advising the government, local coal can support the generation of 10,000 MW for a period of 50 years.24 However, the exploitation of domestic coal is politically sensitive as most of the coal reserves are near agricultural lands which might cause problems in the agricultural sector. The current method of “Long wall top caving” mining is also extracting a small portion of recoverable reserves from the Barapukuria coal mine. The government is also thinking of ending the contract with Asia Energy, the company responsible for mining the Phulbari coal mine. Further, the government project in Khalespeer and Dighipara is also not encouraging. However, an Indian Company has been contracted to examine the prospect of a coal bed methane project in Jamalganj mines. Moreover experts are worried about whether the government would be able to fulfil its Vision 2021 due to the current policy framework of ensuring the supply of energy from abroad and the domestic sources. It is already considering revising the energy plan by increasing the liquid fuel contribution to power from the current 29% to 40%.25 However this might increase the current power tariff structure which might be a very unpopular move. Identifying the primary fuel supply is one of the major challenges for the government to fulfill its Vision 2021.

The gas conundrum The fast depletion of gas resource is a major issue for the government because with the current rate of consumption, no new discovery in gas can result in the resource being completely depleted by the year 2030. If that happens, then the government has to consider the following questions: What will happen to the

Challenges facing the energy sector 115 officials working in all these state-owned government companies? What will happen to the industries based on gas? Will the government be able to meet depletion of gas through other alternative fuels such as LNG or even import of gas through pipelines? Can the local economy sustain the price shock of imported gas? All these are crucial questions that the government needs to focus on in order to take quick decisions. Most of the policy makers were instrumental in ensuring large investment in gas transmission infrastructure development throughout the country. Further, before these infrastructure developments, feasibility studies must have been done to understand the sources of supply throughout their design lifetime.26 However, with the decreasing gas reserve, all these infrastructural developments may become a waste. Moreover, the state-owned BAPEX has failed to find any gas despite all the help from the government. Bangladesh will require around 4,000 MMCFD of gas supply by the year 2031.27 The country now has a daily production capacity of 2,725 MMCFD.28 Even with the current level of production, there is a shortfall of about 600 MMCFD which is increasing every month.29 The government policy makers have over the years failed to give positive market signal to the IOCs willing to invest in the country despite their investments being risky. The Tangratila blowout created negative opinion about IOCs without any justification. After the liberation of the country, over 55% of the gas productions have come from IOC-operated fields.30 Further, the IOC-operated fields are much better managed than the Petrobangla-run fields. Currently, 16 major gas fields out of the 26 discovered by the IOCs or international contractors carry out the production.31 One of the decisions taken by the government to let BAPEX exclusively explore for natural resources has been controversial. Although it is normal for most governments to support their national exploration company, till date the record of BAPEX has not been encouraging. BAPEX does not have the technical capacity like that of the IOCs to explore mature gas reserves found in Bangladesh. The addition of only 1 Tcf of gas over the last 10–15 years is not satisfactory.32 BAPEX did discover some fields, but most of these fields were marginal gas fields. According to experts, if the IOCs were involved in the exploration of gas fields, more new discoveries would have taken place as there are strong prospects of finding gas in the Chattogram region.33 Some of the policy makers advocate for making BAPEX more vibrant and efficient like other national oil companies. However, one has to remember that these IOCs are not only drilling companies, but they also engage drilling contracts and manage drilling. As a result, it would be difficult for BAPEX to shoulder such a huge task with its current workforce. Greater training of workforce, getting new technology and providing better staff package would encourage qualified people to work for BAPEX. Currently, BAPEX can’t retain its own workforce due to poor pay. One of the major issues of the gas sector is the fact that about 67% of gas comes from two gas fields of Bibiyana and Titas. The reservoir pressure of these two gas fields is decreasing at an alarming rate. The production capacity of three Petrobangla-owned companies BGFCL, SGFL and BAPEX is together 1,120 MMCFD.34 They are producing at their full capacity. Further, two other

116  Challenges facing the energy sector IOCs – Chevron and Tullow – have production capacity of around 1,605 MMCFD from 37 producing wells.35 These wells are also producing at their full capacities. Moreover, the IOCs and the national oil companies together produce around 2,725 MMCFD.36 The daily production is between 2,600 and 2,700 MMCFD. Titas from 21 wells produces 518 MMCFD, and Bibiyana from 24 wells produces 1,200 MMCFD.37 These two fields together produce 1,718 MMCFD of gas which is around 66% of the total national production.38 Due to the massive reliance on the two major gas fields, any disruption will have a negative impact on the national grid. For example, a small glitch in the past caused an instant crisis in the gas supply resulting in a massive power shortage. Moreover, during certain days, gas supply to CNG stations is cut off for 24 hours due to maintenance work on these gas fields.39 According to estimates, the current gas demand even after restricted supply would amount to 3,300 MMCFD. The current deficit is around 700 MMCFD.40 As a result, many industrial areas in Dhaka, Chattogram and even Khulna region do not get adequate supply of gas for the entire day. Some of the industries have to run on diesel due to the lack of gas supply, while many dual power plants constructed in Khulna and the rest of the country have to run on imported liquefied fuel throughout their natural life. As a result, there is a serious doubt whether Petrobangla can supply to gas-based power plants that are currently under construction. Further, the gas production will start declining from the year 2017 and assuming no new gas discoveries are made, the total gas production will come down to 812 MMCFD, including 251 MMCFD from the field operated by the IOCs.41 Hence, gas demand by the year 2030 will be around 5,811 MMCFD and the deficit will be around 4,999 MMCFD.42 Hence, the government has to decide an alternative way to meet this demand. Moreover, there is an effort to set up compressors at Bibiyana gas field by the year 2021, but even then the present level of production cannot be maintained. Further, Chevron has been pressuring Petrobangla to increase the price of gas for their work. Hence, the compressor installation program has now become uncertain as Petrobangla did not agree to raise the price of gas. However, Petrobangla is trying to take initiatives for installing wellhead compressors in the Titas gas field. Further, the national oil company has also failed to develop medium- to small-size gas reserves due to the venture not being profitable. IOCs like Santos wanted to develop a small field in Kutubdia, but it was rejected by the government as it was not profitable. The government till date has also not opened onshore blocks for PSC bidding. The reason for this is because of certain policy makers being ultraconservative in allowing IOCs to develop these areas. The result has been BAPEX drilling in the area for the last three years without any success. Moreover, a joint venture exploration between an American and Chinese Company in Chattogram has also failed to take off due to negative opinion from certain bureaucrats in the ministry.43 If the joint venture succeeded, then there was a possibility of gas reserves being found in the region. ONGC, an Indian company has started work in two blocks in the Bay of Bengal. Other IOCs are also completing survey in one offshore block.

Challenges facing the energy sector 117 These companies are also considering drilling an exploratory well at Magnama.44 Norway’s Statoil is also considering signing a PSC with Petrobangla for the three abandoned wells left by another IOC. The resolution of boundary dispute with India and Myanmar brought renewed hopes in the country as it opened the door for Bangladesh going for massive exploration in the Bay of Bengal. However, till date, the government has not taken any initiative to explore these areas. A tender was invited by Petrobangla for conducting a multi-client survey for data acquisition. Despite getting the proposals and completing their evaluation, no steps have been taken by Petrobangla yet. This delay will cost Petrobangla another two years. Further, according to experts, the country should immediately start exploration in the blocks located in the Bay of Bengal.45 The exploration and development of fields in Chatak and Feni should also start as there is a possibility of adding 2–3 Tcf of gas at the earliest.46 Moreover, the government should take advantage of framing its PSCs in a way which will entice the IOCs to invest in the country. The continued low price of crude oil has opened an opportunity for the government.

The LNG policy The initiative to import LNG has been taken from the year 2009 onwards. The government initially wanted to import around 500 MMCFD equivalent of LNG. However, the progress regarding this project is still not satisfactory although a Memorandum of Understanding (MOU) was signed with a Singapore-based consortium for setting up a Floating Storage and Regasification Unit (FSRU). There is uncertainty regarding this project going ahead because till date the work for the FSRU has not started. The government is considering setting up a land-based LNG terminal in Cox’s Bazar. Petrobangla has sought offers from interested IOCs in this regard. The terminal will have a capacity of handling 500 MMCDG equivalent LNG.47 Moreover, the North West Zone Power Company is currently working on an 800 MW power plant at Khulna through importing LNG from a terminal in West Bengal, India.48 Another Indian company Reliance has already signed an MOU with the government for a 3,000-MW LNG-based power plant.49 However, there is confusion regarding how much LNG would be required to run these power plants. According to experts, around 1,500–2,000 MMCFD equivalent LNG may be required to run these plants.50 The government also has to think about the impact LNG will have on local gas price. Currently, weighted average gas price is $2.33/MCF.51 As a result, the price of all primary fuels should be based on their energy content. This will in turn stabilize the price and will reduce the pressure on natural gas. Some of the reasons why LNG projects have not been implemented properly is because of corruption, lack of importance given to the projects by Petrobangla and complications arising from a plan to sell gas on mixed stream after importing LNG at $12– $14.52 Further, there is a question about whether the government will be able to meet the financial obligations of importing LNG. Currently, the government has to spend

118  Challenges facing the energy sector over a billion dollars on various subsidies together with financing the state-owned companies and hence experts worry whether importing LNG would be financially viable for the country.

Challenges in the sector Finding a primary fuel source One of the main challenges facing the government in order to fulfill its Vision 2021 is to ensure a sustainable source of primary fuel such as gas, coal and liquid. The mining of coal deposits in the country is hanging in the balance while the gas reserves are depleting fast. The import of LNG is also running behind schedule, while the BAPEX is struggling to find any new gas reserves despite drilling for more than six years.53 Even if there are unexplored gas reserves in the country, it will take more than seven years to get the gas wells ready for production. All these factors are having a major impact on the country’s energy security. The country at the moment has reached a power generation capacity of over 12,000 MW including the 500 MW it imports from India.54 Despite the fuel supply constraint in the country, the maximum generation reached in the year 2015 was 8,000 MW due to low demand during the winter months.55 Due to the declining reserve of the country’s natural gas, the government has sought to diversify the country’s fuel mix. The policy makers adopted a new Power System Master Plan in 2010 to bring in a new primary fuel other than the imported liquid fuel and rented power plants. Further, they have failed to bring in any new primary fuel nor have they taken any concrete step toward the development of the coal resource in the country. The so-called coal policy has also not seen the light of day. The current production capacity of natural gas in the country is around 2,750 MMCFD, and the country is still staring at a deficit of 500 MMCFD.56 The deficit would in fact rise to 1,000 MMCFD if all the unmet demand is taken into account.57 The planned import of 500 MMCFD equivalent LNG by the year 2021 would only meet part of the demand, but still there is no guarantee of the LNG coming during that time.58 The government in the meantime has also signed a few MOUs for large coal-fired power plants and awarded contracts to some local companies to build new power plants. The government has also plans to import coal but in order to do so, it has to set up related infrastructures like coal ports, terminals and storage facilities. It is extremely difficult for the private sector of the country to undertake such a huge project without the help of any international donors like the Asian Development Bank or the World Bank. JICA has recently pledged to develop such a facility at Matarbari.59 Further, the government has started setting up a coal port at Payra. The work is at a very preliminary stage and will take a long time to finish. Moreover, the coal for the Rampal Power Plant, being built by the India– Bangladesh Friendship Company is going to be imported through vessels at Akram Point, followed by transshipment with lighter vessels through the canals of Sundarbans.60 However, the Rampal coal power project has been controversial

Challenges facing the energy sector  119 due to its environmental impact on the world’s largest mangrove forest. There have been protests from the civil society and other environmental groups to stop the work at Rampal before a proper environmental assessment is made, but it seems that the government is adamant to go ahead with the project. The coal-fired power plant in Payra being built by North West Power Generation Company (NWPGCL) has made significant progress over the last three years. The project is likely to be successful due to its location. The company will be importing coal from India to start the project till the Payra Port Authority implements the coal port project. The 1,320 MW Payra coal-fired power plant may become the country’s first plant of its kind.61 Local companies also have agreements with the government for coal-fired power plants. However, these projects are yet to take off due to the delay in getting the Department of Environment’s approval. As a result, the government is struggling to meet its coal policy in order to fulfill its Vision 2021. The gas sector The lack of proper management and vision and corruption have resulted in the gas sector of the country being vulnerable to the various challenges it faces. In the year 2009, the gas production capacity was 1,750 MMCFD and the deficit was 500 MMCFD.62 In the year 2016, the production increased by 1,000 MMCFD, but the deficit remains the same at 500 MMCFD.63 Moreover, during the last ten years, no new gas-intensive industry has been set up other than one fertilizer company. Further, no new gas connections were given to the industries requiring gas. This has not stopped the mushrooming of various CNG stations across the country with allegations that a significant volume of CNG is being used by industries away from the gas grid.64 The huge supply and demand problem has created a lot of pressure on the gas grid. As a result, Gas Transmission Company Limited (GTCL) had to take the following measures: i) building a 42 inch pipeline between Bibiyana and Dhanua, ii) building a 30 inch gas transmission loop line between Ashuganj and Bakhrabad, iii) building three gas pipelines compressor stations, iv) building another 30 inch gas transmission loop line between Bakhrabad and Siddhirganj and v) building a pipeline between Hatikomrul and Ishwardi–Bheramara–Kushtia–Jessore–Khulna gas transmission pipeline.65 All these new infrastructures cost the government a fortune and without the discovery of any new gas, these new pipelines will remain idle. Moreover, some of these projects have been undertaken by GTCL and Petrobangla due to pressure from certain influential groups and hence are not financially viable for both the companies as well. Only Bibiyana gas field is currently producing gas at its highest level. It has to supply gas to the power plants adjacent to it and to the Bibiyana–Dhanua pipeline.66 Further, the limited gas supply from Bibiyana gas field has restricted the operation of Ashuganj compressor station to only one unit. The Beanibanzar gas field is another gas field which has reached the end of its life time. It no longer feeds the national grid and whatever gas is produced is

120  Challenges facing the energy sector used for local consumption. Kailashtila gas field is another gas field with a major source of liquid recovery. Although the engineers drilling the area were also optimistic about a huge discovery of crude oil, in reality the volume discovered was not financially viable. The Jalalabad Gas Field on the other hand has been producing at 270–280 MMCFD, but whether they can sustain this rate in the future is questionable.67 Moreover, the Chevron-operated Moulvibazar Gas Field is currently not producing at a high rate. The wellhead pressure has depleted to such a level that gas can only enter the grid when the grid pressure is below 700 Pounds per Square Inch (PSI).68 The Rashidpur Gas Field is also toward the end of its lifetime with GAZPROM drilling a few more wells at Rashidpur. Bibiyana at the moment is producing at optimum level. The Chevron-run field produced at 7.5% every year as part of the IOCs’ cost recovery.69 However, the building of the new Bibiyana–Dhanua pipeline has resulted in Chevron producing at the highest possible rate. As a result, the wellhead pressure of the gas well has depleted, which is not an encouraging sign for the field. This will cause Chevron to revise the gas price and will require a wellhead compression to produce gas from this field. The two fields in Habiganj and Titas have also started to decline with some wells requiring compression. The fields in Fenchuganj, Salda, Bhangura and Srekail are all marginal fields and are currently not viable. Currently, Bibiyana, Jalalabad, Habiganj and Titas together produce around 2,228 MMCFD of gas out of 2,710 MMCFD of national production as of the year 2016.70 This amounts to about 83% of the total production.71 As a result, any problems in one of these four fields will have a huge impact on the national grid. The policy makers have to ensure that more IOCs are involved in the exploration of natural gas reserves. Further, relying solely on BAPEX to carry out all the exploration has not served the country well. More­ over, BAPEX was not allowed to use the Gas Development Fund (GDF) that the government created for gas exploration. The LNG import initiative The Chattogram region has suffered the most due to the lack of gas in the Sangu offshore field. Gas demand in the region is currently 450 MMCFD, while Petrobangla can supply only 240–250 MMCFD. As a result, all the industries and the domestic users are suffering due to it. Moreover, many businesses investing millions of Taka in gas-intensive industries are making a loss. According to experts, some of these problems could have been solved by building a Bakhrabad–Chattogram transmission loop line.72 However, till date no action has been taken in this regard. The government in the year 2010 decided to import 500 MMCFD equivalent LNG to support the region. Till date, nothing has happened although an agreement was signed with a Singapore-based consortium to build an FSRU by the year 2016. Moreover, the LNG from Qatar has also not materialized. The government has also planned to construct a pipeline from Maheskhali to Chattogram, but till now the ministry has not started acquiring land for the project.

Challenges facing the energy sector 121 Nuclear power plant The government signed a primary deal with Russia for installing 2,000 MW Nuclear Power Plant (NPP) at Rooppur in the year 2011.73 The construction phase started in the year 2016 and was supposed to have been completed by the year 2018 at a cost of US $2 billion.74 Although the project has still not been completed, serious doubts have been expressed by experts. Some of the doubts include a lack of properly trained manpower, the overall cost of the project, suitability of the site for building NPP, availability of cooling power for the plant, safety record of the VVER-1000 nuclear reactors, nuclear disaster management and the expenditure that will be made without conducting any feasibility study and environmental impact assessment.75 Moreover, there are hardly any nuclear engineers currently working for the Bangladesh Atomic Energy Commission (BAEC) as the recruitment and training for nuclear engineers has stopped over the last two decades. The only engineers recruited by the BAEC were for the operation of the research reactor at the Atomic Energy Research Establishment (AERE) and for maintaining the BAEC establishments.76 Further, since there was no nuclear power program, BAEC became more of a research organization. Though the BAEC has many research scientists, they hardly have any engineers capable of building, operating and regulating NPPs. There were also serious lapses in the overall management of the project. Although the government has been in talks with the Russians for over four years, there were no recruitments of nuclear engineers to oversee the project. The project management team supervises the overall project activities and requires experienced engineers to construct and build the NPP. Without competent engineers, it is extremely difficult to initiate a nuclear power program. Moreover, it takes more than three to five years to train engineers for project management and also for the regulatory body.77 Further, recruitment and training of engineers should have started two to three years before the start of the project. However, the government till date does not have any management team and neither does it have any trained engineers to implement and regulate the various aspects of the project. Further, it took more than four years to sign the agreement with the Russian government for the preparation of the feasibility study when it should have taken only two years. The feasibility study was conducted by a subsidiary company of the likely supplier of the NPP. This made the feasibility study biased and as a result, its findings lost credibility particularly in respect to the cost of the project and the safety of the NPP. In order to receive an impartial feasibility report, the government should have hired independent Western consultants to assess the viability of the project. Moreover, breaking procedure, the Russian government granted a loan of $500 million, while the Bangladesh government approved the first phase of 2,000 MWe NPP at a cost of $650  million before the feasibility study was completed and without assessing the actual cost of the project.78 As a result, such a lack of accountability might arise in the future if the management of the nuclear program is not given to a competent body, for example, a separate nuclear corporation which can build and operate all the NPPs in Bangladesh. It

122  Challenges facing the energy sector is a common practice in Western countries that NPPs are owned and operated by electricity utility companies and not by the Atomic Energy Commission. The Rooppur site chosen by the government was also not ideal to build an NPP. The site was chosen nearly 50 years back for a 10 MWe NPP on political grounds by the then Pakistan government.79 No site selection procedure or any environmental impact assessment has been conducted in that area. The river Padma, which flows through Rooppur, is now silted due to the extraction of 75% of water during the summer by India using the Farakka Dam.80 As a result, the remaining amount of water is inadequate to meet the cooling requirement for even one 1,000 MWe NPP. This would naturally increase the risk of nuclear accidents as seen in Fukushima. Moreover, concerns have been expressed about the safety of the VVER-1000 reactors that have been proposed for the Rooppur NPP. Further, contracts for a total of 11 VVER-1000 reactors, two in Hungary, three in Ukraine, four in Germany and two in Czech Republic were cancelled for failure to meet the European safety standards.81 The construction of two similar reactors in Balakovo in Russia and one in Iran was also suspended due to the lack of safety standards of these reactors.82 As a result, the acceptance of the Russian proposal by the Bangladesh government despite these nuclear reactors having a poor track record has caused dismay and concern among the experts in the country. The government did not also give any attention to the technical issues associated with storage, transportation and the disposal of radioactive material and the waste. In the agreement signed with the Russian government, there is no provision which allows Russia to take the nuclear waste back to their country. This will cause serious environmental damage to Bangladesh if the radioactive waste is left in the country. However, the completion of the project will diversify the energy mix of the country and would add to the national grid.

Gas exploration and energy efficiency The rapid depletion of natural gas is a major concern for the government as no new gas discoveries have been made over the last five years. The government tried to diversify its sources of energy by focusing on coal, LNG, nuclear power in order to deal with the supply crunch and the security of supply. The current deficit is still 600 MMCFD after increasing gas production from 1,800 MMCFD to 2,600 MMCFD over the last five years. As a result, the government can prioritize the users of gas in both the domestic and industrial sectors. This will increase greater conservation and at the same time the government should ensure that not only BAPEX but also IOCs are engaged in the exploration of natural gas. Moreover, even after producing 2,600 MMCFD of gas, five of the seven fertilizer plants including KAFCO, CUFL, PUFF, UFFG and NGFF required shutting down for diverting gas to power generation.83 However, the situation could be better dealt with if the government seriously considered shutting down fertilizer plants which are energy inefficient or they could be replaced with plants which

Challenges facing the energy sector  123 are more energy efficient. In fact, according to experts, the situation could be improved if the old and outdated power generation units are replaced with combined cycle plants.84 Moreover, other than KAFCO and Jamuna Fertilizer, all the other fertilizer plants are not using the gas economically. The government can consider phasing out the supply of gas for domestic consumers and replace it with LPG. In fact, the government has started the initiative of bringing about 70% of the population under LPG.85 This will also lower the dependence on natural gas. Further, the government till date has stopped giving domestic gas connection in order to implement its policy of LPG. This policy of LPG could also be implemented in the industrial sector by setting the price of gas for both the domestic and commercial consumers. Moreover, greater encouragement to the private sector to invest in LPG might also increase the level of use by both the domestic and the industrial sectors. Another policy change of the government can also ensure efficient use of gas in the country. The government can encourage industries to be set up only in economic zones and give conditions that any industry set up outside the zone will not get any gas for captive generation. This will also reduce the number of industries requiring gas and ensure the efficient use of gas for industries requiring it. Moreover, greater transparency in the bidding process to allocate blocks to efficient IOCs can also increase the interest of IOCs to undertake a risky venture. There have been instances in the past when IOCs with very little experience and technological know-how have been awarded PSCs which did not benefit the country at all as they failed to find any new gas reserves. Improving the framework of the PSC and making it more flexible can also encourage the participation of world-renowned IOCs, as the country needs IOCs with international reputation to undertake exploration in a mature basin like Bangladesh. BAPEX with its current manpower and technical capacity is overburdened and is unlikely to find any new gas reserves in the country.

Improving the management of national oil companies The performance of BAPEX and Petrobangla has not been satisfactory. It is difficult for BAPEX to grow as an exploration and production company if it does not have its own funds. The company has to constantly borrow money from the government and donor agencies to carry out its various exploration projects. Further, BAPEX is not able to hold on to its staff due to low pay and lack of benefits. The government needs to change the management structure of the company and provide it with enough funds to function as an efficient company. Moreover, putting too much pressure on BAPEX has also been counterproductive. Currently, it is supposed to drill around 100 wells over the next five years which is next to impossible. Such pressure will result in the company not being able to perform satisfactorily. Petrobangla also requires greater dynamism in its management ranks for quick and efficient decision-making. According to many experts, too much bureaucracy and corruption have made Petrobangla ineffective.

124  Challenges facing the energy sector

Clear policy regarding coal and LNG The government is currently in the process of setting up two new LNG terminals for the import of LNG in order to meet its domestic requirements. As a result, it needs to train people for operating and maintaining the LNG terminals and infrastructures. The gas price will also require adjusting as LNG prices will be significantly higher than domestic gas. The government is currently trying to revive the MOU signed with the government of Qatar. However, the LNG from Qatar is quite expensive and the government should keep its options open when choosing the importing partner. The lack of any coal policy has been discussed previously and the government needs to have a clear and coherent policy regarding coal. The government initiative of importing coal in order to diversify the energy mix is no doubt laudable, but there are questions about how it is going to exploit the domestic coal. Moreover, the cost of domestic coal will be much cheaper if government is able to take a decision on this politically sensitive issue.

Improving the gas transmission system The government-owned GTCL has made infrastructural improvements all over the country. However, it needs to ensure that the SCADA system and the pipeline compressor stations become fully operational to ensure uninterrupted supply of gas.86 According to experts, “GTCL must also have the capacity to conduct regular on-stream pigging and managing intelligent pigging at prescribed intervals”.87 Moreover, officials and engineers of GTCL require extensive training and capacity building in order to manage the gas grid in an efficient manner.

Conclusion This chapter highlighted some of the issues and challenges that the government has to face in order to ensure the energy security of the country. Some of the important issues that the government needs to look at are whether the country can implement the government’s goal of Vision 2021. In order to become a middle-income country by the year 2021, the country needs uninterrupted supply of energy which requires not only diversification of the energy mix but also proper and sustainable planning. The Power Sector Management Plan 2030 has also thrown in some important issues that also need to be considered. The overreliance on imported energy in the plan is a cause of concern as the government till date has not fully utilized domestic resources. Moreover, the extra burden on the exchequer to import all these fuels would also be a great burden and might increase the import bill of the country thus reducing economic growth. The gas-related issues also concern whether the government is right in its decision to allow only BAPEX to carry out exploration for the natural resource when its performance over the last five years has not been satisfactory. Encouraging more IOCs to explore might be a better option for finding new gas reserves. The

Challenges facing the energy sector 125 government should also try to implement its LNG policies as despite signing various agreements with the governments of Qatar and a Singapore-based consortium, little has been done to start these projects. However, the government can deal better with the current energy scenario of the country by facing the challenges more pragmatically and efficiently. The policy makers have to be more efficient in giving their decisions quickly rather than taking months to give their input in the decision-making process. The national oil companies should be given more independence to run the companies and take decisions on their own rather than being monitored and their decision-making authority taken away. This will lower bureaucracy and increase transparency while giving these state companies the confidence to work efficiently. In other words, experts should be calling the shots rather than bureaucrats who have little or no idea about the technicalities of various energy-related issues.

Notes 1 “Perspective Plan of Bangladesh 2010–2021: Making Vision 2021 A Reality”, General Economics Division, Planning Commission, Government of the People’s Republic of Bangladesh, April 2012, https://unctad.org/system/files/non-official-document/ dtl_eWeek2018c03-bangladesh_en.pdf. 2 Ibid, p. 35. 3 Ibid, p. 40. 4 Annual Report of Petrobangla 2016, 2016, https://petrobangla.org.bd/?params=en/ annualreport 5 Ibid, p. 34. 6 Ibid, p. 35. 7 The Government of the People’s Republic of Bangladesh, Statistical Yearbook of Bangladesh: 2017, Dhaka: Government Press. 8 Supra, see note 7, p. 21. 9 Ibid, p. 22. 10 Annual Report of Petrobangla 2018, 2018, https://rpgcl.portal.gov.bd/sites/default/ files/files/rpgcl.portal.gov.bd/annual_reports/5109918d_2074_4e02_867a_9c6ade854 94e/AGM.pdf 11 Report of the Committee for Gas Demand Projections and Determination of Recoverable Reserve and Gas Resource Potentials, June 2002, submitted to the government on August 27, 2002, p. 9. 12 Ibid, p. 10. 13 Ibid, p. 15. 14 Ibid, p. 16. 15 S. Sufi, ‘Exploration Scorecard Looks Miserable”, Energy & Power, February 1, 2018, p. 22. 16 S. Sufi, “Challenges of Petrobangla Companies”, Energy & Power, November 16, 2019, p. 28. 17 Ibid, p. 29. 18 “The Power Sector Master Plan 2030”, Sustainable and Renewable Energy Development Authority and Power Division, Ministry of Power, Energy and Mineral Resources, Government of the People’s Republic of Bangladesh. 19 Ibid, p. 55. 20 Ibid, p. 58. 21 Ibid, p. 65.

126  Challenges facing the energy sector 22 23 24 25

Ibid, p. 64. Ibid, p. 68. Ibid, p. 70. M. Hossain, “Energy Efficiency: The Future of Power Generation”, Energy & Power, December 1, 2019. 26 Ibid, p. 21. 27 Ibid, p. 22. 28 Supra, see note 18, p. 72. 29 Ibid. 30 M. Miah, “BAPEX Needs Partner”, Energy & Power, November 16, 2019. 31 Ibid, p. 13. 32 Supra, see note 30, p. 14. 33 Ibid, p. 15. 34 Ibid, p. 16. 35 Ibid, p. 17. 36 Ibid, p. 18. 37 Ibid. 38 Ibid. 39 Ibid. 40 Supra, see note 25, p. 22. 41 Ibid, p. 23. 42 Supra, see note 30, p. 18. 43 Ibid. 44 Ibid. 45 Ibid, p. 20. 46 Ibid. 47 Supra, see note 25, p. 23. 48 Ibid, p. 24. 49 Ibid, p. 25. 50 Ibid. 51 Ibid. 52 Supra, see note 30, p. 20. 53 M.A. Hossain and S. Sufi, “Security Gets Vulnerable”, Energy & Power, August 1, 2017. 54 Ibid, p. 11. 55 Ibid, p. 12. 56 Supra, see note 53, p. 13. 57 R.R. Panda and M. Karthik, “Regional Energy Cooperation for Accelerating CrossBorder Electricity/Energy Trade & Mobilizing Investment in BIMSTEC Region”, Energy & Power, March 16, 2020. 58 Ibid, p. 17. 59 S. Sufi, “How Secure is Energy Security?”, Energy & Power, May 16, 2018. 60 Ibid, p. 17. 61 Ibid, p. 18. 62 Supra, see note 57, p. 20. 63 Ibid, p. 21. 64 Ibid, p. 22. 65 Ibid. 66 Supra, see note 57, p. 21. 67 S. Sufi, “Coal Power: Challenges in Generation”, Energy & Power, May 16, 2017. 68 Ibid, p. 17. 69 Ibid, p. 18. 70 Supra, see note 67. 71 Ibid.

Challenges facing the energy sector 127 72 Supra, see note 59, p. 18. 73 I.A. Siddiky, “The Rooppur Nuclear Plant: is Bangladesh ready for Nuclear Power”, Journal of World Energy Law & Business, Oxford University Press, 8(1), 2015. 74 Ibid, p. 22. 75 Supra, see note 72, p. 22. 76 Supra, see note 73, p. 23. 77 I.A. Siddiky, “The Nuclear Conundrum for Developing Countries: Are They Ready Yet?”, Journal of World Energy and Natural Resources Law, 33(2), 2015. 78 Ibid, p. 21. 79 Ibid, 80 Ibid. 81 J.M. Doderlin, “Nuclear Power as a Public Issue, Protection of the Public Interest” (International Energy Agency, undated), www.iaea.org 82 Ibid. 83 Supra, see note 57, p. 24. 84 Ibid. 85 Ibid. 86 M.N. Islam, “Critical Observations on the Energy Issues of Bangladesh”, Oil and Gas Journal, pp. 28–40, July 16, 2001. 87 Ibid, p. 8.

Selected bibliography Annual Report of Petrobangla 2016, 2016, https://petrobangla.org.bd/?params=en/ annualreport Annual Report of Petrobangla 2018, 2018, https://rpgcl.portal.gov.bd/sites/default/files/ files/rpgcl.portal.gov.bd/annual_reports/5109918d_2074_4e02_867a_9c6ade85494e/ AGM.pdf Doderlin, J.M. “Nuclear Power as a Public Issue, Protection of the Public Interest” (International Energy Agency, undated), www.iaea.org Hossain, M.A. “Energy Efficiency: The Future of Power Generation”, Energy & Power, December 1, 2019. Hossain, M.A., and S. Sufi, “Security Gets Vulnerable”, Energy & Power, August 1, 2017. Islam, M.N. “Critical Observations on the Energy Issues of Bangladesh”, Oil and Gas Journal, 28–40, July 16, 2001. Miah, M. “BAPEX Needs Partner”, Energy & Power, November 16, 2019. Panda, R.R., and M. Karthik, “Regional Energy Cooperation for Accelerating CrossBorder Electricity/Energy Trade & Mobilizing Investment in BIMSTEC Region”, Energy & Power, March 16, 2020. “Perspective Plan of Bangladesh, 2010–2021: Making Vision 2021 A  Reality”, General Economics Division, Planning Commission, Government of the People’s Republic of Bangladesh, April 2012, https://unctad.org/system/files/non-official-document/ dtl_eWeek2018c03-bangladesh_en.pdf “Report of the Committee for Gas Demand Projections and Determination of Recoverable Reserve and Gas Resource Potentials, June 2002”, submitted to the government on August 27, 2002. Siddiky, I.A. “The Nuclear Conundrum for Developing Countries: Are They Ready Yet?”, Journal of World Energy and Natural Resources Law, 33(2) 2015. Siddiky, I.A. “The Rooppur Nuclear Plant: is Bangladesh ready for Nuclear Power”, Journal of World Energy Law & Business, Oxford University Press, 8(1), 2015.

128  Challenges facing the energy sector Sufi, S. “Challenges of Petrobangla Companies”, Energy & Power, November 16, 2019. Sufi, S. “Coal Power: Challenges in Generation”, Energy & Power, May 16, 2017. Sufi, S. “Exploration Scorecard Looks Miserable”, Energy & Power, February 1, 2018. Sufi, S. “How Secure is Energy Security?”, Energy & Power, May 16, 2018. The Government of the People’s Republic of Bangladesh. Statistical Yearbook of Bangladesh: 2017, Dhaka: Government Press, 2017. “The Power Sector Master Plan 2030”, Sustainable and Renewable Energy Development Authority and Power Division, Ministry of Power, Energy and Mineral Resources, Government of the People’s Republic of Bangladesh.

6 Measuring the energy security of the South Asian countries An analysis

Introduction The South Asia region includes Bangladesh, India, Bhutan, Nepal, Sri Lanka, Maldives, Afghanistan and Pakistan. The population in the region is about 1.4 billion, which is close to 22% of the world population, contributing to a mere 2% of the global GNP.1 The average GNP per capita of the region is $440, which amounts to 9% of the global average of $4,890.2 More than half of the total energy consumption in the region is met by noncommercial energy resources such as animal waste biomass and wood. Despite the rise in demand, the region continues to average among the lowest per capita commercial energy consumption which is almost one fourth of the world average in terms of kilogram of oil equivalent (Kgoe).3 The commercial energy mix of South Asia is around 47% coal, 33% petroleum, 12% natural gas, 7% hydropower and 1% nuclear (in India only).4 India’s energy mix is dominated by coal (55%), Bangladesh relies on natural gas (72%), Sri Lanka relies primarily on imported petroleum (72%), while Maldives fully relies on petroleum.5 Pakistan on the other hand is quite balanced using 38% oil and 43% natural gas in their energy mix.6 Nepal and Bhutan are totally dependent upon hydropower. Table 6.1 below shows the distribution of domestic supply and import of power, while Table 6.2 below shows the domestic supply and import of petroleum products (POL) in the SAARC countries. There are in fact a lot of endowments in the region including coal, gas, oil and hydropower. However, there are no technical and economic reasons to prevent the development of bilateral and/or regional agreements to utilize these resources more efficiently and contribute toward the creation of a regional energy hub or an economic zone.7 In fact, the economic and technical advantages of a regional electricity and gas/grid pipeline are many. It ensures greater supply security and reliability, reduces the reserves needed for meeting peak demands, lowers cost through economies of scale, increases diversification of primary sources of energy and contributes to overall energy.8 As a result, this chapter will measure the energy security of the South Asian countries by using the following criteria: i) availability of the resources, ii) accessibility of the resources, iii) affordability of the resources and

130  Energy security of South Asian countries Table 6.1  Domestic Supply and Import of Power in the SAARC Countries Countries

Electricity [GWH] Gross demand

Domestic supply

Afghanistan

4,981

1,076

Bangladesh Bhutan India

65,124 2,186 1,205,266

58,300 7,630 1,202,099

1,405 5,557 120,392 15,763

1,405 4,476 118,916 15,763

Maldives Nepal Pakistan Sri Lanka

Surplus/ Deficit position

Deficit/ Surplus %

Major importing/ exporting nations

Deficit

–78%

Deficit Surplus Deficit

–10% 249% 0%

Self-Sufficient Deficit Deficit Self-Sufficient

0% –19% –1% 0%

Iran, Tajikistan, Uzbekistan, Turkmenistan India India Bangladesh, Bhutan, Nepal – India Iran –

Source: SAARC Energy Centre, Islamabad, Pakistan

Table 6.2 Domestic Supply and Import of Petroleum Products (POL) in the SAARC Countries Countries

POL (’000 tonnes) Gross demand

Domestic supply

Surplus/ Deficit position

Deficit/ surplus %

Major importing/ exporting nations Iran, Russia, Turkmenistan, UAE Singapore, UAE, Saudi Arabia India EU, Singapore, Japan UAE, Singapore, Malaysia India UAE, Oman, Kuwait, Saudi Arabia Singapore, China, Malaysia, India

Afghanistan

2,019

0

Deficit

–100%

Bangladesh

6,384

1,166

Deficit

–82%

158 204,922

0 252,839

Deficit Surplus

–100% 23%

561

0

Deficit

–100%

Nepal Pakistan

2,307 29,037

0 10,741

Deficit Deficit

–100% –63%

Sri Lanka

5,168

1,867

Deficit

–64%

Bhutan India Maldives

Source: SAARC Energy Centre, Islamabad, Pakistan

iv) geopolitics of the resources.9 Moreover, using these four criteria as the analytical framework or methodology will enable us to understand the current energy security position of all the five countries and identify their relative strengths and weaknesses.

Energy security of South Asian countries  131 Availability of resources All the countries in the South Asia region suffer from the shortage of energy supply. Availability of resource is one of the crucial components in ensuring energy security. However, if a country does not have adequate supply of its own resources, then it has to ensure the secure supply of the resource from abroad. As a result, there is a competition among countries to ensure their energy supply. This causes the price of the resource to rise which causes problems for third-world developing countries. India is the largest country in South Asia and its energy reserve would last for only the next 30 years.10 Moreover, most of the country’s oil and gas fields are in the decline. Further, the coal reserves are supposed to last another 40 years while the quality of the coal is also not high.11 This has resulted in the government not being able to use coal reserves due to the fear of pollution. India also heavily relies on oil due to the huge demand for the fuel in the transport sector. The country has to import a huge amount of oil due to its increasing high demand. India is also dependent on hydropower over the last 50 years.12 However, this sector is becoming difficult to develop due to the land-title disputes and resettlement issues. The shortage of resources in the country has resulted in the Indian national oil and gas companies investing abroad to fulfill the country’s energy needs. These companies are working in Central Asia, Middle East, Latin America and Africa in search of oil and gas in those regions. Recently, these national oil and gas companies have worked bilaterally with the other countries of the region including Nepal, Bhutan and Bangladesh. However, renewable energy has a great future in the country as well. The country has launched the world’s largest renewable energy expansion to achieve 175 GW capacity of energy by the year 2022.13 Thus, India has a shortage of its own resources and is depending upon its national oil companies to ensure its secure supply of resources from abroad. Further, it has also signed various bilateral agreements with its South Asian neighbors to supply it with hydroelectricity, while it receives petroleum resources from the Middle East. The country is heavily dependent upon its imported fuel as it does not produce enough resources to meet its growing demand. Pakistan is going through a decline of its gas resources over the last two decades. Moreover, a huge population and high government subsidies have resulted in the country suffering from an energy crunch. Pakistan’s primary energy supply comprises 24.9% of natural gas, 26.7% of oil, 10.3% of coal, 2.3% from hydropower and 2.5% from nuclear power.14 The rest 33.1% comes from biomass.15 The country has around 29 Tcf of natural gas reserves and production of around 1.4 Tcf.16 Moreover, most of the country’s gas production is located in the Sind and Baluchistan regions.17 Pakistan’s most productive field is in Baluchistan which produces around 231 Bcf of gas a year. The country is trying to increase its hydropower generation capacity in order to diversify its energy supply. Pakistan is totally dependent on the import of petroleum from the Middle Eastern countries, and it also needs to import gas as its reserves will not last more than a decade. The country also does not have any bilateral energy-related agreements with other South Asian countries other than

132  Energy security of South Asian countries the Indus Water Agreement with India. As a result, it has a very limited amount of energy resources at its disposal, and it needs to diversify both its fuel mix and sources of supply. Nepal is another South Asian country which is currently experiencing energy crunch due to the high demand from its population. However, the country has a lot of potential for reliable source of energy. Nepal’s hydropower potential is estimated at 83,000 MW of which 42,000 MW is considered to be financially viable and developable.18 However, despite the potential, the country has only 698 MW of installed hydropower capacity in the public sector out of which 473 MW is connected to the grid.19 Moreover, another 167 MW of private generation capacity also exists.20 The country’s energy mix includes biomass and waste products which make up 73.7% of the total supply, oil makes up 17.3%, while coal and hydropower make up 6% and 2.3%, respectively.21 Although Nepal has a lot of potential to become an energy sufficient country, a lack of foreign investment and political upheaval have resulted in a lot of energy projects not finishing on time. This has resulted in the country not being able to meet its demand. The hydropower resource could play a crucial role in alleviating the energy poverty of the country. Moreover, greater bilateral cooperation with other South Asian countries could also diversify and improve its energy security. Bhutan is a landlocked country and its energy sector is the main power behind the economy with the electricity and water accounting for about 20% of the GDP and 51% of the country’s export.22 Bhutan has over the years undertaken a number of hydropower projects in order to revitalize its economy. The government has decided to complete ten hydropower plants by the year 2020 with a combined installed capacity of 11,576 GW.23 Moreover, 60% of Bhutan’s population does not have access to commercial sources of energy.24 Further, 72.5% of the country is covered by forests and renewable energy sources such as biomass, fuel wood and waste products. Biomass covers around 91% of residential energy consumption, while the residential sector consumes nearly 47% of the total energy.25 As a result, hydropower plays an overwhelmingly important role in the energy sector of Bhutan. The country is also dependent on India in terms of investment in its hydropower sector. Further, the rough terrain of the country has resulted in the energy infrastructure being in a dilapidated condition. Although the country has available source of energy, it is not being able to fulfill its promise due to the lack of integrated transmission network. Bangladesh is also suffering from supply crunch due to its high energy demand. The country has a power generation capacity of over 12,000 MW including the 500 MW it imports from India.26 Despite the fuel supply constraint in the country, the maximum generation reached in the year 2015 was 8,000 MW due to the low demand during the winter months.27 Due to the declining reserve of the country’s natural gas, the government has sought to diversify the country’s fuel mix. The policy makers adopted a new Power System Master Plan in 2016 to bring in a new primary fuel other than imported liquid fuel and rented power plants. The current production capacity of natural gas in the country is around 2,750 MMCFD, and the country is still staring at a deficit of 500 MMCFD.28 The

Energy security of South Asian countries  133 deficit would in fact rise to 1,000 MMCFD if all the unmet demands are taken into account.29 The planned import of 500 MMCFD equivalent LNG by the year 2020 would meet only part of the demand, but still there is no guarantee of the LNG coming during that time.30 The government in the meantime has also signed MOUs for setting up a few large coal-fired power plants and awarded contracts to some local companies to build the new power plants. Although Bangladesh has diversified its available sources of energy, it still has not been able to meet the demand of its population. The lack of any proper planning from the government in terms of energy security and being involved in too many energy projects without realizing whether the country has the capacity to utilize them has been a major failure. The construction of mega energy projects not finishing on time due to bureaucratic hurdles and inefficiency is having a negative impact on the country’s energy security. Accessibility of resources Accessibility of the energy resources is another important criterion for measuring the energy security of a country. India has its own energy resources, but they are declining steadily and will only last another 30 years. As a result, the country is trying to get access to resources overseas through its national oil and gas companies. These companies already have stakes in the oil and gas reserves of many Central Asian and African countries. The country has also signed bilateral agreements with Nepal for hydroelectricity and is working with Bangladesh on numerous energy projects. Since India is already aware of its high-energy demand, the government has actively ensured that the country has access to energy abroad and has diversified its fuel mix by investing more on renewables. Pakistan, on the other hand, does not have a sound energy accessibility policy to meet its growing energy demand. The country’s gas reserves in Sind and Baluchistan are rapidly declining causing the country to suffer energy shortage. Further, Pakistan is suffering from economic turmoil resulting in the country not being able to pay for its energy import. However, it was bailed out by Saudi Arabia in the year 2020 by paying the country’s energy debts to its suppliers.31 Although Pakistan is diversifying its energy mix by investing more in hydropower, its only access to petroleum and gas resources are from the Middle Eastern countries. It also gets help from China for its energy infrastructure development. Overall, the country does have very limited access to energy resources due to a lack of government policy and economic condition. Bangladesh has diversified its access to energy resources by building a nuclear power plant, coal-generated power plant and by importing electricity from neighboring countries. The country suffers from a huge energy crunch, but the government is trying to meet the demand through various forms of energy mix. Bangladesh is also importing LNG and plans to invest in the hydropower sector. Although the country has identified various policies to meet its energy demands, most of the big projects remain unfinished causing a shortage of supply. The incompetence of national oil and gas companies has also stalled exploration

134  Energy security of South Asian countries resulting in the country having a chronic energy deficit. As a result, Bangladesh has access to energy resources, but lack of implementation and red tape is holding it back. Nepal and Bhutan are the two landlocked countries in South Asia. Both the countries are heavily dependent on hydropower for their electricity and import most of their energy resources from India. China has recently been helping Nepal with its energy infrastructure and is also helping it in its generation capacity. Bhutan, on the other hand, has only access to its huge hydropower potential which allows it to export electricity to India. Both Nepal and Bhutan have a limited access to energy resources and further their governments do not have any plan to diversify their fuel mix. Since both the countries have a huge potential in hydropower and biomass, they can afford to focus on only their hydropower resources in the short term. Availability of resources The availability of the resources is another criterion to measure the energy security of a country. India had a substantial deposit of energy resource like coal and gas at their disposal. However, the gas deposits have declined and the government is in a dilemma to use coal due to the environmental concerns. The nuclear power is also not sufficient, while the country has made significant investment in the renewable sector. As a result, due to the country having insufficient resources, it is importing petroleum and other resources from abroad in order to ensure its energy security despite investments in nuclear power and renewables. Further, the government needs to focus more on domestic oil and gas exploration in order to meet the demand for oil and gas in the country. Pakistan has a very limited resource in the country to develop in order to meet its high energy demand. The country’s gas reserves have declined drastically resulting in Pakistan depending upon imported petroleum resources from abroad. The Chinese have made massive investments in the energy sector of the country. However, Pakistan needs to find new sources of energy and the government is actively harnessing hydropower in order to increase the choice of available resources. Bangladesh like Pakistan is also facing challenges to meet its growing energy demand. However, unlike Pakistan, it has made giant strides to diversify its available resources. The country has built a nuclear power plant, several coal-generated power plants, imported electricity and LNG and is also focusing on renewables. However, despite this diversification of available resources, the country has not been able to generate enough power to meet the demands of the huge population. Moreover, some of the reasons for this are the inefficient use of energy and the lack of skilled manpower. Both Nepal and Bhutan have a limited availability of resources as they are overly reliant on hydropower to meet their energy demands. While Nepal imports some of its petroleum resources from abroad, Bhutan mostly relies on its hydropower resources to meet its demand. Further, both the countries are reliant on India to deliver them with the resources they need. As a result, there is no diversification

Energy security of South Asian countries  135 in terms of the available resources at their disposal which might be an energy security issue in the future. The geopolitics of resources The most important energy security criterion in the context of South Asia is the geopolitics surrounding the energy resources available in the region and the competition for them outside the region. Moreover, an outside actor like China is also involved in the energy sector of the region. India is the largest and most powerful country in South Asia and acts like a hegemon in trying to secure its access to energy resources in other countries. The energy resources in both Nepal and Bhutan are developed by Indian companies, and the surplus energy from these countries are exported to India. Moreover, being a landlocked country, both these countries are dependent on India to some extent. India and Bhutan had signed the treaty of Friendship and Cooperation in 1949, which lasted till the year 2007.32 Through this treaty, the former controlled the foreign policy of the latter. The treaty has been renegotiated after its expiry in the year 2007. Moreover, India is the only country Bhutan exports its electricity to. The cooperation between the two countries in regard to hydroelectricity started in the year 1961 with the 18,000 KW Jaldhaka project which was followed by the 336 MW Chhuka project. The five major hydropower projects including Tala project (1,020 MW), Chhuka project (336 MW), Dagacchu project (126 MW), Basochhu project (64 MW) and Kurichu project (60 MW) have all been built with the financial incentive from India.33 Moreover 80% of Bhutan’s hydropower generation is exported to India.34 Further, the two countries have plans to develop ten more hydropower dams to generate 11,576 MW of power by the year 2021.35 All these cooperation among the two countries shows the dominance of India over Bhutan’s energy sector. However, recently Bhutan has been trying to develop its relationship with China through its Belt and Road Initiative to the ire of India. Nepal is also another country close to India. However, the recent dispute between the two countries in relation to their border demarcation has soured the relationship. During the 1950s, India helped Nepal with the building of Kataiya Powerhouse.36 Further, Trisuli, Devighat and Phewa hydropower projects were also built with Indian assistance.37 The exchange of power between the two countries started with 5 MW of power to 150 MW of power by the year 2002.38 Moreover, the two countries are currently trading 300 MW of electricity.39 In the year 2014, both the countries signed a bilateral Power Trade Agreement for the two hydroelectric projects in Upper Karnali and Arun III, with each generating about 900 MW.40 However, despite all the cooperation between the two countries, there is a growing mistrust between both of them. India is fearful of Nepal cozying up with China, as the latter is playing a greater role in improving the energy infrastructure of the country. Further, there is a general feeling among the population in Nepal that India is trying to convert the country as one of its satellite states. The political

136  Energy security of South Asian countries turmoil in Nepal is also to blame for the deterioration of relationship with India as the political parties are divided between Indian and Chinese sympathizers. The relationship between India and Bangladesh has been warm for the last decade with both the countries signing various bilateral energy-related agreements. Some of these agreements include building coal-fired power plants, exporting electricity to Bangladesh and having a common electricity grid between Bangladesh and Northeast India. Moreover, both the countries have renegotiated the water agreements. In the year 2018, the India–Bangladesh Friendship pipeline was inaugurated, which transfers diesel from Siliguri in India to Parbatipur in Bangladesh.41 Further, several national oil and gas companies from India are working with Petrobangla in Bangladesh’s oil and gas sector. However, despite all the cooperation between the two countries, there is a general mistrust of India in Bangladesh. Most of the energy agreements that have been signed with India tend to favor India more than Bangladesh. Moreover, the coal-fired power plant being built is near Sundarbans, the largest mangrove forest in the world. According to experts, building a power plant so near to the forest is environmentally unsafe and hazardous. However, due to the strong relationship between the governments of both the countries, most of the energy projects are undertaken without proper scrutiny.42 India on the other hand wants to keep a strong grip over the energy sector in Bangladesh in order to protect its Northeast which lacks energy resources and suffers from insurgency. Bangladesh recently has signed a number of agreements with China in order to diversify its sources of energy. The Chinese companies are building the energy infrastructure of the country and are also heavily investing in various power projects.43 The recent involvement of China in Bangladesh’s energy landscape has worried India as it takes the relationship with Bangladesh for granted. Further, through greater cooperation between the South Asian countries, Bangladesh could be a major transit country for energy trade in India, Nepal and Bhutan. Moreover, China could also use the country’s port facilities for importing crude oil, LNG, LPG and may even use these ports for export. Further, Bangladesh can also be benefiting from transit tariff if cross-border power and gas transmission line transits across the country. Bangladesh already permits transit facilities to India. However, all these scenarios might not be possible due to the current geopolitical climate, as India considers Chinese involvement in the region as a national security issue. As a result, Bangladesh stands to gain more by being a transit country and by diversifying its access to energy resources which in turn would give them a greater leverage over India. One of the roadblocks for greater energy cooperation in South Asia is the bitter rivalry between India and Pakistan. Both the nuclear armed countries have fought several wars with the latest confrontation involving both the countries attacking each other. Pakistan has been supporting the growing insurgency in Indian-administered Kashmir, which the country denies. India, on the other hand, has tried to isolate Pakistan in South Asia by discouraging others to carry out energy-related trade with the country. However, massive Chinese involvement in Pakistan’s energy sector has angered India.

Energy security of South Asian countries  137 The TAPI (Turkmenistan, Afghanistan, Pakistan and India) pipeline was oncein-a-lifetime opportunity for both India and Pakistan to cooperate with each other. The pipeline project aimed to transfer gas from Turkmenistan’s Galkynysh field through Afghanistan to Pakistan and then to India.44 The capacity of the pipeline was 16 Tcf.45 In the year 2014, the state oil and gas companies of all the four countries created the TAPI Pipeline Company, which aimed to build, finance, own and operate the pipeline.46 The project was supposed to have been completed by the year 2019 but is stuck in quagmire due to security issues. The security of the pipeline through Afghanistan and Pakistan has been questioned due to insurgency in Afghanistan and the Baluchistan province in Pakistan. Further, India does not trust Pakistan due to the latter’s support of insurgency in the Indian administered Kashmir. Pakistan, on the other hand, has a lot of options to cooperate with both India and Afghanistan for its energy resources. The country’s relationship with Afghanistan is strained due to the country supporting insurgency in Afghanistan. However, Pakistan has signed an agreement with Iran to import 35 MW of electricity from Polan in Iran to Gwadar in Pakistan.47 Iran is also considering exporting 3,000 MW of electricity to Pakistan.48 Further, an 1800 km Iran–Pakistan pipeline was expected to be completed in the year 2019.49 This pipeline would transfer 21.5 Mcm of gas per day from the South Pars gas field in Iran to Karachi in Pakistan.50 However, US sanctions have derailed some of the plans in this project, and Pakistan might need to secure another access to resources in order to avoid the ire of the US. Pakistan needs to also improve its relationship with both its neighbors in order to ensure its energy security. Although both China and Saudi Arabia are helping the country in terms of its access to energy resources, the country needs to be more self-reliant. The role of both India and Pakistan are neorealist in nature although India is more dominant in the region. India is willing to cooperate only in areas of energy which will benefit the country in both the short term and the long term. The import of electricity from Nepal and Bhutan and using the territory of Bangladesh to supply energy to the Northeastern states while denying Bangladesh to import electricity through India is a good example of India’s neorealist behavior. Pakistan, on the other hand, is not able to dominate in the region due to its geographical location, but the country uses its influence in the neighboring Afghanistan to supply its own energy needs. Bangladesh, Nepal and Bhutan have no other option but being neoliberals, all the three countries promote cooperation to achieve their energy goals. Moreover, in a cooperative setting, these three countries are also less worried about forgoing the autonomy of policy making and about the gains that the other countries might make. The US and China are also neorealists in nature as they try to use their power and influence to allow their domestic companies to invest in the region. Since the South Asian countries are short of funds to build their energy infrastructure, both these countries try to implement their agendas aggressively in order to protect and promote their foreign policies. Most of the South Asian countries tend to follow their lead as they intend to enhance their energy security.

138  Energy security of South Asian countries

Conclusion This chapter attempted to measure the energy security of the South Asian countries by using four criteria as an analytical framework to understand the current energy security situation in the region. In terms of availability of resources, all the countries are suffering a supply crunch due to the high demand of resources to fuel their economic growth. India, the largest country in the region uses a lot of natural resources including oil, coal, gas, hydropower and renewables in order to fuel its growth. The country has some of its own resources, but most of these reserves are in the decline resulting in a huge import of energy. Pakistan on the other hand produces gas and oil, but it is insufficient to meet its high demand, while Bangladesh uses some of its own resources like gas and renewables and imports other fuels like oil, coal and LNG. Nepal and Bhutan mostly use hydropower in their energy sector and although Bhutan is self-sufficient in terms of energy, Nepal has to import oil and gas to meet the energy demand of the country. In terms of accessibility of the resources, all the countries have a relative security of supply in importing their energy resources from the Middle East. India has access to its oil demand from the Middle Eastern countries and also imports gas from Central Asia. Moreover, the country also receives technical assistance from the US for its nuclear power generation. Further, Indian companies also have stakes in the oil and gas resources abroad, which give them a greater access to meet the country’s energy needs. Pakistan and Bangladesh also have access to resources in the Middle Eastern countries, which allow them to get a secure supply of oil. Pakistan also receives help for its nuclear technology from China and is increasing its hydropower capacity with the help of donor agencies. Bangladesh has started importing coal and LNG from Qatar in order to meet its high energy demand. Nepal and Bhutan also have access to fuels from the Middle East, China and India. India is able to afford most of its energy from abroad due to its strong economic foundation. Although the high energy import bill drains most of its foreign currency, the country is heavily reliant on import in order to fuel its economic growth. Pakistan on other hand is unable to afford most of its energy import and is reliant on international financial agencies and friendly countries to finance its import bill. The country also needs to become more energy efficient in order to lower its import. In the case of Bangladesh, the country is able to meet its energy demand from abroad by financing from its internal sources despite constraints in its economy. However, the country intends to lower its import in the future by investing in hydropower, renewables and nuclear energy. Both Nepal and Bhutan import a very limited amount of energy from abroad and can meet their financial requirements. However, Nepal gets assistance from the international financial institutions, China and India for importing oil. The geopolitics of the resources was one of the most important criteria to measure the energy security of the region. India being the strongest country in the region uses its geographical location and military power to gain more from the other countries in the region. The bilateral agreements that the country has

Energy security of South Asian countries  139 signed with Bangladesh, Nepal and Bhutan tend to benefit it more than the other countries. Pakistan, being a constant threat to India, uses its military strength to dominate the energy scene of its neighboring countries. Bangladesh, Nepal and Bhutan have been steady in trying to cooperate with all the countries of the region for their energy needs, and due to their size and economic power, they have not been able to sign energy deals which fully serve their purpose. The role of outside actors like China and the US has also changed the energy dynamics in the region as it has threatened the Indian energy dominance. In terms of measuring the energy security of India, the country has a limited availability of resources domestically resulting in them trying to get access to energy resources abroad. The country has access to the resources it requires from abroad and can also afford them without any financial assistance from others. Moreover, being the strongest country in the region, India dominates the energy geopolitics by using its soft power over its neighbors. This neorealist trait of India has served them well as they have used their power to get more leverage from others. However, India is far from energy secure as the country needs to diversify its fuel mix and also its sources of supply. India imports most of its fossil fuels from the Middle East, which is the most volatile region in the world as any disruption in the supply of energy resources will have a detrimental effect on the country. Moreover, the neorealist trait of dominating the neighbors will have a negative impact in the future as India needs to cooperate more with its neighbors. Further, giving leadership in a cooperative setting as advocated by the neoliberals will give India a greater leverage from the threats it faces from China and the US. Pakistan has a very limited availability of resources due to the rapid depletion of oil and gas reserves in the country. Moreover, it cannot afford the resources it requires due to the low economic growth over the last decade. However, the country does have access to resources abroad as it has a close relationship with all the Middle Eastern countries. Further, geopolitically the country tries to dominate over Afghanistan and is constantly fighting with India in the region. The constant feud between the two nuclear armed countries has severely affected Pakistan as it invests less on energy and more on defense. However, China has been a close ally of the country and supplies most of its energy needs including the building of its energy infrastructure. The energy security situation in Pakistan is precarious as the country is not only energy inefficient but dependent upon others to finance their energy needs. As a result, the other countries might use the country for their own needs. Pakistan urgently needs to improve its energy infrastructure, invest more on exploration of new reserves and increase their energy efficiency. Further, they need to streamline their energy industry by cutting down red tape and taking control of the provincial energy departments not cooperating with the central policy makers. Instead of acting like a neorealist by constantly being aggressive toward its neighbors, Pakistan needs to cooperate more with the other countries in the region to enhance its credibility and energy security.

140  Energy security of South Asian countries Bangladesh on the other hand has made a rapid progress in the field of energy over the last 12 years. Although the country does not have the available resources domestically to meet its energy needs, it has been able to import energy resources including oil, gas, LNG, LPG and coal. Bangladesh has also built a nuclear power plant. The country can afford to buy most of its resources from abroad and has access to its energy needs. Moreover, geopolitically, Bangladesh has cooperated with India and the others in order to secure its energy resources. The neoliberal trait of cooperating with the other countries and making relative gains has served the country well. However, despite making all the progress, the energy security of Bangladesh stands on a shaky ground. The country needs to produce more of its energy resources and should depend less on imported fuel as it is straining the economy. The government should also lower the subsidy and improve the function of the national oil and gas companies in order to explore new gas reserves. Bangladesh has a lot of potential in the Bay of Bengal that needs to be harnessed. Further, cutting down red tape and improving the governance structure of the energy industry is also required to make the country energy secure. The recent investment by China in the various energy projects is also a positive sign as the country is lowering its dependence on India. The neoliberal policy of the country in cooperating with all the countries in the region will serve them well in the future as greater cooperation will enhance the country’s energy security. Both Nepal and Bhutan have resources available in their respective countries but due to a lack of energy infrastructure, both the countries import energy from abroad. Nepal imports more as its demand cannot be fulfilled from domestic sources alone. Further, both the countries require the help of international financial institutions to import their energy resources from abroad and have access to most of the resources they intend to import. Moreover, both the countries are geopolitically dependent on India due to them being landlocked. Bhutan has a low demand of energy in the country and exports most of its hydroelectricity. As a result, although the country has energy security at the moment, it needs to diversify its sources of energy and not be over reliant on hydropower. The energy security situation of Nepal is worrying as the country is not being able to meet its high energy demand from hydropower alone. It also needs to diversify its energy mix, improve the energy infrastructure and lower the subsidy in the electricity sector. The recent investment by China in the energy infrastructure of the country is a positive sign toward ensuring the country’s energy security. Moreover, the neoliberal attitudes of both Nepal and Bhutan in cooperating with all the countries of the region have served them well which will further boost their energy security.

Notes 1 “BP Statistical Review of World Energy”, BP, London, 2019, https://www.bp.com/ en/global/corporate/news-and-insights/press-releases/bp-statistical-review-of-worldenergy-2019.html. 2 Ibid.

Energy security of South Asian countries 141

3 Ibid. 4 Ibid. 5 “South Asia Regional Overview”, EIA, March 2017, www.eia.doe.gov. 6 Ibid, p. 5. 7 R. Sobhan, “Growth Zones in South Asia: Potential and Feasibility”, Asia Pacific Development Journal, 7(1), 2000, pp. 23–41. 8 I. Hossain, “The State of Energy (Gas) Sector in Bangladesh and Implications for South Asian Regional Cooperation”, CPD, Dhaka, 2001, www.cpd-bangladesh.org. 9 The first three criteria were formulated by the energy security and sustainability (ESSD) framework by the Asia Pacific Energy Research Centre (APERC) in “A Quest for Energy Security in the 21st Century, Tokyo, Japan, 2007. All the four criteria have been defined and discussed in detail in Chapter 1. 10 “Overview of South Asian Power Sector”, South Asia Regional Initiative for Energy Integration, New Delhi, 2018, https://sari-energy.org/oldsite/article/SARI_Energy_ brochure.pdf 11 SAARC Energy Centre, SAARC Energy Outlook 2030, Islamabad: SAARC Energy Centre, December 2018. 12 Ibid, p. 25. 13 Supra, see note 11, p. 27. 14 Supra, see note 10, p. 6. 15 Ibid, p. 7. 16 Ibid, p. 8. 17 Ibid. 18 Nepal Electricity Authority, Annual Report 2018, Katmandu: Nepal Electricity Authority, p. 80. 19 Ibid, p. 81. 20 Ibid, p. 82. 21 Ibid. 22 C.K. Ebinger, Energy and Security in South Asia: Cooperation or Conflict? Washington, DC: Brookings Institution Press, August 2011. 23 Ibid, p. 84. 24 Supra, see note 11, p. 45. 25 Ibid, 26 Supra, see note 10, p. 14. 27 Ibid, p. 15. 28 Supra, see note 11, p. 48. 29 Ibid, p. 50. 30 Ibid, p. 52. 31 Supra, see note 22, p. 76. 32 S.R. Dadwal, “Can the South Asian Gas Pipeline Dilemma Be Resolved Through a Legal Regime?”, Strategic Analysis, 32, 2011. 33 M.S. Huda and S.H. Ali, “Environmental Peace Building in South Asia: Establishing Consensus on Hydroelectric Projects in the Ganges-Brahmaputra-Megna (GBM) Basin”, Geoforum, 96, 2018. 34 Ibid, p. 162. 35 Ibid, p. 165. 36 Supra, see note 11, p. 81. 37 Ibid, p. 88. 38 Ibid, p. 89. 39 Ibid, p. 90. 40 Ibid, p. 91. 41 P. Pandey, India Bangladesh Domestic Politics: The River Ganges Water Issues, Singapore: Springer, 2016.

142  Energy security of South Asian countries 42 Supra, see note 41, p. 74. 43 “As Bangladesh’s Relations with India Weakens, Ties with China Strengthen”, The Economist, September 19, 2020. 44 M. Kugelman, “Can the TAPI Pipeline Be Any More Than a Pipe Dream?”, The Diplomat, December 17, 2015. 45 Ibid. 46 Ibid. 47 R. Osmani, “TAPI Gas Pipeline: Are Sino-US Relations a Zero Sum Game?”, The Central Asia-Caucasus Analyst, January 19, 2016. 48 Ibid, p. 46. 49 Ibid, p. 48. 50 Ibid.

Selected bibliography Asia Pacific Energy Research Centre (APERC). A Quest for Energy Security in the 21st Century, Tokyo: APERC, Institute of Energy Economics, 2007. “BP Statistical Review of World Energy”, BP, London, 2019, https://www.bp.com/en/ global/corporate/news-and-insights/press-releases/bp-statistical-review-of-worldenergy-2019.html Dadwal, S.R. “Can the South Asian Gas Pipeline Dilemma Be Resolved through a Legal Regime?”, Strategic Analysis, 32, 2011. Ebinger, C.K. Energy and Security in South Asia: Cooperation or Conflict? Washington, DC: Brookings Institution Press, 2011. Hossain, I. “The State of Energy (Gas) Sector in Bangladesh and Implications for South Asian Regional Cooperation”, CPD, Dhaka, 2001, www.cpd-bangladesh.org. Huda, M.S., and S.H. Ali, “Environmental Peace Building in South Asia: Establishing Consensus on Hydroelectric Projects in the Ganges-Brahmaputra-Megna (GBM) Basin”, Geoforum, 96, 2018. Kugelman, M. “Can the TAPI Pipeline Be Any More Than a Pipe Dream?”, The Diplomat, December 17, 2015. “Overview of South Asian Power Sector”, South Asia Regional Initiative for Energy Integration, New Delhi, 2018, https://sari-energy.org/oldsite/article/SARI_Energy_brochure.pdf Rahman, M.M. and M.S. Hossain, “Hydropower Development Along the Major Rivers Basins in South Asia: Benefits for Bangladesh”, Sustainable Water Resources Management, 6(6):116–123, 2020. Rahman, M.M., and A.A. Mamun, “Hydropower Development along Teesta River Basin: Opportunities for Cooperation”, Water Policy, 22, 2020. SAARC Energy Centre. SAARC Energy Outlook 2030, Islamabad: SAARC Energy Centre, December 2018. Sobhan, R. “Growth Zones in South Asia: Potential and Feasibility”, Asia Pacific Development Journal, 7(1):23–41, 2000. “South Asia Regional Overview”, EIA, March 2017, www.eia.doe.gov.

Conclusion

Introduction The concluding chapter begins by providing a summary of the current energy scenario of the countries in the region. This is followed by a discussion on the energy security position of Bangladesh. In this section, all the energy aspects of the country including its fuel supply, import policy and the role of its national oil and gas companies in exploration and production are analyzed in detail. This is followed by the next section which discusses the ineffectiveness of SAARC in promoting greater cooperation among the South Asian countries. This section covers in detail some of the factors making SAARC ineffective in the region despite having a strong potential. The involvement of China and the US is also discussed in this chapter in order to understand the role of outside actors in the geopolitics of energy in the region. The internal energy dynamics of both these countries are analyzed to evaluate their strategy for South Asia. Further, the following section discusses the role of climate change in the region. It analyzes some of the policies taken by the countries to deal with climate change as they have a negative impact on it. The chapter concludes by discussing some of the solutions available to the countries in the region, if they are serious about ensuring their energy security despite the intense geopolitics involved.

Energy scenario in South Asia The South Asian region is in a very strategic location that needs to be developed as a vibrant energy hub in the world. The region made up of eight countries achieved very little in energy trading due to global and regional geopolitics. The prolonged political rivalry between India and Pakistan and the situation in Afghanistan acted as major impediments for sharing resources within and outside the region. There are a few forums like the SAARC, Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC), which have the potential for social and economic integration for exploring and sharing the huge untapped energy resources in the region.

144  Conclusion The South Asian region could not achieve sustainable energy security of its own, but it could act as a conduit for energy and power trading in other regions, if the existing and emerging opportunities are effectively harnessed and exploited. Despite all the potential, the SAARC power grid between Bangladesh, Bhutan, Nepal and India has still not gathered pace. Further, the huge untapped petroleum resources in the Bay of Bengal remain almost unexplored even after the settlement of maritime boundary dispute between Bangladesh, India and Myanmar.1 Further, the TAPI gas pipeline could not still see the light of day due to the geopolitical rivalries between India, Pakistan and Afghanistan and the sanctions on Iran by the US. The current Rohingya crisis has also soured the relationship between Bangladesh, India and Myanmar resulting in the Myanmar, Bangladesh and India pipeline being on hold. China is also an important factor in the region as the country is involved in various energy projects in Bangladesh, Pakistan and Nepal. However, greater Chinese involvement in the region is seen with suspicion by India due to both the countries having land boundary disputes with each other. There have been many meetings and both multilateral and bilateral dialogues for the setting up of SAARC power and energy grids for energy and power trading among the SAARC countries. Many development partners and donor agencies advocated for the setting up of SAARC Energy Secretariat as it will benefit all the countries in the region. As a result, the Energy Secretariat was set up in Afghanistan. However, despite setting up the Secretariat, the SAARC grid remains a distant dream due to geopolitical and technical issues. India, Pakistan and Bangladesh are the three largest countries in terms of economy and population in South Asia. India has a significant coal reserve and limited hydrocarbon resources but is technologically advanced compared to the other South Asian countries. To meet its energy demand, India imports oil, LNG and liquid fuel from different countries. The country also has medium-to-large power plants using different primary fuels like coal, gas, nuclear, hydropower and renewable resources.2 It also has a few medium-to-large petroleum refineries for which it imports crude petroleum from the Middle Eastern countries. India imports power from Bhutan and Nepal, while it exports power to Bangladesh. Some of the refineries have additional built-in capacities which, if used at optimum level, can meet the energy demands of smaller South Asian countries.3 India is also expanding its nuclear power plants by building new ones. Pakistan on the other hand is endowed with gas, coal and hydropower. However, most of the major gas fields of the country have now been depleted. The country also had a lot of Independent Power Producers (IPPs), which resulted in them having surplus power generation. Moreover, they suffered due to the rapid depletion of Sui Northern and Sui Southern gas fields, as this caused huge shortage of primary fuel supply resulting in massive power load-shedding.4 As a result, Pakistan started importing LNG. The economic meltdown in the country due to years of mismanagement caused the failure of the country to meet its LNG payment obligations.

Conclusion 145 The election of Imran Khan as the Prime Minister resulted in the country getting help from Saudi Arabia to pays its energy debts.5 However, the power supply situation in the country is still perilous without any future plans to meet the country’s growing energy demands. The shelving of the TAPI and the IPI pipelines due to political problems with India has damaged the country’s energy security. Further, any significant multilateral energy collaboration is subject to India and Pakistan settling their political disputes or agreeing to keep energy out of politics like Israel has done with its Arab neighbors.6 The energy security situation of Bangladesh is rather mixed as the country is struggling to cater to the demands of its huge population. The country has a significant gas resource which it did not effectively utilize for power generation and industrial development. It has also a substantial coal reserve which remains mostly unexploited.7 However, the economy of the country grew rapidly over the last decade due to the adequate supply of primary fuel. Lack of government policy regarding the utilization of coal reserves, inadequate exploration in the Bay of Bengal and the depletion of gas reserves do not bode well for the country. Bangladesh has also started importing liquid fuel, LPG, LNG and coal.8 However, the economy of the country will not sustain the financial, economic challenges of imported fuel dependency over a long period of time. The country is also setting up imported coal-fired power plants and a nuclear power plant against the advice of environmentalists. These power plants will have a huge negative impact on the country’s environment. The government is also building a terminal for the import of LNG while the country also has a small refinery. Bangladesh is importing 1,160 MW of power from India through two power grids.9 The only country in South Asia with energy surplus is Bhutan. Energy in Bhutan has been a primary focus of development in the country. Moreover, in collaboration with India, it has undertaken several hydroelectric projects whose output is traded between the countries.10 Although Bhutan has overall surplus energy, the country is a marginal net importer of energy due to dry winters and increased fuel demand in the country. However, the main advantage of the country lies in its excess supply of electricity which earns large revenue and balances its trade.11 The industrial development of the country relies on cheap hydroelectricity. As a result, hydropower is the main resource of electricity generation whereas biomass is the main source of meeting residential demands such as cooking. The country imports only petroleum products and coal. These imported resources are mainly used in the transportation sector of the country, while kerosene and LPG are used in the building sector.12 Nepal, on the other hand, generates 90% of its total electricity from hydropower. Hydropower also plays an important role in the country’s economy. Nepal has hydropower generation capacity of about 40,000 MW.13 If the country realizes its potential, it could easily meet Nepal’s demand and create a surplus that could be exported to neighboring countries like Bangladesh. However, currently, Nepal exports most of its surplus energy to India due to an agreement signed between the countries.14 Moreover, most of the hydropower capacity in Nepal has been

146  Conclusion developed by Indian companies operating in the country. The country also imports up to 27% of its power from India.15 The huge hydropower potential that the country has should be used to increase its energy security. Maldives and Sri Lanka are two island countries that are totally dependent upon imported liquid fuel to generate power. Recently, Sri Lanka was supposed to set up a large imported coal-based power plant, but it failed to see the light of day due to political reasons.16 The country imports most of its liquid fuel. Maldives on the other hand imports most of its fossil fuel from the Middle East.17

Energy security scenario of Bangladesh Bangladesh is having a sustained economic growth over the last decade. However, according to experts, the question is whether this sustained economic growth can be accompanied by sustainable energy security.18 Bangladesh has a national vision for achieving mid-income country status by the year 2021 and a developed economy by the year 2041. The country was one of the leading countries in achieving the major indices of the Millennium Development Goals (MDG). This was possible due to the country having its own secure supply of natural gas. However, the next challenge of meeting the Sustainable Development Goals (SDG) would be difficult as the country lacks a sustainable energy security policy. Although the government claims that the entire country will get power supply by the year 2021, the fact is the power supply will not be uninterruptible. All segments of the power value chain including transmission, generation, distribution and customer service need a lot of development. Further, sustainable supplies of fuel from own source needs to be guaranteed by the government. Moreover, the price structure of fuel and power must be adjusted in ensuring the efficient use of resources. The government has installed about 15,000 MW generation capacity over the last eight years, but the actual generation hardly exceeds 8,500 MW.19 This is because the power companies are unable to supply uninterrupted gas. The Petrobangla companies during the summer divert gas from other users and ration supply of some other customers. As a result, this gas is good enough for generating 7,500 MW to 8,000 MW gas-based power.20 Moreover a big share of the current generation capacity (28%), comes from liquid fuels such as furnace oil and diesel.21 These power plants were allowed to be built as a contingency measure as rental and peaking plants for a short period of time. Further, instead of retiring these plants with traditional fuel gas, the government has kept them in operation and has also extended contracts in detriment to the country’s energy security. The power system outside the capital is also not reliable with cities outside Dhaka experiencing six to eight hours of chronic load-shedding.22 Moreover, the industrial areas of Dhaka and Chattogram have low grid power and low frequency.23 Further, the power transmission and distribution system of the country cannot survive major cyclones and tornadoes. There have also been instances when major grid failures have kept many areas under darkness.24

Conclusion 147 As discussed in the previous chapters, affordability, accessibility and availability are three important parts of energy security. In the case of Bangladesh, the country needs to have a short-term and a long-term policy. A short-term energy security policy would involve the country focusing on the ability of the energy system to deal promptly with sudden changes in the supply and demand balance, while a long-term energy security policy involves investment to supply energy in line with economic development and environmental needs. Unfortunately, the country does not have these policies in place. Bangladesh has not ensured the availability of fuel on a sustainable basis for power generation, cannot access the generated power on interruptible basis through existing transmission and distribution system and nor can it supply power and energy at an affordable price to its citizens. As a result, the country is in a precarious situation in terms of energy security. Supply of fuel The primary supply of fuel is an area where the government over the last decade has failed to make any progress. The country did not discover any new reserves of substance. Rather, a major increase in production from discovered gas fields has hastened the depletion of discovered gas resources. The gas production has increased from 1,750 MMCFD to 2,750 MMCFD.25 Further, from the year 2000 till the year 2018, the country consumed about 9 Tcf of gas from discovered gas reserves.26 However, in this period, Petrobangla and its companies were only able to add about 1 Tcf of new gas.27 The lack of gas supply insecurity is a major issue acting as a disincentive for new investments. Moreover, at the current rate of consumption, the remaining reserves would be depleted by the year 2031 if no new large reserves are discovered.28 Further, major depletion has already set in. BAPEX, the exploration and production company of Petrobangla, has already started drilling 108 wells including 53 exploration wells in the last five years.29 However, according to experts, BAPEX has a very limited technical, management and financial capacity to achieve any success in exploring new reserves. For example, Santos in partnership with BAPEX had made a futile attempt to explore gas in Maganama, while Santos and Kris energy have started working on another exploration block offshore.30 Other companies like ONGC from India is exploring Kutubdia gas field, while Petrobangla has also signed a Production Sharing Contract (PSC) with a South Korean company, Daewoo Posco for exploring in deep-water blocks. The aforementioned initiatives by Petrobangla are praiseworthy, but the problem is most of these projects are now stagnant. This has made significant exploration in deep-water uncertain. Further, even if a new discovery is made, it will not be available in the national grid before the next nine to ten years. Moreover, the failure to find any new reserve in the country’s vast unexplored offshore areas has forced the government to import LNG. However, the indecision of the government and the poor management of the Energy and Mineral Resource Division

148  Conclusion (EMRD) have also delayed the import of LNG. The first 500 MMCFD supply of LNG may not be available to the gas grid before the year 2021. Further, the government has already committed itself to several LNG projects by assessing the price impacts of LNG on the lower priced gas regime of the country. The country has also failed in exploring and exploiting its significant highquality coal reserves. The PSMP 2010 provided for 50% contribution for the 40,000 MW power generation capacity by the year 2030 to come from coal.31 However, the continued reluctance from policy makers in exploiting coal and significant delays in implementing coal-based projects make coal-fired generation capacity uncertain. Moreover, the permission by the government to build Rampal power plant near Sundarbans will be extremely harmful to the environment and might also cause an ecological disaster in the area. The setting up of a coal-generated power plant near the world’s largest mangrove forest against the advice of experts will not benefit the country because the government has still not formulated its coal policy. Bangladesh could adopt coal as its preferred option for generating power only if superior quality of coal is used. The government also needs to ensure that the power plants use high-efficiency low-emission (HELE) supercritical and ultrasupercritical technology. The state companies running these power plants also need to develop their skills and capacity for project management and operation of these plants from the beginning till the contingency emergency response planning. Failure in exploration and production The goal of Bangladesh being an energy-secure country is thwarted by the fact that the country has failed to discover a large gas or oil field in the last 19 years. The country has added only about 2 Tcf of new gas over this period.32 Moreover, about 12 Tcf of gas has been discovered previously.33 Bangladesh continues to suffer from gas deficit for over a decade and a half. As a result, the industries are not growing at the expected pace and the existing industries are suffering from poor quality of gas supply. Petrobangla-owned national exploration company BAPEX enjoys exclusive rights for exploration in the onshore area. The company could only add 2 Tcf of gas over the last two decades.34 The failure of BAPEX has led to abandoning 108 wells in various projects. Bangladesh was able to resolve their maritime disputes with India and Myanmar in the years 2014 and 2012, respectively.35 The country was able to establish the rights over a vast offshore area which is almost the size of the entire country. However, both EMRD and Petrobangla have failed to invite fresh bidding from the IOCs for shallow and deepwater exploration. Moreover, no new gas field has been discovered offshore till the Shangu offshore gas field. Exploration in the onshore area has also remained limited despite a high growth of gas demand in the country. The lack of interest among the IOCs is also another reason for the lack of exploration in the country. Petrobangla has failed to rope in the IOCs and the investment and technology that these international companies could bring into

Conclusion  149 Bangladesh. The national oil company also failed to create any momentum in offshore exploration after the resolution of disputes with Myanmar and India. According to experts, the lowering of oil price in the global market, less attractive gas price and insufficient data and information about the offshore projects of the country are major reasons for the lack of interest among the IOCs.36 The current petroleum resources of the country are not infinite. Bangladesh is currently importing primary fuel with the government having no realistic long-term plan for fuel import. As a result, the government needs to have a clear idea about the resources the country possesses. Although several surveys by Petrobangla have created optimism for discovering gas and oil in both offshore and onshore areas, the country does not have any other option but to drill exploration wells to ensure energy security. Importing power from other South Asian neighbors Bangladesh is currently importing 600 MW power from India through two fronts of grid connectivity.37 The Prime Ministers of both the countries have signed several MOUs for more power import opportunities from Nepal and Bhutan. Moreover, an Indian company, Adani Group, is working on a coal-fired power project in Jharkhand, India for exporting 1,600 MW power to Bangladesh.38 Bangladesh on the other hand is considering investing $1 billion in Bhutan for developing a hydropower project.39 However, any import of power from Nepal and Bhutan through India needs to be dealt with through an Indian power transmission company. Moreover, all these possibilities may take quite a long time to get implemented. The present energy and power scenario does not provide any assurances about Bangladesh ensuring its energy security. In fact, the country is not ready to meet the challenges required for its vision 2021 and 2041.40 Primary fuel supply, implementation of planned projects, adopting state of the art technology and absorption of higher price implications are some of the challenges that the country is currently facing. Bangladesh needs to also improve its transmission and distribution system in order to import power from other countries. Role of national oil and gas companies One of the challenges for achieving a sustainable long-term energy security is to ensure the supply of primary fuel at an affordable cost. Adopting the right fuel mix of domestic and imported fuel and creating efficiency in energy use are also important components for ensuring energy security of the country. As a result, the role of Petrobangla and its 13 companies is extremely important in ensuring that the country is able to meet its energy demands. However, Petrobangla and its companies have failed over the past decade in many ways in exploiting discovered coal resources and exploring and developing petroleum resources at offshore and onshore areas. They have also failed to gain expertise in efficiently operating and managing gas transmission infrastructures. Petrobangla and its companies

150  Conclusion could not also curb the theft and pilferage of gas distribution, marketing and managing implementation of LNG import on time.41 Moreover, Petrobangla could not develop efficient leadership for managing development and operation of its companies. The government is also finding it difficult to employ competent officials in these companies. For example, BAPEX could not be developed as a flagship company in the upstream sector, while GTCL is burdened with too many infrastructure development projects which results in them giving less attention to their operation and maintenance. The 13 companies of Petrobangla incorporated under the Companies Act, 1994 are designed for running activities relating to the development and operation of different segments of the gas value chain and developing and operating coal and hard rock mines related to CNG, LNG and the LPG sectors. These companies are also supposed to act in accordance with the provisions of the Companies Act as autonomous entities, governed by the board of directors comprising relevant experts, academics and representatives of different stakeholders. However, the EMRD of the Ministry of Energy and Mineral Resources (MOEMR) has made these companies ineffective by appointing nontechnical people in the board of directors of these companies. For example, BAPEX has no person other than the managing director having any exploration and development experience.42 Further, in other companies like BGFCL, out of nine directors, five are from the ministry, while in SGFL, six of the nine directors have no energy background.43 Two mining companies – BCML and MGMCL – have no member of mining in the board. Petrobangla-owned companies are heavily populated by members of EMRD. As a result, these companies are suffering from a lack of competent senior executives. Moreover, there are not enough senior technical executives for the position of company chief executives. Petrobangla also needs reform as the company does not have any senior gas sector professionals engaged as chairman or directors. It is impossible for the company to work effectively without technical people running the company. Further, the country is counting a heavy loss due to the national oil and gas company not being able to carry out its duties in ensuring the energy security of the country. The government needs to make wholesale changes in order to make Petrobangla compete with other foreign national oil companies and IOCs.

Ineffectiveness of SAARC The idea of South Asian cooperation was first discussed by the late King Birendra of Nepal during the 1970s. This idea was taken further by the late President Ziaur Rahman of Bangladesh in the year 1981when he made a proposal for South Asian cooperation in the social and economic arena.44 The areas of cooperation included agriculture, rural development, telecommunications, environment, health and population activities and child welfare.45 Further, in order to implement these agendas, an Integrated Plan of Action (IPA) was introduced in 1983 through a Declaration on South Asian Regional Cooperation. In 1985, a charter was adopted by a summit of South Asian heads of state for establishing the SAARC.46

Conclusion 151 Moreover, bilateral issues were kept outside the purview of regional cooperation. For example, despite trade and investment being important for regional development, they were left out due to them being considered as bilateral matters. To institutionalize SAARC, several information centers and a secretariat was set up all over South Asia. The Agriculture Information Center, Meteorological Research Center, Energy Center, Tuberculosis Center, Documentation Center, Human Development Center and Coastal Zone Management Center were all located across the region.47 A SAARC Forestry Centre was set up in Bhutan, while the SAARC Centre for Disaster Management and Preparedness is located in India.48 However, the increasing energy deficit in South Asian countries has resulted in the setting up of the SAARC Energy Centre. The concept of SAARC Energy Centre was formulated in order to facilitate interregional energy trade and also for collective energy import from outside the region. The Islamabad Declaration in 2004 paved the way for setting up the SAARC Energy Centre.49 However, despite being set up for nearly 17 years, the SAARC Energy Centre has not been effective in dealing with the various energy-related problems in South Asia. According to experts, despite having numerous energy-related studies, the Energy Centre has not been able to formulate a road map for the region.50 Moreover, despite having the SAARC regional electricity network plan approved by the countries involved, the plan has not been implemented. This is due to the countries not setting up the domestic infrastructure required for a regional electricity grid. The tension between the two nuclear armed countries in the region is a major roadblock for the SAARC working effectively. The geopolitical problem of India and Pakistan has divided the region resulting in India trying to corner Pakistan. The mistrust and animosity between the two countries has resulted in SAARC head of governments not meeting for the last ten years. Further, according to an expert “the problem of Kashmir, present since the partition of British India . . . in 1947, has been one of the main obstacles preventing the SAARC region from achieving its full potential”.51 As a result, this endless conflict between the two countries had been a source of frustration for other countries willing to cooperate in the energy field. It is also important to note that focusing solely on the relationship of mistrust between India and Pakistan is not the only reason for a lack of cooperation in the SAARC. The bilateral relationship of other countries with India also had contributed to the ineffectiveness of SAARC. Although the relationship between India and Bangladesh has improved over the last decade, there is still a lingering distrust between the two nations. Although the governments in Bangladesh and India try to paint a rosy picture in the relationship between the two countries, the reality is somewhat different. The building of Tipamukh dam in Northeast India will reduce the flow of water coming into Bangladesh, which will have a major impact on the country’s agrarian landscape. Despite repeated requests by Bangladesh, India has not stopped its work on the dam. The Tipamukh dam has all the hallmarks of another Farakka Barrage, cutting Bangladesh out of water from the Ganges.52

152  Conclusion Further, India’s relationship with Nepal and Bhutan has also soured recently. The increased involvement of Chinese investment in the energy infrastructure of Nepal has caught India by surprise. Further, the recent border dispute with India has also caused mistrust among the two nations. Bhutan’s interest in being part of the Silk Belt Initiative of China has also raised suspicion in India. As a result, all these geopolitical and bilateral issues between the South Asian countries have made SAARC ineffective in promoting energy trade between the countries. On the other hand, Bangladesh’s relationship with Pakistan has been cold over the last decade. The role of Pakistan in the liberation war of Bangladesh is a major stumbling block in ensuring greater energy trade between the countries. Moreover, Pakistan’s relationship with Afghanistan is also of suspicion and mistrust as there are allegations about the former trying to destabilize the government in Kabul in order to counter Indian and US hegemony in the region. This also had a negative impact on SAARC. One of the reasons for SAARC’s infectiveness in the energy and other fields is due to a lack of leadership in the South Asian region. India being the largest and most powerful country in South Asia could have easily given the leadership in making SAARC work. However, the country has always treated SAARC with suspicion as it is under the impression that the regional organization has been created in order to counter Indian hegemony in the region. This has resulted in India ensuring SAARC adopting Article X in its Charter. Article X ensured unanimity in decision-making, and it excluded all bilateral and contentious issues from being discussed.53 This provision has resulted in SAARC being constrained to take any effective decision thus weakening its decision-making capacity. The inclusion of politics and security in the SAARC charter could have acted as a confidencebuilding mechanism to promote cooperation between the countries. The eagerness of India for bilateral and multilateral cooperation with some countries in South Asia has also weakened SAARC. According to experts, India’s preference of bilateral relationship and taking unilateral decisions against its smaller neighbors is a major stumbling block for cooperation in South Asia.54 In order to sustain high economic growth, the South Asian economies require affordable and competitive supply of energy on a long-term basis. As a result, adequate, affordable, clean and sustainable energy is a prerequisite for the development and energy security of all the South Asian countries. However, this will not be possible unless all the countries in the region try to make SAARC effective.

Aggressive role of China in the energy dynamics of South Asia China over the last eight years has made massive investment in the various energy projects in South Asia. In Bangladesh, Pakistan and Nepal, Chinese oil and gas companies have invested billions of dollars with the hope of getting greater access to the resources in these countries. In Pakistan, Chinese companies are developing the energy infrastructure in the country including the development of port facilities, while in Nepal they have invested in the national grid system and in

Conclusion  153 hydro-energy and in Bangladesh they have helped build power plants, ports and exploring natural resources in the country. One of the major reasons for China investing heavily in South Asia was due to a lack of involvement of the US in the energy sector of the region. Further, China also wanted to ensure its energy security and diversify its fuel mix, and the South Asian region provided them the perfect opportunity to do so due to its close geographical proximity. Moreover, the Chinese policy makers had the long-term objective of diminishing the US hegemony and replacing them as the leading power in Asia. As a result, the Chinese military and its energy-related activities are geared toward ensuring that the country’s energy policy does not result in the US trying to cut off its energy supply or interfere with its access to imported energy.55 However, Chinese energy policy is often decentralized and is made on an ad hoc basis. The national oil and gas companies of the country seek profit from their energy ventures abroad, which always does not conform to the thinking of the central government. In fact, according to experts, the Chinese policy is not a coherent strategy, but their energy policies are more a collection of ad-hoc initiatives- some coordinated, some not and some state driven, others market and commercially driven.56 This complicates matters as different Chinese national oil and gas companies can compete against each other in a foreign country. Further, the lack of an Energy Ministry is also a weakness for the country as there is no coordination for the energy policies set on an ad hoc basis.57 Moreover, according to experts the fragmented institutional structure of the energy industry has led to a fragmented energy policy, aggregated from specific industry objectives driven more by the leaders of these industries than by the formulation of sector wide initiatives.58 This has led to the domination of state oil and gas companies which fulfilled the functions of a government agency. The rise of state oil companies like CNOOC (China National Offshore Oil Corporation), SINOPEC (China Petroleum and Chemical Corporation) and CNPC (China National Petroleum Corporation) have played a major role in the energy landscape of the country. For example, in an international tender for building the energy infrastructure in Bangladesh, it is quite normal for CNOOC, SINOPEC and PetroChina to compete against each other.59 As a result, although they are from the same country, their profit motive is more important than representing the energy policy of their central government. The influence of actors from the People’s Liberation Army (PLA) and the Ministry of Foreign Affairs in the Energy Bureau shows the stakes both these state organs have on the energy security of the country. Further, there is a cadre of elite Communist Party officials with direct links to the oil and gas industry, who are

154  Conclusion also important players in the energy landscape of the country.60 All these diverse actors within the Chinese energy landscape further reiterate the uncoordinated Chinese approach to energy security.61 However, despite the internal chaos of China’s energy security policy, the country has been ramping up its presence in the energy sector of the Middle East, Africa, South America, Australia and Asia.62 In South Asia, the country is aggressively pursuing its policy of investing heavily in the energy sectors of Bangladesh, Pakistan, Nepal and Bhutan. In Bangladesh, the country has taken advantage of Bangladesh’s sour relationship with India by investing more than $1 billion in a water management project.63 Pakistan, on the other hand, is dependent on China for improving its energy infrastructure and for also building various power plants across the country. Nepal and Bhutan have also seen Chinese investment in its hydroelectricity sector. All these investments by China have caused unease in India, as the region is considered as India’s backyard. The geopolitical implication in the energy sector of South Asia is immense for all the smaller countries of the region. It is beneficial for countries like Bangladesh, Nepal and Bhutan to diversify their energy mix. Moreover, it also allows them to improve their energy security by not being overly reliant on India. Pakistan has also used the help from the Chinese to counter the Indian hegemony in the region. However, this has resulted in a lack of cooperation among the South Asian countries which is not ideal in the long term. India is partly to blame for Chinese involvement in the region, as it participated only in bilateral negotiations rather than multilateral arrangements which could have improved the energy security scenario in the region. Further, India’s recent border skirmish with China which killed 20 Indian soldiers has also complicated matters as this will have an impact on the energy landscape of the region.64

Lack of involvement of the US in the region The US has over the last ten years withdrawn itself from the various energy projects in South Asia. While the civil nuclear partnership with India no doubt cemented the Indo-US relationship, the importance of the US has declined due to its lack of interest in the region. The period from the 1980s through the 1990s to the 2000s was the time the US actively participated in ensuring that the interests of all the countries in the region were well protected. The country had a strong bond with especially Pakistan and Bangladesh. However, since the US started its courtship with India, the relationship with the other countries has suffered. The reason being, it was thought by the South Asian governments, that the US had ceded its influence in the region in order to please India and has left the region under India’s leadership. This was not taken well by the other countries in the region, resulting in China filling the vacuum. The discovery of shale gas in the US has also played a part in making the country less interested in other parts of the world including South Asia. The massive discovery of shale gas in the US due to technological innovation has resulted in the country becoming an exporter rather than an importer of energy.65 As there

Conclusion 155 was a lack of demand for importing energy, the US started playing a less assertive role in the global energy mix. Moreover, rather than finding the countries to import their energy from, the US has been actively looking for regional and international markets to sell their shale gas. This transformation has resulted in other countries like China and Russia to take a renewed interest in the region. Moreover, the US policy makers had simply paid lip service to the problems faced by the various countries in the region. The Obama and Trump administrations have over the years failed to recognize that most of the problems in the region were due to the lack of energy resources. As the size of the population rose, electricity shortages increased, causing social tensions and devastation in the economy. In fact, the US failed to grasp that in a complex region like South Asia, energy plays a strong role in ensuring geopolitical stability. Further, the US should have supported the building of the Iran–Pakistan–India pipeline which would have greatly increased cooperation in the region. However, due to the US sanctions on Iran and the bad blood between the two countries, the project was discarded. According to the US, supporting the pipeline would have allowed Iran to fulfill its nuclear dream while totally ignoring the fact that it would have given Pakistan its energy security. This shortsighted policy by the US administration ignored the fact that with natural gas reserves being stagnant in Pakistan, gas imports from Iran would have helped both India and Pakistan and would have also contributed toward reducing carbon dioxide emissions in the region.66 The US could also play a role in ensuring more US oil and gas companies participate in the exploration of oil and gas in the Bay of Bengal and by making investments in the energy projects currently taking place in the region. The country could also provide technical help in building power plants and train people to develop the energy sector. As a result, the US needs greater engagement with South Asia as it is a region with tremendous potential and its geographical location is important, if the US wants to counter Chinese hegemony in Asia and in other parts of the world. However, the recent development of USAID investing around $28 million in the South Asian regional energy market is a positive sign of the US reengaging with the region.67

Climate change and South Asia The Paris Agreement signed in the year 2016 has been an important milestone in slowing down carbon emissions in South Asia and in other parts of the world. However, with some countries going almost carbon-neutral and some trying to achieve that goal, there is a growing confidence that a carbon-neutral world may not be impossible to achieve one day. Moreover, due to the abundant availability of fossil fuel, cost-effectiveness of various fuel mixes will still dominate the thinking of the policy makers in South Asia. The policy makers in the region need to consider that winters are getting severe, while summers are extremely hot and humid. Further tsunamis, tidal surges, cyclones and draughts are becoming more common. The sea level is also rising resulting in part of the countries like Bangladesh and Maldives going under water.

156  Conclusion The South Asian region needs to invest more on renewable energy to fulfill their commitment of limiting global warming below 1.5 degree Celsius by the year 2100.68 As a result, dependence on fossil fuels such as coal and oil need to be reduced. Moreover, India, Bangladesh, Nepal and Bhutan are increasingly moving toward solar, hydropower, wind, nuclear and other forms of green energy. This not only will enhance the energy security of these countries but could also be pivotal in lowering emissions in one of the most polluted regions of the world. Further, according to experts, the entire world could be powered by renewable energy in the next 40 years.69 In South Asia, India has one of the highest carbon emissions per person followed by Bangladesh. The carbon emission per person in India is 1.7 tons while for Bangladesh it is 1.1 tons per person.70 Although most of the South Asian countries have no obligation for reducing their emissions in accordance with the Paris Climate Change Agreement, most of the governments in the region have made a sizeable investment for lowering emissions. For example, in its Nationally Determined Contribution (NDC) submitted to the UNFCCC, Bangladesh committed to reduce emissions by 5% by making investment from its own sources.71 Moreover, according to experts, subject to getting global technological and financial support, the South Asian countries can reduce greenhouse gas emissions by 15%.72 Further, almost all the countries in the region have finalized their National Action Plan giving priority in the power, transportation and the industrial sectors. However, ensuring efficiency at all segments of the energy value chain and maximizing the use of renewable energy is critical for ensuring that the countries in the region are fulfilling their commitments under the Paris Climate Change Agreement. According to the research by the SAARC Energy Centre, the power, transportation and the industrial sectors account for 69% of greenhouse gas emissions in the region.73 Further, by the year 2030, it will grow up to 264%.74 The carbon emission accounts for 64 MT of the total emissions and will grow to 230 MT by the year 2030.75 As a result, individual governments in the region are trying to bring it down by 5% or 12 MT by the year 2030 by investing from their own sources.76 However, global assistance can bring it down by 15% or 36 MT.77 The governments of Bangladesh and Nepal have already planned to generate 10% of the total power generation from renewable energy sources.78 Further, it is supposed to be implemented from the year 2021. However, due to the various challenges faced by these two countries, it appears that the target will not be achieved. On the other hand, in India, work on enhancing energy efficiency is ongoing. According to experts, almost 15% of energy can be saved by the year 2021 and 30% by the year 2030 through efficient energy usage in the region.79 For example, in Bangladesh the energy intensity per GDP has reduced by 8.4% in the year 2018 compared to what it was in the year 2014.80 Further, according to the National Action Plan of the country, the government is planning to reduce carbon emissions in the power sector by 18%, in the transportation sector by 24% and in the industrial sector by 10%.81 The entire South Asian region’s energy security will be jeopardized if the countries do not work actively to lower their greenhouse gas emissions and undertake

Conclusion 157 policies which are energy efficient. Further, achieving sustainable energy security is a fundamental requirement to protect the region from environmental catastrophe. Although all the South Asian countries import primary fuel in order to meet the increasing domestic demand, energy efficiency is imperative to meet environmental challenges. As a result, all the countries should make greater investment in non-fossil fuel-based power generation. In the backdrop of increasing natural disasters and dwindling biodiversity in the region, all the governments and the mainstream political parties should take action to deal with the concerns over climate change and human sufferings from global warming. The South Asian governments could take cue from the UK, where the major political parties in their election manifestos have supported a transition to net zero greenhouse gas emission within a few decades and are competing with each other on the policies to attain that objective. In the year 2019, the National Parliament of Bangladesh adopted a motion on planetary emergency arising out of the global climate change, pollution and the biodiversity depletion worldwide.82 While this is a step toward the right direction, other countries in South Asia also need to take a similar stand to protect the region from climate change.

Challenges and the way forward All the South Asian countries have significant challenges to ensure their energy security. However, all of them can deal with these challenges if there is greater cooperation among all the countries in the region. Almost all the countries have domestic challenges that need to be addressed before they can reap the benefits of energy security through cooperation. India has significant issues at its state level as any project requires the approval of both the federal and state governments to proceed. As a result, the federal government is reliant on state government for the approval of pipelines and the electricity transmission projects that cut across state boundaries even though the federal government has the ultimate authority.83 Further, despite India’s immediate need for electricity interconnections, the state government does not always authorize such projects. Moreover, the lack of any clear land titles in tribal, forested and other special areas has delayed numerous energy projects in the country causing investors to back out from these projects. The federal government does not also take any concrete steps to deal with these issues despite pressure from the donor agencies. However, what is required is the federal government passing relevant legislations which lower its dependence on state governments and update the land titles in the tribal and forest areas. Further, greater monitoring is required on the civil services in order to ensure their cooperation in approving mega energy infrastructure projects in the country. In Pakistan, the provincial energy offices with legal and institutional responsibilities have caused problems in the development of hydropower projects in various provinces of the country. For example, when the National Electric Power Regulatory Authority was created for regulation of the power sector, each province demanded its own representative on the commission which created a major

158  Conclusion problem in making the organization operational.84 Further, the dispute between the federal government and the Sind state government regarding who is responsible for enforcing the rules and regulations for the development of coal in the Thar coal deposit has also caused problems in the entire project.85 The conflict between the federal and state government has led to Pakistan not being able to develop one of the largest coal deposits in South Asia. Further, insurgency in Baluchistan due to a lack of governance in the region has also scuppered the government plans to develop various mineral resources in the region. The government needs to have a sound energy plan and legislations to ensure the cooperation of all the stakeholders in the country. A lack of vision and coordination among the various government agencies is also responsible for Pakistan not being able to deal with its chronic energy shortages. Bangladesh on the other hand has an energy plan which the government finds difficult to implement due to a lack of coordination among the various agencies of the government. When the country had abundant supply of gas, it was confused whether it should go ahead with its policy of saving the gas for the future or export it to the neighboring countries. The lack of policy making has resulted in Bangladesh currently suffering from energy supply crunch. The government had also started numerous energy projects like importing LNG and LPG, building nuclear and coal-powered plants and also quick rental power plants to solve loadshedding in the country. All these numerous projects have resulted in the country not being able to maximize its energy efficiency resulting in energy insecurity. The Bangladeshi policy makers also need to ensure that all energy projects go through a thorough environmental impact assessment before they are approved. The building of a coal-powered power plant near the Sundarbans and the Rooppur Nuclear power plant despite serious reservations from the environmentalists and UN agencies is a prime example of the government not paying attention to the environment and red tape.86 The government needs to also ensure the experience and financial viability of the private companies being allowed to build private power plants. A clear energy policy with emphasis on the environment with a focus on a specific fuel mix will improve the energy security of the country. Nepal’s and Bhutan’s dependence on hydroelectricity has led to the lack of energy security of both the countries. Although Nepal wants to diversify to other fuel mix, the government does not have an energy policy in place to deal with the supply crunch facing the country. Moreover, the political problems within the country have led to insufficient investment in the energy infrastructure of the country. The government needs to formulate an energy plan for the next few decades, promote investment from the other countries and ensure greater access to energy resources in order to ensure its energy security. Bhutan, on the other hand, is self-sufficient in terms of energy, but its total dependence on hydropower does not enhance its energy security. The country needs to lower its dependence on India in regard to investment in its energy sector. The recent Chinese investment in the country is a positive development as it will be able to diversify its energy investment. However, the government needs a concrete energy policy in order to ensure that the current energy surplus could be used for future energy development in the country.

Conclusion  159 The lack of a proper tariff structure in all the South Asian countries is also one of the major causes of the lack of energy security. Since all the South Asian governments heavily subsidize the cost of energy in their countries, no tariff structure has been developed in these countries. Tariff structure includes a flat rate tariff, volumetric tariff and multi-part tariff.87 A flat rate tariff is a single tariff applicable to all based on actual power used.88 Volumetric tariff is based on actual metered consumption while multi-part tariffs include two part tariffs, where users pay by both a monthly fee for access and usage and optional tariffs where consumers are offered a menu of pricing plans.89 Further, an effective structure requires taking into account the financial viability, cost-effectiveness, efficiency and social acceptability.90 However, all these are missing when the countries of the region are fixing their tariff structure. A heavy subsidy of electricity, natural gas or petroleum products vary among most of the South Asian countries. The subsidies provided by the government boost domestic demand but discourage conservation.91 Further, governments provide very little incentive for customers to change their consumption pattern.92 Hence, this results in countries having a very little incentive to explore their oil and gas resources which increases their import. According to experts, the failure of Bangladesh, India and Pakistan “to address oil and gas prices at all three stages- wellhead, transport and retail has led to market distortions and refinery bottlenecks”.93 Moreover, excessive subsidy can also lead to debt crisis as seen in Pakistan.94 As a result, all the countries in the region need to rethink their strategy on subsidy and the tariff structure in their respective countries in order to lower imports and improve their energy security. The donor agencies could also play an important role in the energy sector of South Asia. The reason being the donor agencies not only bring investments in the region but could also provide technical help through their involvement in the energy development of the region. The involvement of high-quality technical and legal experts has no doubt increased better energy policy making among the South Asian nations. However, one of the challenges of donor agencies is to ensure greater transparency in their work. The donor agencies should lower the hiring of consultants and hire people with technical background who could work in the field.95 A strong donor and government partnership can be beneficial toward the improvement of energy security of the South Asian countries. Internal politics in the individual countries is also responsible for a lack of cooperation among the South Asian countries. In Bangladesh, the political situation is extremely partisan with the two main political parties divided between Bangladesh Awami-league being close to India and Bangladesh Nationalist Party being perceived as anti-Indian. Politicians from both the two parties blame each other whenever something goes wrong resulting in the policy makers being wary in taking rational energy-related decisions. This is a problem in India as well, as the states closer to Bangladesh are always noncooperating when the federal government wishes to cooperate. As a result, the

160  Conclusion five Indian states sharing their borders with Bangladesh always use their domestic politics as the reason for not allowing the federal government to negotiate on issues such as energy. For example, the federal government could not reach an agreement with Bangladesh in 2011 on sharing the Teesta River water due to the opposition of the Chief Minister of West Bengal.96 The internal conflict between the current federal government led by Narendra Modi and the state governments of Northeast India has spilled outside India’s border. Most of the Northeastern states are extremely poor and are under the impression that the federal government wants to use their mineral resources to enrich the other states. A lack of investment over the years together with insurgency has resulted in these states not cooperating with the federal government. Moreover, sectarian violence between the Hindus and the Muslims has also shaken the trust of India’s neighbors as it was once considered as a secular country. In the case of Nepal, there are internal feuds between the Communist Party of Nepal- Maoists (CPN-M), the Unified Marxist Leninist (UML) and Nepali Congress (NC), which resulted in the country still not being able to draft its Constitution.97 Further, the political instability has caused the country not being able to formulate any energy plans which is detrimental to its energy security. The recent anti-India sentiment has also been used by the political parties to serve their own petty interest. Pakistan on the other hand has internal political conflict between its various provinces which is having a detrimental effect on its energy policy. The secessionist activities in Baluchistan have resulted in the country not being able to explore its mineral resources in this volatile region. Further, political instability in the country between the various political parties and the military does not bode well for the energy situation of the country. The constant political turmoil within the country and the geopolitical tension with India has put them in a precarious situation. Bhutan, the only country in South Asia with relative peace and prosperity, has also seen the country divided between those who want to keep the country environmentally pristine and others who want greater investment and diversity in its energy mix. This conflict has resulted in the country being confused about its energy strategy as it is weighing its options between greater cooperation at the cost of its environment.98 The political football to suit the needs of the political parties within the South Asian countries has resulted in the casualty of cooperation in the energy arena of the region. There is a lack of political will in countries like India, Pakistan and Bangladesh to ensure greater understanding and cooperation in regard to the energy security of all these countries. As a result, all the countries in South Asia need to sort out their internal political conflicts in order to deal with their energy supply issues. Moreover, the region needs a better governance of the power and energy sector in order to improve their energy security. Most of the countries like Bangladesh, Pakistan and to some extent India have corruption plaguing the energy sector resulting in the lack of a sound energy policy. This has a detrimental effect on the

Conclusion 161 supply of the resources, as policy makers grapple to suit their political and other needs in preparing the country’s energy policy. As a result, more transparency and technical experts need to be involved to better coordinate the needs of the country with the available resources. Another important aspect that needs to be dealt with by the South Asian countries is the better management structure of state-owned enterprises. In Bangladesh, the state companies have over the years been incurring huge losses due to mismanagement and a lack of technical expertise. In Pakistan and India, there is a tussle between the various state authorities trying to wrestle the control of these national enterprises despite incurring huge losses, while in Nepal and Bhutan, there is a lack of technical people to run these enterprises. As a result, all these countries should seriously consider privatizing these state behemoths to make them competitive. Further, more technicians are required and they should be sent abroad for extensive training. This experience would help these technical experts to manage mega energy projects in the future. The involvement of the private sector (both local and foreign) in all segments of the power and energy value chain could also increase the competitiveness of state-owned enterprises which in turn could improve the energy security of the region. However, currently, the private sector is not encouraged to invest in the power sector other than in India and Bangladesh. Moreover, greater involvement of the private sector could also lead to modernization of the power and energy transmission and distribution infrastructure, which could have a positive impact on the energy security of the respective countries in the region. Further, all the countries also need to explore and exploit their own primary fuel for the creation of a balanced fuel mix. Most of the countries are not exploiting their own resources properly due to their reliance on imported fuel mix. This not only puts pressure on their economy like in Pakistan and Bangladesh but is also worrying for their energy security. As a result, a greater focus on exploration and exploitation by all these countries is required in order to deal with their supply crunch. However, all the aforementioned solutions for greater energy security in South Asia are not possible without considering the geopolitics of the region. The geopolitical situation in the region is extremely delicate with both India and Pakistan being ready for war at any time. Moreover, the increasing involvement of China as an investor has caused suspicion. Further, the recent border skirmish between India and China can also destabilize the region. As a result, the solution lies with the South Asian countries themselves. All the countries need to cooperate with each other and stand on a common platform like the SAARC to improve each other’s energy security. The current mistrust and suspicion between the South Asian countries can be resolved through confidence building mechanisms and energy diplomacy. This could be in the form of electricity grids and connectivity between the various South Asian countries. Moreover, if China and South Asia could be united, it could also be a win-win situation for all. According to experts, South Asian countries can ensure their energy security if there is i) political perseverance to ensure cooperation, ii) domestic leadership

162  Conclusion building consensus among the people, iii) positive engagement with other regional powers and iv) effective communication with the people of South Asia about the benefits of cooperation.99 However, the fact remains, those regional relationships that have been shaped for centuries cannot be changed overnight. As a result, although greater cooperation among the South Asian countries is the only way forward for energy security, the question remains whether the South Asian citizens and their respective governments are ready for such a leap of faith in order for their future generations to survive.

Notes 1 M.S. Huda, “Addressing Challenges to Regional Energy Cooperation in South Asia”, in S. Narayan, C. Len and R. Kapur (eds), Sustainable Energy Transition in South Asia, Singapore: World Scientific, 2019. 2 Supra, see note 1, p. 26. 3 Ibid, p. 27. 4 Ibid, p. 28. 5 Ibid, p. 29. 6 Ibid. 7 S. Sufi, “Coal Power: Challenges in Generation”, Energy & Power, May 16, 2017. 8 S. Sufi, “How Secure Is Energy Security?”, Energy & Power, May 16, 2018. 9 Ibid, p. 20. 10 M. Lama, “Renegotiating Alternative Integration Model in the SAARC”, International Studies, 54(4), 2017. 11 Ibid, p. 84. 12 Ibid, p. 85. 13 Ibid, p. 86. 14 Ibid, p. 91. 15 Ibid, p. 94. 16 Supra, see note 10, p. 97. 17 Ibid, p. 98. 18 S. Islam, “Energy Cooperation between India and Bangladesh”, in The Geopolitics of Energy in South Asia, Singapore: The Institute of Southeast Asian Studies, National University of Singapore, 2009. 19 M.A. Hossain and S. Sufi, “Security Gets Vulnerable”, Energy & Power, August 1, 2017. 20 Ibid, p. 15. 21 Ibid, p. 16. 22 Ibid, p. 17. 23 M. Hossain, “Energy Efficiency: The Future of Power Generation”, Energy & Power, December 1, 2019. 24 Ibid, p. 24. 25 Supra, see note 23, p. 25. 26 M. Miah, “BAPEX Needs Partner”, Energy & Power, November 16, 2019. 27 Ibid, p. 19. 28 Ibid, p. 20. 29 Ibid, p. 21. 30 Supra, see note 25, p. 26. 31 “The Power Sector Master Plan 2030”, Sustainable and Renewable Energy Development Authority and Power Division, Ministry of Power, Energy and Mineral Resources, Government of the People’s Republic of Bangladesh.

Conclusion  163 32 Ibid, p. 64. 33 Ibid, p. 65. 34 Supra, see note 26, p. 68. 35 S. Sufi, “Exploration Scorecard Looks Miserable”, Energy & Power, February 1, 2018. 36 Supra, see note 35, p. 23. 37 Ibid, p. 24. 38 Ibid, p. 25. 39 Ibid. 40 Supra, see note 31, p. 70. 41 Supra, see note 31, p. 71. 42 R. Armstrong, “HRD: An Urgent Need of Time”, Energy & Power, November 16, 2019. 43 Ibid, p. 14. 44 M.S. Huda and M. McDonald, “Regional Cooperation on Energy in South Asia: Unraveling the Political Challenges in Implementing Transnational Pipelines and Electricity Grids”, Energy Policy, 98, 2016. 45 Supra, see note 44, p. 75. 46 Ibid, p. 76. 47 M. Dubey, “SAARC and South Asian Economic Integration”, Economic and Political Weekly, 42(14), 2007. 48 Ibid, p. 1245. 49 Ibid, p. 1247. 50 Ibid. 51 Supra, see note 44, p. 80. 52 F. Sobhan, “Cooperative Security Framework in South Asia: A Bangladeshi Perspective”, in N. Nayak (ed), Cooperative Security Framework for South Asia, New Delhi: Pentagon Press, 2013. 53 N. Banskota, South Asia Trade & Energy Security: The Role of India, Irvine, CA: Universal Publishers, 2012. 54 Ibid, p. 63. 55 P.A-Speed and R. Dannreuther, China, Oil and Global Politics, Abingdon, Oxon: Routledge, 2011, p. 94. 56 Ibid, p. 95. 57 Ibid, p. 96. 58 Ibid, p. 97. 59 Ibid, p. 99. 60 Ibid, p. 102. 61 Ibid, p. 121. 62 P. A-Speed, The Governance of Energy in China: Transition to a Low-carbon Economy, London: Palgrave Macmillan, 2012. 63 Ibid, p. 46. 64 “India and China Have Their First Deadly Clashes in 45  Years”, The Economist, June 18, 2020. 65 D. Yergin, The New Map: Energy, Climate and the Clash of Nations, New York: Allen Lane, 1st edition, 2020. 66 D. Yergin, “Energy Security and Markets”, in J.H. Kalicki and D.L. Goldwyn (eds), Energy & Security: Strategies for a World in Transition, Washington, DC: Woodrow Wilson Centre Press, 2nd edition, 2013. 67 “USAID Announces $28m Assistance to Advance South Asian Regional Energy Market”, The Financial Express, October 29, 2020. https://thefinancialexpress.com.bd/ 68 M. Rahman, “UN Climate Conference & the Planetary Emergency”, Energy & Power, October 2019. 69 Ibid, p. 21.

164  Conclusion 70 Ibid, p. 22. 71 M.A. Hossain, “Danger of Denying Climate Call”, Energy & Power, October 2018. 72 Ibid, p. 10. 73 SAARC Energy Centre, SAARC Energy Outlook 2030, Islamabad: SAARC Energy Centre, December 2018. 74 Ibid, p. 14. 75 Ibid, p. 15. 76 Ibid, p. 17. 77 M.A. Shuvro, “Making Rural Electrification Sustainable”, Energy & Power, February, 2018. 78 M.A. Hossain, “Nepal Eyes Generating 40,000MW of Electricity in 10  Years”, Energy & Power, February 2018. 79 Ibid, p. 20. 80 Supra, see note 78, p. 21. 81 Ibid, p. 23. 82 Ibid, p. 24. 83 Supra, see note 53, p. 75. 84 Supra, see note 53, p. 78. 85 Ibid. 86 Ibid, p. 80. 87 Supra, see note 53, p. 68. 88 Ibid, p. 69. 89 Ibid, p. 70. 90 Ibid, p. 71. 91 Ibid, p. 72. 92 Ibid, p. 79. 93 Ibid, p. 80. 94 Supra, see note 52, p. 123. 95 Ibid, p. 124. 96 Supra, see note 52. 97 F. Krampe, “Empowering Peace: Service Provision and State Legitimacy in Nepal’s Peace-building Process”, Conflict, Security & Development, 16(1), 2016. 98 Supra, see note 53, p. 57. 99 R.R. Panda and M. Karthik, “Regional Energy Cooperation for Accelerating CrossBorder Electricity/ Energy Trade & Mobilizing Investment in BIMSTEC Region”, Energy & Power, March 16, 2020.

Selected bibliography Armstrong, R. “HRD: AN Urgent Need of Time”, Energy & Power, November 16, 2019. “As Bangladesh’s Relations with India Weakens, Ties with China Strengthen”, The Economist, September 19, 2020. Banskota, N. South Asia Trade & Energy Security: The Role of India, Irvine, CA: Universal Publishers, 2012. “BP Statistical Review of World Energy”, BP, London, 2019, https://www.bp.com/en/ global/corporate/news-and-insights/press-releases/bp-statistical-review-of-worldenergy-2019.html Dadwal, R. “Can the South Asian Gas Pipeline Dilemma Be Resolved Through a Legal Regime?”, Strategic Analysis, 32, 2011. Dubey, M. “SAARC and South Asian Economic Integration”, Economic and Political Weekly, 42(14), 2007.

Conclusion 165 Ebinger, C.K. Energy and Security in South Asia: Cooperation or Conflict? Washington, DC: Brookings Institution Press, 2011. Hossain, I. “The State of Energy (Gas) Sector in Bangladesh and Implications for South Asian Regional Cooperation”, CPD, Dhaka, 2001, www.cpd-bangladesh.org. Hossain, M.A. “Danger of Denying Climate Call”, Energy & Power, October 2018. Hossain, M.A. “Energy Efficiency: The Future of Power Generation”, Energy & Power, December 1, 2019. Hossain, M.A. “Nepal Eyes Generating 40,000MW of Electricity in 10 Years”, Energy & Power, February 2018. Hossain, M.A., and S. Sufi, “Security Gets Vulnerable”, Energy & Power, August 1, 2017. Huda, M.S. “Addressing Challenges to Regional Energy Cooperation in South Asia”, in S. Narayan, C. Len, and R. Kapur (eds), Sustainable Energy Transition in South Asia, Singapore: World Scientific, 2019. Huda, M.S., and S.H. Ali, “Environmental Peace Building in South Asia: Establishing Consensus on Hydroelectric Projects in the Ganges-Brahmaputra-Megna (GBM) Basin”, Geoforum, 96, 2018. Huda, M.S., and M. McDonald, “Regional Cooperation on Energy in South Asia: Unraveling the Political Challenges in Implementing Transnational Pipelines and Electricity Grids”, Energy Policy, 98, 2016. “India and China Have Their First Deadly Clashes in 45 Years”, The Economist, June 18, 2020. Islam, S. “Energy Cooperation between India and Bangladesh”, in The Geopolitics of Energy in South Asia, Singapore: The Institute of Southeast Asian Studies, National University of Singapore, 2009. Krampe, F. “Empowering Peace: Service Provision and State Legitimacy in Nepal’s Peacebuilding Process”, Conflict, Security & Development, 16(1), 2016. Kugelman, M. “Can the TAPI Pipeline Be Any More Than a Pipe Dream?”, The Diplomat, December 17, 2015. Lama, M. “Renegotiating Alternative Integration Model in the SAARC”, International Studies, 54(4), 2017. Miah, M. “BAPEX Needs Partner”, Energy & Power, November 16, 2019. Nepal Electricity Authority. Annual Report 2018, Katmandu: Nepal Electricity Authority, 2018. Osmani, R. “TAPI Gas Pipeline: Are Sino-US Relations a Zero Sum Game?”, The Central Asia-Caucasus Analyst, January 19, 2016, https://www.cacianalyst.org/publications/ana lytical-articles/item/13321-tapi-gas-pipeline-are-sino-us-relations-a-zero-sum-game?. html “Overview of South Asian Power Sector”, South Asia Regional Initiative for Energy Integration, New Delhi, 2018, https://sari-energy.org/oldsite/article/SARI_Energy_brochure.pdf Panda, R.R., and M. Karthik, “Regional Energy Cooperation for Accelerating Cross-Border Electricity/ Energy Trade & Mobilizing Investment in BIMSTEC Region”, Energy & Power, March 16, 2020. Pandey, P. India Bangladesh Domestic Politics: The River Ganges Water Issues, Singapore: Springer, 2016. Rahman, M. “UN Climate Conference  & the Planetary Emergency”, Energy & Power, October 2019. SAARC Energy Centre. SAARC Energy Outlook 2030, Islamabad: SAARC Energy Centre, December 2018.

166  Conclusion Shuvro, M.A. “Making Rural Electrification Sustainable”, Energy & Power, February 2018. Sobhan, F. “Cooperative Security Framework in South Asia: A Bangladeshi Perspective”, in N. Nayak (ed), Cooperative Security Framework for South Asia, New Delhi: Pentagon Press, 2013. Sobhan, R. “Growth Zones in South Asia: Potential and Feasibility”, Asia Pacific Development Journal, 7(1):23–41, 2000. “South Asia Regional Overview”, EIA, March 2017, www.eia.doe.gov. Speed, P.A. The Governance of Energy in China: Transition to a Low-carbon Economy, London: Palgrave Macmillan, 2012. Sufi, S. “Coal Power: Challenges in Generation”, Energy & Power, May 16, 2017. Sufi, S. “Exploration Scorecard Looks Miserable”, Energy & Power, February 1, 2018. Sufi, S. “How Secure Is Energy Security?”, Energy & Power, May 16, 2018. “The Power Sector Master Plan 2030”, Sustainable and Renewable Energy Development Authority and Power Division, Ministry of Power, Energy and Mineral Resources, Government of the People’s Republic of Bangladesh. “USAID Announces $28m Assistance to Advance South Asian Regional Energy Market”, The Financial Express, October 29, 2020. https://thefinancialexpress.com.bd/ Yergin, D. “Energy Security and Markets”, in J.H. Kalicki and D.L. Goldwyn (eds), Energy & Security: Strategies for a World in Transition, Washington, DC: Woodrow Wilson Centre Press, 2nd edition, 2013. Yergin, D. The New Map: Energy, Climate and the Clash of Nations, New York: Allen Lane, 1st edition, 2020.

Index

accessibility 6, 16, 17, 24 – 6, 84, 129, 133, 138 affordability 6, 7, 16, 17, 24, 26, 91, 94, 129, 147 Afghanistan 9, 11, 13, 25, 38, 51, 69, 70, 74, 75, 83, 86 – 9, 129, 130, 137, 139, 143, 144, 152 Africa 22 – 3, 37 – 9, 75, 85, 131, 133, 154 agreement(s) 8 – 11, 18, 19, 36, 43, 44, 47, 56, 71, 75, 84 – 8, 90 – 1, 107, 112 – 13, 119 – 22, 125, 129, 131 – 3, 135 – 8, 145, 155, 156, 160 agriculture 38, 46, 59, 101, 104, 150 – 1 Akram 118 alternative 2, 4, 18, 40, 48, 80, 115, 116, 162 Amazon 26 Andhra Pradesh 42 Antarctica 26 Arctic 29 Argentina 23, 43 Arun 80, 135 Arunachal Pradesh 59 Asalouyeh 86 Asia 1, 3, 5, 7, 8, 10 – 4, 19, 20, 22, 24, 25, 28, 31 – 5, 36, 37 – 8, 42, 54, 62 – 3, 67 – 9, 70, 72 – 4, 81 – 5, 88 – 9, 90 – 5, 114, 129, 131, 134 – 6, 138, 141 – 5, 151 – 9, 160, 161 – 6 Asian 1 – 8, 10 – 2, 17, 23, 26, 35, 59, 61, 62, 64, 66 – 9, 70, 72 – 3, 75, 78, 82 – 4, 88 – 9, 90 – 4, 100, 118, 129, 131 – 3, 136 – 8, 141 – 4, 149, 150 – 9, 160, 161 – 6 Assam-Arakan Basin 42 Ashuganj 119 Atomic Energy Research Establishment (AERE) 121 Australia 23, 39, 41, 154 availability 6, 16 – 17, 24, 26 – 7, 76, 121, 129, 131, 134, 138 – 9, 147, 155

Baghabari 112 Bakhrabad 102, 119, 120 Balaju-Hetauda-Birganj 55 Balakovo 122 Baluchistan 50 – 1, 74 – 5, 85 – 6, 88, 131, 133, 137, 158, 160 Bangladesh 2 – 6, 8 – 10, 11 – 3, 15, 20, 25, 26, 36, 38, 43, 67, 68, 69, 70, 71, 73, 74, 76 – 9, 81, 83 – 5, 90 – 2, 94, 96 – 9, 100 – 11, 115, 117, 118, 121 – 3, 125, 127 – 9, 130, 131 – 4, 136 – 62 Bangladesh Atomic Energy Commission (BAEC) 121 Bangladesh Awami League 159 Bangladesh Gas Fields Company Limited (BGFCL) 102 Bangladesh Nationalist Party 159 Bangladesh Petroleum Corporation (BPC) 106 Bangladesh Petroleum Exploration & Production Company Limited (BAPEX) 99 Bangladesh Power Development Board, The (BPDB) 98 bank 25, 36, 38, 55, 57, 59, 64, 66 – 8, 79, 81, 86, 88, 100 – 1, 103, 118 barrels vii, 23, 42, 50, 73 basin(s) 2, 37, 42, 47, 50, 103, 123, 141 – 2 Basochhu 135 Bay of Bengal 2, 12, 77, 84, 99, 113, 116, 117, 140, 143 – 5 Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) 13, 15, 126 – 7, 143 Beanibanzar 119 Bengal 2, 12, 40, 77, 84, 99, 113, 116, 117, 140, 143 – 5, 155, 160 Bhangura 102, 120 Bheramara 119 Bhutan 2, 5, 6, 8 – 13, 25, 35, 38, 43, 59, 60 – 1, 67 – 9, 70, 71, 73, 74, 77, 80 – 1,

168 Index 85, 90 – 1, 129, 130, 131 – 2, 134 – 9, 140, 144 – 5, 149, 151 – 2, 154 – 5, 158, 160 – 1 Bibiyana 76, 99, 102, 112, 115, 116, 119, 120 bilateral 8, 71, 73, 75, 79, 80, 84 – 5, 90, 129, 131 – 3, 135 – 6, 138, 144, 151 – 2, 154 bill(s) 36, 47, 73, 105, 124, 138 billion(s) 1, 5, 36, 38, 40, 42, 47, 51, 63, 67, 74, 75, 80, 84 – 8, 97 – 9, 102, 104, 118, 121, 129, 149, 152, 154 biofuels 20, 39 biogas 53, 55 biomass 20, 21 – 2, 35, 40, 44, 49, 57, 59, 60, 70, 76, 98, 129, 131 – 2, 134, 145 Biratnagar 57 Birendra 150 bond(s) 1, 7, 90, 154 Boropukuria 105 boundary 10, 19, 20, 73, 117, 144 Brazil 39, 43 Brahmaputra 43, 77, 141 – 2 British 7, 151 budget 26, 43, 78 bureaucracy 59, 61, 123, 125 Cambay Basin 42 Canada 16, 23, 28 capital 18, 19, 22, 79, 146 carbon dioxide 18, 21, 29, 155 Chatak 117 Chattogram 76, 113, 115, 116, 120, 146 Chernobyl 20 Chevron 102, 116, 120 Chukka 60 China 5, 7, 9, 10, 12, 23, 28, 32 – 3, 52, 65, 67, 69, 70, 72 – 5, 77 – 8, 80 – 9, 91, 93 – 4, 102, 130, 133 – 40, 142 – 4, 152 – 4, 161 China National Offshore Oil Corporation (CNOOC) 153 China National Petroleum Corporation (CNPC) 153 circuit 55 clean 22, 26, 80, 83, 152 coal 2, 3, 4, 10, 12, 13, 15, 20 – 2, 25 – 6, 35 – 6, 39, 40 – 3, 46, 48 – 9, 51, 53, 54, 55, 57, 59, 60, 61, 70, 74, 76, 77, 79, 88 – 9, 96, 97, 98, 99, 100, 101, 103 – 5, 107, 111, 114, 118 – 9, 122, 124, 126, 128 – 9, 131 – 4, 136, 138, 140, 144 – 6, 148 – 50, 155, 158, 162 cogeneration 44, 53 cold war 20, 85 combustible 49, 59 commercial 1, 23, 37, 43, 45 – 7, 49, 52, 57, 59, 61, 73, 83, 88, 123, 129, 132, 153

Communist Party of Nepal- Maoists (CPN-M) 160 compressed 39, 51 Compressed Natural Gas (CNG) 39, 116, 119, 150 connectivity 112, 149, 161 Consolidated Mine Rules, The (1952) 52 consortium(s) 37, 43, 58, 71, 117, 120 consumer(s) 1, 4, 6, 7, 24, 26, 35, 40, 45 – 6, 49, 51, 57, 73, 82, 87, 104, 112, 123, 159 consumption 1, 5, 12, 17, 20 – 4, 26 – 7, 29, 35, 37, 40 – 2, 45 – 6, 53, 55, 59, 61, 68, 70, 72, 80, 96, 98, 100 – 1, 106 – 7, 114, 120, 129, 132, 147, 159 contract(s) 5, 43, 51, 70, 77, 100 – 2, 114 – 15, 118, 122, 133, 146 – 7 cooperation 7 – 12, 13, 14, 15, 23, 67, 69, 70 – 3, 75, 77, 79, 81, 84 – 5, 87 – 8, 90 – 2, 94, 101, 126 – 7, 132, 135 – 7, 140 – 3, 150 – 5, 157 – 65 corridor 71, 75 corruption 28, 36, 53, 54, 117, 119, 123, 160 cost(s) 3 – 5, 16, 18, 21 – 2, 26, 36, 36, 41, 46, 50, 65, 68, 71, 78, 80, 86 – 8, 97 – 9, 101 – 7, 117, 119, 120 – 1, 124, 129, 149, 155, 159, 160 Cox’s Bazar 117 crisis 2, 19, 47, 52 – 3, 72, 85, 116, 144, 159 cross-subsidized 106 crude oil 1, 41 – 2, 117, 120, 136 crunch 2, 3, 5, 6, 7, 10, 12, 27, 51, 61, 70, 73, 76, 80, 84, 91, 113, 122, 131, 132, 133, 138, 158, 161 customer(s) 4, 57, 146, 159 Czech Republic 122 Dabhol 43 Daewoo Posco 147 Dagacchu 135 dam(s) 46 – 7, 50, 55, 60, 77, 122, 135, 151 Dauletabad 88 deficit 37, 44, 47, 76, 103, 113, 116, 118, 119, 122, 130, 132 – 4, 148, 151 demand(s) 1, 2, 3, 4, 5, 6, 12, 16, 20, 22 – 3, 25 – 9, 35 – 7, 40 – 2, 45 Devighat 135 Dhaka 67 – 8, 116, 125, 128, 141 – 2, 146 Dhanua 119, 120 diesel 48, 57, 61, 97, 103, 106, 108, 116, 136, 146 Dighipara 114 disruption(s) 4, 6, 16, 17, 24 – 5, 27, 36, 46, 101, 116, 139 distribution 9, 23, 26, 38, 45, 47, 49, 51, 56, 57, 106, 129, 146, 147, 149 – 50, 161

Index  169 diversification 4, 6, 17, 22, 24, 48, 76, 82, 91, 96, 99, 124, 129, 134 domestic 1, 2, 4, 6, 9, 16, 18, 24, 28, 29, 36, 40, 41 – 2, 45 – 6, 50, 53, 61, 70, 72, 73, 76, 80, 84, 85, 87 – 8, 91, 96, 98, 101, 104, 106, 112, 113, 114, 120, 122 – 4, 129, 130, 134, 137, 140 – 1, 149, 151, 156 – 7, 159, 161 downstream 39, 49, 105 East-Asia 19 ecological 18, 148 economic 1, 7 – 9, 12, 17, 18, 19, 20, 21, 24, 27 – 8, 35, 36, 44, 46 – 9, 52 – 5, 58 – 9, 61 – 2, 68, 70 – 9, 82 – 5, 91, 94, 96, 98, 104, 123 – 4, 129, 133, 138 – 9, 143 – 7, 150, 152 economy 4, 6, 17, 20, 25 – 6, 29, 35 – 7, 44, 48, 57 – 9, 67, 80, 96, 101, 103, 106, 115, 132, 138, 140, 144, 145, 146, 155, 161 Ecuador 84 Electricity Tariff Fixation Commission, The (ETFC) 57 emission(s) 18, 19, 22, 23, 25, 42, 83, 148, 155 – 7 energy 1 – 37, 38, 39, 40, 42 – 3, 45 – 9, 50 – 63, 65, 101, 104 – 14, 117, 118, 121 – 9, 130, 131 – 66 Energy and Mineral Resource Division (EMRD) 148, 150 Energy Independence and Security Act, The (2007) 17 Energy Security and Sustainable Development (ESSD) Framework 14, 24, 32, 141 environment 2, 10, 14, 17, 19, 20, 25, 26, 30, 35, 66 – 8, 73, 77, 89, 90, 92, 94, 104, 145, 148, 150, 158, 160 Europe 4, 19, 21, 23, 28, 82 exploitation 2, 38, 51, 52, 59, 70, 72, 73, 83, 103, 105, 111, 112, 114, 161 exploration 2, 5, 26, 37 – 9, 42, 46 – 7, 50 – 1, 58, 70, 72 – 3, 76 – 9, 83, 92, 94, 98 – 9, 101 – 2, 103, 106 – 8, 111 – 3, 115 – 7, 120, 122 – 5, 128, 133 – 4, 139, 143, 145, 147 – 9, 150, 155, 161 export(s) 23, 26, 28, 59 – 61, 71, 78, 80, 82, 87 – 9, 104, 105, 132, 134 – 6, 140, 144 – 5, 158 Faisalabad 46 Farakka 122, 151 farmers 38, 45, 46 Fenchuganj 120 Feni 117

fertilizer 42, 45, 51, 73, 77, 112, 119, 122 – 3 Floating Storage and Regasification Unit (FSRU) 117, 120 Food and Energy Security Act of the US, The 17 foreign 19, 28, 30 – 1, 36, 41, 49, 50, 52, 54, 56, 58, 61, 70, 71, 72, 75, 77 – 8, 81, 84, 87, 100, 102, 132, 135, 137 – 8, 150, 153, 161 fuel(s) 1 – 4, 6, 7, 16, 17, 19, 20 – 4, 25 – 6, 28 – 9, 35 – 7, 39 – 40, 42, 45, 48, 54, 55, 59, 60 – 1, 70, 73 – 4, 76, 81, 83, 90, 96, 97, 98 – 9, 100, 101, 103 – 6, 108, 112, 114 – 18, 124, 131 – 4, 138 – 40, 143 – 7, 149, 153, 155 – 8, 161 Fukushima 122 furnace 97, 103, 106, 107, 108, 112, 146 gain(s) 8 – 11, 37, 71, 79 – 81, 85 – 6, 89, 90, 136 – 8, 140 Galkynysh 137 game 7, 12, 31, 88, 94, 95, 142 gap 1, 73, 101 gas 1 – 6, 12, 16, 18, 19, 20 – 6, 28 – 9, 31, 36 – 40, 42 – 3, 45 – 51, 53 – 4, 61 – 2, 68, 70 – 9, 82 – 4, 86 – 9, 91, 93 – 6, 97, 98 – 120, 122 – 5, 127, 129, 131 – 4, 136 – 50, 152 – 9 Gas Authority of India Ltd, The (GAIL) 37, 39, 43, 88 Gas Exporting Countries Forum (GECF) 24 gasoline 61 GAZPROM- 103, 120 geographical 69, 137 – 8, 153, 155 geological 2, 40 geopolitics 3, 6, 7, 11 – 2, 18, 19, 20, 24, 27 – 8, 62, 68 – 9, 77, 87, 91 – 2, 94, 130, 135, 138 – 9, 143, 161 – 2 geostrategic 71 geothermal 21 Ghazi-Barotha Hydro-power Project 50 global 1, 4, 12, 16, 17, 19, 20 – 3, 26, 27, 28, 29, 30, 31, 32, 37, 41, 63, 70, 72, 82, 86, 89, 104, 129, 140, 142, 143, 149, 155, 156, 157 Global Agriculture Information Network (GAIN) 104 government(s) 2, 3, 6 – 7, 10, 12, 13, 15, 19, 20, 23, 26, 28, 35 – 7, 40 – 9, 51 – 62, 64 – 75, 77 – 80, 83 – 6, 88, 91, 96 – 101, 103 – 8, 111 – 25, 127 – 8, 131 – 4, 136, 140, 145, 146 – 54, 156 – 60, 162 greenhouse 19, 156 – 7 grid(s) 8, 36, 38, 44 – 5, 49, 55, 57, 71, 80, 85, 89, 90, 97, 98, 101, 103, 106, 112,

170 Index 116, 119, 120, 122, 124, 129, 132, 136, 144 – 5, 146 – 9, 151 – 2, 161 Gross Domestic Product (GDP) 1, 23, 36, 48, 54, 59, 96 – 8, 104, 107, 111, 132, 156 Gujarat 42 – 3, 86 gulf 23, 72, 81 – 2, 86, 93, 95 Gulf Cooperation Council 23 Gwadar 74, 75, 85, 137 Habiganj 102, 120 Haripur 112 Hatikomrul 119 Hetauda 55, 57 hegemony 8, 75, 152 – 5 high-efficiency low-emission (HELE) 148 Himachal Pradesh 59 hub 1, 75, 85, 129, 143 Hungary 122 Hyderabad 46 hydrocarbon 1, 2, 36 – 8, 42, 58, 72, 75, 82, 84 – 5, 144 hydroelectricity 2, 22, 43, 60, 71, 73, 85, 89, 131, 133, 135, 140, 145, 154, 158 hydropower 2, 11, 18, 36, 38, 40, 43, 46 – 50, 52 – 3, 55 – 61, 66, 68 – 9, 70, 76, 80 – 1, 85, 98, 100, 129, 131 – 5, 138, 140, 142, 144 – 6, 149, 156 – 8 import(s) 1 – 6, 16, 17, 23, 36 – 8, 41, 43, 46 – 7, 50 – 1, 55, 56 – 7, 59, 61, 70, 71, 73, 76, 79, 81, 82, 85, 88, 90, 98, 99, 100, 101, 103 – 5, 112, 113, 114, 115, 117, 118, 120, 124, 129, 130, 131 – 4, 137 – 9, 140, 143, 144 – 51, 154 – 6, 159 Independent Power Producers (IPPs) 52, 144 India 1, 2, 5 – 12, 13, 14, 25, 26, 28, 35 – 47, 50 – 1, 55 – 6, 59 – 63, 67 – 73, 74, 75 – 94, 100, 102, 107, 112, 117, 118, 119, 122, 129, 130, 131 – 49, 151 – 2, 154 – 65 Indian Oil Corporation (IOC) 37 – 8 Indo-Bangla 90 Indonesia 20, 41, 82 Indo-Pacific 84 Indus 47, 50, 75, 132 Indus Basin Water Treaty, 1958 47 infrastructure(s) 2, 4 – 6, 9, 16, 20, 25, 28, 45 – 6, 48, 51, 55, 69, 73, 75, 77, 79, 96, 104, 115, 118, 119, 124, 132 – 7, 139, 140, 149 – 54, 157 – 8, 161 insecurity 5, 6, 29, 61, 147, 158 insurgency 11, 72 – 4, 136 – 7, 158, 160 Integrated Plan of Action (IPA) 150 International Energy Agency (IEA) 1, 17, 21, 29, 40 – 1, 44 – 5, 50, 53 – 4 International Monetary Fund 81

International Oil Companies (IOCs) 5, 37, 42, 47, 58, 70, 77 – 9, 81, 99, 101 – 3, 105, 107, 111 – 2, 113, 115, 116, 117, 120, 122, 123 – 4, 148 – 50 investment(s) 5, 6, 9, 10, 11, 13, 15, 18, 31, 36, 38, 41 – 2, 44 – 5, 48, 51 – 2, 54 – 6, 58, 60 – 1, 72 – 3, 75, 77 – 80, 84 – 6, 97, 99, 102, 115, 126 – 7, 132, 134, 140, 147 – 8, 151 – 2, 154 – 9, 160 IPI 86 – 8, 93, 95, 145 Iran 24, 37, 39, 41 – 3, 50 – 1, 82 – 4, 86 – 9, 93, 95, 122, 130, 137, 144, 155 Iraq 41, 82, 93, 95 irrigation 47 Islamabad 48, 54, 55, 75, 89, 130, 141 – 2, 151 Ishwardi 119 Israel 145 Jalalabad 120 Jaldhaka 135 Jamalganj 114 Jamuna 123 Japan 14, 16, 32, 77 – 8, 82, 101, 130, 141 Japan International Cooperation Agency (JICA) 101, 118 Jessore 119 jet fuel 48 Jhelum 47 Kabul 152 KAFCO 122, 123 Kailashtila102, 120 Kali Gandaki 57 Karachi- 49, 52, 137 Kashmir 86, 136 – 7, 151 Karnali 80, 135 Kathmandu 55, 92, 94 Kataiya 135 kerosene 45, 61, 106 – 7, 145 Kazakhstan 84 Khalespeer 114 Khan, Imran 145 Khimti Khola 58 Khulna 112, 116, 117, 119 Khustia 119 Khyber Pakhtunkwa 75 kilogram of oil equivalent (Kgoe)- 129 Kochi 39, 43 Kris 147 Krishna–Godavari Basin 42 Kulekhani 55, 57 Kurichu 135 Kutubdia 101, 113, 116, 147 Kuwait 37, 41, 82, 130

Index  171 Latin America 37 – 8, 131 Libya 39, 42, 87 liquid(s) 2, 21, 26, 39, 61, 98, 100, 101, 112, 114, 118, 120, 132, 144, 145, 146 Liquefied Petroleum Gas (LNG) 3, 23, 42 – 3, 45, 54, 86, 88, 93, 95, 98, 99, 101 – 2, 106, 113, 114, 115, 117, 118, 120, 122, 124 – 5, 133 – 4, 136, 138, 140, 144 – 5, 147 – 8, 150, 158 liquid petroleum gas 39, 61 load-shedding 2, 112, 144, 146, 158 loop line 119, 120 Magnama 117 Magurchara 78 Maheskhali 114, 120 Malakand 50 Malaysia 20, 82, 130 Maldives 11, 13, 25, 38, 70, 74, 81, 129 – 30, 146, 155 Mangla 47, 50 Manipur 72 market(s) 1, 4, 6, 9, 19, 24, 26 – 8, 32, 36, 39, 40, 42, 45 – 6, 54, 57, 61, 70, 72 – 3, 80, 82, 85, 93, 95, 102, 104 – 6, 113, 115, 149, 153 – 5, 159 Marsyangdi 57, 80 Matarbari 118 Meghnaghat 112 Middle East- 2, 4 – 6, 20, 22 – 3, 27, 37 – 8, 41, 75, 82, 85, 131, 138 – 9, 146, 154 military 8, 9, 20, 28, 48, 82 – 4, 138 – 9, 153, 160 Millennium Development Goals (MDG) 146 mineral(s) 2, 3, 5, 13, 15, 41, 59, 75, 98, 125, 128, 147, 150, 158, 160, 162 mining 3, 41, 44, 51 – 2, 59, 86, 104 – 5, 114, 118, 150 ministry 13, 15, 38 – 9, 44, 48 – 9, 54, 56, 59, 62, 64, 67 – 8, 71, 98, 113, 116, 120, 125, 128, 150, 153, 162 mobilization 70, 79 Modi, Narendra 160 Mongolia 44 Moulavi Bazar 102, 120 Mozambique 39, 41 Multan 46 multilateral 8, 73, 90, 144 – 5, 152, 154 Mumbai 39, 42 Muzzafarpur–Dhalkebar 80 Myanmar 2, 42, 71, 73, 102, 117, 144, 148 – 9 National Energy Policy, The (NEP) 96, 107 National Integrated Energy Plan, The (NIEP) 49

Nationally Determined Contribution (NDC) 156 neo-liberal(s) 10 – 1, 14, 15, 79, 81, 85, 90 – 1, 137, 139, 140 neoliberalism 69, 75 neorealism 69, 75, 91 neorealist 8, 9, 11, 73, 85 – 7, 89 – 91, 137, 139 Nepal 2, 5, 8 – 12, 13, 25, 35, 38, 43, 54 – 8, 61, 66 – 9, 70, 71, 73, 74, 76, 77, 80 – 1, 85, 91 – 2, 94, 129, 130, 131 – 41, 144 – 5, 149 – 50, 152, 154 – 6, 158, 160 – 1 Nepal Electricity Authority (NEA) 55 (electric) 56, 66 (electricity), 68, 141 Nepali Congress (NC) 160 network(s) 19, 39, 44, 45, 46, 60, 73, 104, 132, 151 Nigeria 37 noncommercial 83, 129 North-America- 19, 21, 23 Northeast 38 – 9, 42, 71 – 2, 77, 90, 100, 136, 151, 160 Northwest 42, 99 North West Power Generation Company (NWPGCL) 119 nuclear 18, 20, 21 – 2, 29, 36, 40, 43 – 4, 46 – 9, 52, 54, 65, 67, 68, 74, 75, 76, 82 – 3, 85 – 7, 98, 99, 100, 101, 112, 114, 121 – 2, 127, 129, 131, 133 – 4, 136, 138 – 40, 144 – 5, 151, 154 – 6, 158 Nuclear Non-Proliferation Treaty, The 52 Obama administration 155 offshore 2, 28, 42, 76, 101 – 2, 103, 107, 111, 112, 113, 116, 120, 147 – 9, 153 oil 1 – 6, 10, 12, 16, 18, 19, 20 – 4, 25 – 8, 31, 36 – 43, 45 – 50, 53 – 4, 57 – 9, 61 – 3, 67 – 8, 70, 72 – 3, 74, 76, 77 – 8, 80 – 6, 90, 92, 95, 97, 99, 101 – 2, 103, 105 – 8, 111 – 2, 113, 115, 116, 117, 120, 123, 125, 127, 129, 131 – 4, 136 – 40, 143 – 4, 146, 148 – 50, 152 – 3, 155 – 6, 159 – 60 Oil and Natural Gas Corporation (ONGC) 37 – 9, 62, 68, 70, 116, 147 onshore 2, 42, 76, 103, 107, 111, 113, 116, 148 – 9 OPEC 23 Pakistan 2, 5 – 9, 11, 12, 13, 25, 26, 35, 36, 38, 43, 46 – 53, 54, 55, 64 – 5, 67 – 9, 70, 73, 74, 75, 76, 81, 83 – 91, 122, 129, 130, 131, 133 – 4, 136 – 9, 143 – 5, 151 – 2, 154 – 5, 157 – 61 Pakistan Atomic Energy Commission, The 47 – 9, 52 – 3

172 Index Pakistan Electric Power Company (PEPCO) 49 Panauti 55 pandemic 1 Parbatipur 136 Paris Climate Change Agreement, The 19, 156 Payra 118, 119 People’s Liberation Army (PLA) 153 Petrobangla 76, 92, 95, 101 – 2, 111, 112, 113, 115, 116, 117, 119, 120, 123, 125, 127 – 8, 136, 146 – 9 Petrochina 153 petroleum 16, 22, 27 – 8, 32 – 3, 38 – 9, 41 – 2, 45, 48 – 50, 57, 59, 61, 71 – 2, 78, 99, 106, 129, 130, 131, 133 – 4, 144 – 5, 149, 153, 159 Petronet 43 Pharping 55 Phewa 135 Phulbari 104, 114 pipeline(s) 11, 23, 28, 39, 42, 45, 47, 49, 51, 69, 71 – 2, 74 – 5, 82 – 4, 86 – 9, 91 – 5, 115, 119, 120, 124, 129, 136, 137, 141 – 2, 144 – 5, 155, 157 plants 2, 3, 5, 10, 25, 47, 51 – 3, 56 – 7, 59, 61, 97 – 100, 102, 105 – 6, 108, 112, 114, 116, 117, 118, 119, 122 – 3, 132 – 4, 136, 144 – 6, 148, 153 – 5, 158 Polan 137 political 3, 7, 8, 10, 16, 19, 48, 51, 54, 56, 58 – 9, 67, 72 – 3, 75, 77 – 80, 82 – 3, 85, 94, 105 – 7, 122, 132, 135 – 6, 143, 145 – 6, 157 – 61 pollution 19, 29, 104, 131, 157 port(s) 45, 72, 74 – 5, 80, 85, 118, 119, 136, 152 – 3 Pounds per Square Inch (PSI) 120 power(s) 1 – 3, 5, 7 – 12, 13, 14, 15, 18, 20 – 2, 25 – 7, 29, 36, 38, 40 – 61, 64 – 5, 67 – 70, 73 – 6, 80, 82 – 3, 85, 89, 90 – 2, 94 – 101, 103, 104 – 6, 108, 112, 113, 114, 116, 117, 118, 119, 121 – 9, 130, 131 – 42, 144 – 9, 153 – 66 Power Development Board, The (PDB) 99 Power Sector Master Plan, The (PSMP) 3, 98 – 101, 114, 148 President 49, 150 price(s) 1, 3, 4, 6, 17, 19, 23 – 4, 26 – 7, 29, 30, 36 – 7, 40 – 2, 45 – 7, 51, 54, 56, 61, 72, 73, 82, 86 – 8, 101 – 2, 104 – 6, 112, 113, 115, 116, 117, 120, 123 – 4, 131, 146 – 9, 159 Prime Minister(s) 54, 87, 145, 149

private 36 – 8, 44 – 6, 48, 51, 55 – 6, 78, 88, 97, 113, 114, 118, 123, 132, 158, 161 producer(s) 4, 26, 40, 41, 50, 51, 52, 56, 72, 144 production 1, 2, 4, 23, 25, 27 – 8, 36 – 42, 50 – 1, 54, 70, 73 – 7, 83, 85, 96 – 9, 101 – 4, 106, 112, 115, 116, 118, 119, 120, 122 – 3, 131 – 2, 143, 147 – 8 production-sharing contract (PSC) 78, 101, 102, 112, 116, 117, 123, 147 public 5, 20, 31, 38, 47, 55 – 6, 65, 68, 78 – 9, 114, 127, 132 Qatar 5, 24, 120, 124 – 5, 138 Quadripur 51 Quetta 47 quick rental 97, 100, 108, 158 radioactive 19, 122 Rampal 118, 119, 148 Rashidpur 102, 120 realist(s) 8, 10, 11, 14, 73, 84 refineries 28, 38 – 9, 47, 144 region(s) 1, 2, 4 – 12, 13, 15, 20 – 2, 23, 24 – 8, 38, 42, 44, 51 – 2, 69, 72 – 7, 80, 82 – 6, 88 – 95, 107, 113, 115, 116, 120, 126 – 7, 129, 131, 135 – 40, 143 – 4, 151 – 2, 153 – 61 regional 4, 7, 9, 13, 15, 19, 20, 51, 67, 69, 70, 72, 82, 88 – 9, 90, 92, 94, 97, 102, 105, 107, 126 – 7, 129, 141 – 3, 150 – 2, 154 – 5, 161 – 6 Renala 50 renewable(s) 2, 3, 12, 13, 15, 20 – 2, 24, 26, 29, 36, 39, 40, 48 – 9, 53, 57, 59, 74, 76, 89, 93, 95, 98 – 9, 125, 128, 131 – 3, 134, 138, 144, 155 – 6, 162 Republic of Congo 42 reserves 2, 3, 5, 18, 23 – 4, 26 – 8, 37, 41 – 2, 45, 47, 50 – 1, 58, 70, 72 – 3, 76, 78, 87, 99, 102 – 3, 111, 113 – 6, 118, 120, 123 – 4, 129, 131, 133 – 4, 138 – 40, 145, 147 – 8, 155 residential 5, 49, 54, 57, 59, 132, 145 resources 2, 3, 5 – 7, 12, 13, 15, 16, 17, 18, 20, 23 – 9, 32, 36 – 9, 46 – 52, 55 – 6, 58, 61, 69 – 73, 75 – 7, 79, 81 – 5, 90 – 1, 96, 98, 104, 111 – 12, 113, 115, 124 – 5, 127 – 40, 142 – 50, 152 – 3, 155, 158 – 62 Rohingya 144 Rooppur 99, 112, 121 – 2, 127, 158 Russia 10, 20, 24, 44, 82 – 3, 88, 121 – 2, 130, 155

Index  173 SAARC 7, 9, 11, 12, 48, 54, 55, 69, 73, 74, 81, 89, 90, 94, 129, 130, 141 – 4, 150 – 2, 156, 161 – 5 SAARC Energy Centre, The (SEC) 48, 54 – 5, 74, 81, 89, 130, 141 – 2, 151, 156 Salda 120 Sangu 102, 112, 120 Santos 116, 147 Saudi Arabia 37, 41, 50, 82, 130, 133, 137, 145 science 48 sector(s) 1, 3, 4, 5, 7, 9 – 12, 13, 15, 19, 21 – 2, 26, 29, 35 – 61, 66 – 7, 71, 73, 75 – 8, 80, 82 – 3, 85 – 6, 89, 91, 96 – 101, 104 – 8, 111 – 12, 113, 114, 115, 118, 119, 122 – 5, 128 – 38, 140 – 2, 145, 150, 153 – 62 security 1, 3 – 12, 13, 14, 15, 16, 17, 18, 19, 20, 24 – 5, 27 – 35, 42, 45 – 6, 48 – 9, 53 – 4, 61 – 3, 65, 67 – 9, 71 – 7, 79 – 81, 83 – 96, 101, 104, 107 – 9, 111, 113, 118, 122, 124, 126 – 47, 149 – 66 Shahdara 46 Shale 23, 36, 62, 68, 82, 154 Shangu 148 share 1, 20, 22 – 4, 37, 39, 52 – 3, 57, 69, 76, 82, 102, 146 Shell and Total 43 Siddhirganj 119 Sikkim 59 Siliguri 136 Sind 2, 50, 51, 131, 133, 158 Singapore 31, 62, 68, 92, 94, 117, 120, 125, 130, 141, 162 SINOPEC 72, 153 skirmish 154, 161 social 18, 19, 24, 83, 92, 94, 103, 106, 143, 150, 155, 159 solar power 21, 53, 98 source(s) 2, 3 – 6, 8, 16, 17, 18, 19, 20, 22, 23, 24, 25, 27, 28, 29, 35, 36, 38, 39 – 41, 43, 48, 54, 55, 50, 59, 60, 61, 70, 72, 74, 75, 76, 78, 79, 81, 96, 98, 101, 103, 108, 111, 114, 115, 118, 120, 122, 129, 130, 132, 133, 134, 136, 138, 139, 140, 145 – 6, 151, 156 South Asia 1, 3, 5, 7, 8, 10, 11 – 2, 13, 14, 20, 24, 25, 35 – 7, 38, 62 – 3, 67, 68 – 9, 70, 71 – 95, 107 – 10, 129, 131, 134 – 6, 141 – 5, 151 – 66 South East 20, 72 South Korea 82 South Korean 147 Soviet Union 55

Srekail 120 Sri Lanka 11, 13, 25, 38, 70, 74, 76, 81, 107, 129, 130, 146 stakeholders 3, 6, 11 – 2, 35, 38, 48, 56, 59, 88, 150, 158 steel 41, 85, 105 subsidy 7, 24, 26, 45, 51, 97, 105 – 7, 140, 159 Sudan 42 Sui 46 – 7, 49, 51, 74, 144 Sukkur 46 Sulfur 51 summer(s) 50, 98, 100, 122, 146, 155 summertime 97 Sundarbans 118, 136, 148, 158 supply 1 – 6, 8, 10 – 2, 16, 17, 19, 20, 23 – 6, 28, 35 – 7, 40, 43, 46, 49, 51 – 3, 57 – 8, 61, 70, 71 – 3, 75 – 6, 80, 81 – 2, 84, 86, 88, 90, 91, 96 – 9, 101 – 8, 111 – 2, 113, 114, 115, 116, 118, 119, 120, 122 – 4, 129, 130, 131 – 3, 137 – 9, 143 – 9, 152 – 3, 158, 160 – 1 surges 20, 54, 155 surplus 130, 135, 144 – 5, 158 surpluses 20 Sustainable and Renewable Energy Development Authority (SREDA) 3 Sustainable Development Goals (SDG) 146 Sylhet Gas Field Limited (SGFL) 102, 115, 150 Syria 42 Tajikistan 89, 130 Tangratila 115 TAPI 86 – 9, 93 – 5, 137, 142, 144 – 5 Tarbela 47, 50 tariff(s) 3, 45, 55 – 7, 86, 88, 97, 106, 113, 114, 136, 159 tax 48, 56, 58, 112 taxation 4 – 5 Teesta 142, 160 terrorism 16, 75, 87 Thailand 20 Tharpakar 51 Thar 51, 157 thermal 38, 41, 49, 52, 56, 57 Tibet 77 tipamukh (also spelt as tipaimukh) 151 Titas 102, 115 – 6, 120 trade 1, 10 – 1, 13, 14, 15, 31, 41, 59, 63, 67, 71, 73, 75, 77, 79, 80, 83 – 5, 89, 90, 92, 94, 107, 126 – 7, 135 – 6, 145, 151 – 2 transit 3, 5, 6, 12, 71, 75, 86 – 7, 100, 136 transmission 26, 36, 38 – 9, 45, 47, 49, 51, 55 – 6, 59, 60, 71, 73, 77, 80, 106, 115, 119, 120, 124, 132, 136, 146 – 7, 149, 157, 161

174 Index transportation 4, 5, 7, 17, 23, 25, 29, 37, 39, 41, 45, 47, 49, 51, 57, 75, 87, 88, 102, 104, 122, 145, 156 transshipment 71, 76, 118 tribal 41, 53, 74, 157 Tripura 72 Trisuli 55, 135 Trump administration 155 Tullow 116 Turkmengas 88 Turkmenistan 11, 86 – 9, 130, 137 UAE 20, 37, 41, 50, 82, 130 UK 32, 78, 157 UNFCCC 156 Unified Marxist Leninist (UML) 160 UNOCAL 78 upstream 38, 39, 49, 150 uranium 44, 84 US 7, 9, 12, 17, 20, 23, 25, 27 – 8, 31 – 2, 36, 43 – 4, 46, 55, 61, 68 – 9, 75, 77 – 9, 81 – 8, 91, 94 – 5, 121, 137 – 9, 142 – 4, 152 – 5 USAID 155, 163 US Department of Energy 27, 31 utilization 24, 71, 77, 145

Venezuela 42 Vietnam 20, 32 war(s) 20, 75, 85, 86, 136, 152, 161 warming 17, 155, 157 waste(s) 19, 40, 44, 49, 53, 57, 59, 115, 122, 129, 132 water 36, 43, 46 – 9, 50, 52, 56, 59, 66 – 8, 75, 77, 105, 122, 132, 136, 141 – 2, 147, 151, 154 – 5, 160 Water and Power Development Authority (WAPDA) 47, 49, 50, 52 wellhead 51, 86, 102, 116, 120, 159 West Bengal 40, 117, 160 western 2, 11, 27, 28, 39, 44, 47, 50, 69, 72, 77 – 8, 82, 90, 121, 122 WikiLeaks 87 wind 18, 21 – 2, 39, 53, 85, 156 winter(s) 5, 50, 54, 57, 98, 100, 118, 132, 145, 155 Yangon 71 Zamzama 51 Zangmu 77 Ziaur Rahman 150