India is a growing economy with more than a billion population. More than 70 percent of its energy requirements is met through imports. Energy Security has thus acquired greater importance in the foreign policy of the country. In the recent period India has attempted to diversify the import sources beyond West Asia. The ONGC Videsh Ltd has acquired stakes in countries like Russia, Sudan. India is involved in partnership with Vietnam for oil exploration in South China Sea.
South Asia as a whole is facing energy deficit. The rationale thus for signing the SAARC electricity trade agreement was the impending domestic energy crisis faced by individual member countries. The major problem faced by SAARC remains is the lack of trust among member nations . It is often seen in SAARC that a commercially viable initiative gets side lined due to overarching political differences among the participants. Iran Pakistan India Pipeline is such an example.Energy Cooperation thus provides an opportunity to bridge differences and improve relation among SAARC countries through energy dependence.
As highlighted in IDSA, in order to make SAARC Energy Agreement viable ,three policy initiatives are of key importance.
Firstly, there is a need for better participation of private sector in energy generation ,transmission and distribution. The private sector has better resources and technical know how to execute these projects. The government on the other hand faces time and cost overruns in executing these capital intensive projects.
Secondly, necessary legal framework may be provided by governments to attract investment from private sector.Given the uncertain political situation in SAARC region, the private players may be reluctant to make investment unless provided with some legal assurance and other incentives. Such steps would make the recently signed SAARC initiative more effective and insulate it from changing political circumstances.
Thirdly, the SAARC region lags behind in technical aspects with huge power transmission losses and lack of grid discipline. It is important for India and other countries to rectify such technical shortcomings to facilitate regional power exchange.