The Hindu Business Line : The energy chase

The anxiety to secure new sources of energy is reaching a feverish pitch. First it was Ministry of Petroleum and Natural Gas that sent its oil companies on a frenzied search for equity oil and gas overseas from Sakhalin in the east to Columbia in the west. Some forays were successful; some others were foiled by strong Chinese bidding, especially in Kazakhstan. Now, the Power Ministry is re-focussing its attention on neighbouring countries such as Nepal, Bhutan and Myanmar, whose potential to generate hydroelectric power with the waters of the snow-fed Himalayan rivers, as is well known, is vast. The dream of harnessing the rapids of these rivers to power homes and industry in India is, of course, an old one. Little pieces of that idea have been on the ground for some years with projects such as the Chhuka in Bhutan, built with financial and technical assistance from India nearly two decades ago, continuing till today to supply most of the electricity back to this country. But there is substantially more that can be achieved.

Put together, the three countries can harness over 200,000 MW of hydro energy, more than six times what India generates from its rivers. They have not done so for many different reasons: One, given the state of development their economies even today have little appetite themselves for the energy; two, environmental concerns have often tended to smother any official enthusiasm for such ventures; and, three, any attempt by India to invest in these projects is suffused with such exaggerated political overtones that the leadership in these countries have been wary of making haste with the bilateral arrangements. Yet, it is a plain reality that all these countries can do with the revenues that such projects can earn by selling the energy to India. Water is to Bhutan what oil is to the Arabs, King Jigme Singye Wangchuck once said; the revenue from electricity sales to India from Chhuka fetched Bhutan 35 per cent of its national revenue last year. India, in turn, would be rather grateful for that contribution to reducing the stark deficits that feature the national grid, especially the North. The mutual rewards are, therefore, quite evident.

The question is whether this time round New Delhi can turn on the right political tone and the economic conditions that would make its neighbours see merit in allowing India to invest in developing nearly 30,000 MW of hydroelectric capacity (as much as India's own) in a much speedier way. The challenging geography apart, the obvious problems in cross-border transfers of energy, especially over the long term, are of pricing and of sustained delivery. So far the transfers have been small (relative to Indian needs) and any demand for a price increase has been accommodated in the amiable bilateral relations between India and Bhutan, but that cannot be taken for granted when it comes to dealing with other neighbours. The commercials will be crucial to securing long-term commitments for such an ambitious programme.