The Proximity Principle

A car ride of about 10 minutes takes your columnist to a slum, which wears a different face in the morning and a completely different one at night. At night, there are big cars being parked in front of the slum, which trade drugs and dangerous substances. Poverty has no choice. The only choice of survival steers the slum dwellers to continue doing what they do everyday. And there's no visible change, ever. Nine days ago, the city corporation election took place. It's almost natural for your columnist to write about the election, the process and the outcome. But, today's column is not about the elections that just took place. It's about how living close does not necessarily mean shared prosperity. It's about how living in proximity does not necessarily ensure public welfare. With the City Corporation Elections being over, the new mayors must pledge the proximity principle and ensure that the lives of the ultra poor change for the better. 

Having said that, this column shall now move on to discussing the necessity of believing in the proximity principle, even in South Asia. A recent meeting arranged by the World Bank on South Asia in Colombo brought a few of us together from across the region. The group was diverse and in the two days we spent together, trying to "champion" the cause of proximity principle, all of us, at the end, had become big believers pledging to the essential rule of believing in the shared space of prosperity and freedom. The meeting revealed how we are losing opportunities by the minute…

Most of us live close to each other yet remain dangerously disconnected from our neighbours. South Asia is one such neighbourhood, which has eight official members who routinely indulge in mistrust. In the process, opportunities get marred and challenges overwhelm the scene. For example, if only the member states of SAARC worked in harmony, then apart from many other platforms where the South Asian neighbours could thrive together, the South Asian energy market would be the first one, which could yield the best possible results.

In 2013, India and Bangladesh implemented a power trading arrangement where India will provide electricity to Bangladesh with plans of extension. Bhutan had started exporting power to India since the early 1960s, and is now exporting 1300MW's of power during the peak of monsoon season – amounting to 27 percent of the total annual revenue for Bhutan. Bhutan plans to sell over 5000MW's by 2019. The Kyrgyz Republic, Tajikistan, Afghanistan and Pakistan, have all penned an unprecedented agreement that will bring power from Tajikistan through Afghanistan to Pakistan. More power sharing projects are on the platter where Bangladesh's Northeast to India is also being considered. Nepal signed two major hydro-development agreements with firms from India that will generate 1800 MW. Much more is being considered. A transmission line is now actively being developed between India and Pakistan.

Most South Asian countries have been adversely affected by serious power shortages. While they are endowed with huge energy potentials, there is a great opportunity to increase per capita consumption of energy on the other. At the moment, per capita consumption of electricity - an essential measure of prosperity – varies from about 900 kwh in India to less than 100 kwh in Nepal. Also in India, in a few states, it is less than 100 kwh. The regional average per capita consumption is just 555 kwh, as compared to 2337 kwh per person in East Asia (World Bank figures for 2010).  

In reality, how much resource do these South Asian countries possess? India has 285 billion tonnes of coal reserve, yet its present annual production is less than 600 million tonnes. It has 100 -150 GW of Hydro Power potential, the capacity commissioned is only 40 GW. Nepal has more than 100 GW of Hydro Power potential, developed capacity is less than 1 GW. The region has vast under-exploited gas reserves; concentrated in India (1,241 bcm), Pakistan (1,188 bcm) and Bangladesh (400 bcm) . Pakistan has 185 billion tonnes of coal and lignite reserves that have barely been used.  Imported oil has been largely used as a default option when other sources of energy for power generation have been lacking, exposing countries to higher import bills and price volatility. Bangladesh, Bhutan, Maldives, Nepal and Sri Lanka import all of their oil products. 

If the South Asian countries do not embark on the proposed collaborative approach, the region's people and governments could spend an additional US$ 226 billion on electricity supply over the next 25 years. On the other hand, Nepal, Bhutan, and Afghanistan-the small, landlocked and resource rich countries would lose investments and would not be able to afford a secure energy supply system if they cannot connect to the electricity markets of the neighbours. The prevailing massive load-shedding/blackouts in Afghanistan and Nepal would continue. Finally, the region would lose out on an opportunity to attain win-win opportunities locked up in energy cooperation. Therefore, explicit roadmaps need to be built for different countries on the bilateral, sub-regional and regional levels and each of their timeframes could be drawn. These plans could then take the process forward while from time to time these road maps may be reviewed and revised based on ground realities that exist in a region that is so closely packed with promise.

Truth is, anything and everything works better if one doesn't operate in isolation. After all, Korail is only 10 minutes away and the nearest South Asian city is only a 25 minutes plane ride. So whether it's a local neighbourhood or an international one, the only thing that works is the commitment to being fair to those who live close by. After all, asymmetric neighbourhoods don't breed prosperity and losing out on neighbourhood opportunities also don't do justice to the collective potential.

1Estimates compiled from: CEA, Geological Survey of Pakistan, BP Statistical Review 2012

The writer is Managing Director, Mohammadi Group.