Dependence on energy in South Asia and the need for a regional solution

Abstract

This paper examines the how the South Asian countries are addressing their energy deficiency as the capacity to refine imported crude oil is limited except India. India has developed substantial refining capacity (247.6 million tons per annum) compared to Pakistan (18.8 mtpa) and Bangladesh (1.5 mtpa). India’s refining capacity is being currently utilized nearly 100%. Having no local refining capacity, Nepal and Bhutan import refined petroleum products entirely mainly from India. The demand for refined petroleum products in Bangladesh outstripped the quantity produced by the country’s single aged oil refinery over 3 times. Similar problem is faced by Pakistan. This paper provides an analytical framework based on the data collected from the region and argues that a regional energy trade will create a mutually beneficial platform for effective utilisation of natural resources which will increase reliability of power supply, build economies of scale, enable mutual support during contingencies, transform sectors on a large scale and contribute to economic growth. This trading platform will promote market integration in energy (oil, gas coal) and energy-related goods and services.