India-Pakistan energy cooperation: Rethinking opportunities and newer approaches

Abstract

India and Pakistan are facing an acute energy shortage owing to the rapidly growing domestic demand for electricity that has not been met with adequate supply. Both of these developing economies have relied upon natural fuels such as oil, natural gas, and coal for their energy needs. Despite the various restructuring and policy reforms in the power sector, not only has the consumption of energy exceeded production, but the declining reserves of oil and natural gas too emerge as a cause of concern. An analysis of the power generation and demand projections in India and Pakistan brings to light the possibilities of energy cooperation and power trade between the two countries. This cross-border power exchange could take place through a bilateral mode, pool-based mode, or wheeling mode. Though there have been newer initiatives toward building bilateral and regional energy cooperation, this chapter provides policy recommendations for sustaining such energy exchanges in the future.