Against the backdrop of a severe energy crisis, Pakistan has officially requested the World Bank (WB) to fund a project for the import of 500 megawatts of electricity from India, a senior official of the lending agency said on Tuesday.
“We are engaging with both the countries and a pre-feasibility study will soon be initiated,” said Senior Operations Officer for South Asia Diep Nguyen. She was speaking in Kathmandu at a workshop on regional cooperation in South Asia, organised by the World Bank.
WB’s chief economist for the South Asian region Kalpana Kochhar, who is involved in the trade normalisation process, said issues including technical details and electricity pricing will be ironed out over the next 18 months. The project will materialise in three years, she added.
The economist also said that while the exact cost of the project had not been worked out, the transmission line itself will cover a very short distance. She clarified that the WB was not involved in trade discussions except participating as observers. Kalpana said that South Asia was a severely energy-starved nation and the WB was working to improve energy cooperation. She said there were talks on building infrastructure between Pakistan and India for power sharing.
To a question regarding establishing compensation funds to mitigate the short-term impact of trade liberalisation, Kalpana said neither of the countries had requested a mechanism for compensation.
Kalpana said India was taking very seriously the “very big step taken by Pakistan in normalising trade ties,” adding that there was much hope that both sides would take to the process to its logical conclusion. She emphasised that trade agreements must be turned into reality by moving towards implementation.
The WB economist said that poverty in South Asia was heavily concentrated in landlocked and border areas. “The World Bank is figuring out the exact impact of regional integration on poverty reduction, which was an overlooked area so far,” Kalpana remarked.
She said the WB was working towards building on more facilities for improving border crossing between India and Pakistan. The lending agency has also been discussing virtual and phone connectivity between countries in the region. There is a very low level of people-to-people contact in the region but for [increasing connectivity] the trust deficit has to be overcome, she added.
Senior Operations Officer Nguyen said the South Asia was the only region in the world that does not share any regional energy scheme despite having huge potential. In Pakistan, industrial load shedding has so far resulted in a loss of 400,000 jobs, Nguyen added.
The official highlighted the need to make various trade agreements effective by moving towards regional integration. India and Pakistan both trade more with China and very little with each other. Pakistan’s trade with India amounts to less than 5% of its total trade. She explained that according to various independent studies, both the countries will make huge gains if they normalise trade. In short, India is Pakistan’s main missing market and vice versa. Diep said the economic crisis in the US and Europe heightened the need for intraregional trade.
Published In The Express Tribune, June 13th, 2012.
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