The time is ripe for a south Asian electricity market This summer, India and Pakistan could find a reason to get together. With mercury soaring and the demand for power going up incrementally, India Inc is already feeling the pinch. The bad tidings came early with industrial production falling by about 25 per cent as early as in February-March 2008, according to industry estimates. An Assocham study titled Fallout of worsening summer power situation on industrial production in April-July 2008 substantiates this fact. The study indicates that industrial production suffered by 25 per cent due to the extremely erratic power situation in February and March. Captive power stations within the industrial premises ran at half the capacities, because diesel and petrol that have become more costly. The study is based on a feedback from over 2,000 industrial locations across the country through various chambers. The situation in Pakistan is almost the same. Pakistan's electricity production was nearly 3,000 megawatts short of demand in March. The country made up the difference by turning off lights, and everything else, for several hours during day. Prime Minister Syed Yousuf Raza Gillani has bracketed the 'energy crisis' with terrorism as a top issue to be addressed during his first 100 days in office. The situation in India is unlikely to improve in the coming months because of the constraints on generation. The minimum production loss incurred by India Inc would stay around 35 per cent as demand for power in domestic and other areas of economic activities is growing at around 20-25 per cent, according to the Assocham report. The states in which.power supplies would be severely affected are Delhi, Uttar Pradesh, Haryana, Madhya Pradesh, Rajasthan, Maharashtra, Andhra Pradesh, Karnataka, Tamil Nadu and Gujarat. Industrial locations in all these states are complaining that 40 per cent of their capacities are running idle as the power availability and shortage ratio in most of these states is 60-40 per cent. With fresh investments and modernisation plans yet to yield results, the transmission losses are contributing to the grave power situation in the country. Maharashtra, which is one of the most industrialised states in the country, is facing one of the worst crises, with energy deficit touching about 20 per cent at over 1,700 million units (mu) and peak deficit exceeding 4,200 mw. As per the feedback given to Assocham by its constituents, the state is resorting to an load-shedding of 8-10 hours a day. Pakistan is experiencing the shortages despite its miserly electricity use with per-capita consumption of 546 kilowatt hours per year, a fifth of the global average of 2,586 kWh, according to statistics from the seven-nation South Asia Association for Regional Co-operation (sAARc).The problem arises because Pakistan has failed to build new power plants to keep up with the demand for electricity. As a result, the poor who are connected to the grid are going without power during the nearly four hours of outages that occur every day in summer. In wealthier neighbourhoods, however, the streets are reverberating with the noisy clatter of generators. A grave concern for the economy is the impact of the outages on the industrial sector, which is Pakistan's biggest consumer of electricity, and factories having to shut down during the outages. Recently, Pakistan was forced to approach Iran to buy power. Negotiations are on with Tehran to buy 1,100 mw of electricity to help Pakistan meet its demand. Of Pakistan's 19,500 mw of production capacity, a little more than 60 per cent is from imported oil and domestic natural gas power plants. Hydropower generated from the country's two major dams accounts for about 30 per cent, and its one nuclear power plant produces less than 5 per cent. Coal plant production is even less, but that could change if Pakistan exploits what has been estimated as the world's third-largest known coal reserves in the south-eastern part of the country. Coal, more nuclear plants and dams are other options put forward, while some tout solar and wind power. But Pakistan's coal reserves lie south-west of Sindh. Some say that it would be a disaster if they are mined, as the pollution would blow into India, causing political problems. In fact, this factor could throw a spanner in the plan by Pakistan and Beijing to set up a corporation to build coal-based power plants. There are many ifs and buts in this plan, which includes building nuclear plants. The idea was reportedly broached by Beijing during Pakistan President Pervez Musharraf's recent visit to China. Under the plan, China will help the energy-strapped Pakistan meet its civilian nuclear energy requirements of 8,800 mw by 2030 by delivering a series of 300 mw plants. Given Pakistan's dubious nuclear track-record, it is unlikely that the world will simply wink at this deal. This is where India can step in. It can facilitate the sale of electricity to Pakistan. India has set up a 'power for all by 2012' target, with 78,000 mw of power to be added during the current plan period. The power situation in India is set to improve but will take time.- India can now co-opt Pakistan as a partner to drive the idea of a south-Asian electricity grid. The grid would draw and sell electricity from the pan-South Asia electricity ring that India is developing. The plan involves broad-basing India's energy security by wheeling back the bulk of the power generated through the inter-country power projects on the anvil. The 'electricity diplomacy' also envisages a greater play for Indian firms in harnessing energy resources across the region. Doable idea Diplomatic observers feel that the pan-south Asia electricity ring can now be ramped up by making it a saarc-mandated project driven by private enterprise. Power ministry officials add that idea of a south Asian electricity market is 'doable'. However, several issues would need to be sorted out, the primary one being that, unlike gas, electricity cannot be stored, at least not in large quantities and not over long periods. It must be available at short notice, in response to sudden changes in demand. Turning to the pan-south Asia link, while a transmission link with Bhutan is already in place, there are plans to develop two more projects in the Himalayan kingdom, besides sprucing up the existing power line, to enable up to 5,000 mw of electricity imports into India by 2020. An undersea link with Sri Lanka is also being contemplated. In Nepal, two Indian firms