This article originally appears in the ‘Smart Future’ column of the Daily Mirror Business on 1st July 2015. At the Energy Symposium, my speech during the Energy, Economics, and Policy session was drawn from a recent ‘Smart Future’ article on the global oil dynamics and implications for Sri Lanka – https://thecurionomist.wordpress.com/2015/06/03/the-evolving-dynamics-of-the-global-oil-market/
It is now recognised that for developing countries like Sri Lanka, meeting the energy needs of an economy aspiring to achieve rapid growth, while ensuring environmental sustainability, is a key challenge. The Energy Symposium held last week, organized by the Ministry of Power and Energy on the theme ‘Energy Challenges in the Knowledge Economy’ was an important effort in putting the energy agenda front and centre. There was an impressive range of technical presentations made at the symposium, including how to reorient the transport sector to be more energy efficient, leveraging renewables like solar and wind, leveraging biofuels as a new alternative, keeping nuclear energy options open, and institutional reforms to meet evolving energy challenges. Amidst this, a crosscutting theme that resonated throughout, was about building up the knowledge capacity in the energy sector. This article highlights a selected set of key takeaways from the Symposium that relate to this.
Preparing for a Mannar Oil/Gas Era
Although progress in tapping the oil and gas reserves in the Mannar basin has been slow, with exploration running into various obstacles, a takeaway from one of the first sessions was that the state institution charged with leading this task – the Petroleum Resources Development Secretariat (PRDS) – has been doing a lot to build up capacity in, and enhance the country’s readiness for, this emerging industry. The PRDS has begun implementing a very progressive and holistic capacity building programme, including conducting research on what models have worked globally and what can be adapted for Sri Lanka’s own approach, and hiring young graduates and providing opportunities for on-the-job training (including sending them to Cairn India’s off-shore drill ship). Efforts to help local parties gain more and more from domestic oil and gas exploration activities have had early success. The PRDS reported that 23% of the 60 services contracts went to local parties, and 17 local businesses have benefited. But on the technical capacity, there are gaps in what the academia supplies and what the industry demands. This doesn’t seem to be a problem unique to Sri Lanka, however. For instance, a study by global energy giant NEXT (a Schlumberger company) revealed that around the world, only a handful (3-4) types of technical worker categories are produced by academic institutions, compared to over 25 categories that the industry demands. The PRDS needs to be supported to implement the policy reforms needed to expand the capacity in this sector.
Partnering with China for Renewables
Another takeaway was how China can possibly be a key partner in supporting Sri Lanka’s renewable energy thrust. Sri Lanka has an ambitious medium-term goal (under the CEB’s Generation Plan) of a 20% contribution from Non-Conventional Renewable Energy (NCRE) by 2020. If this is to be mainly met by solar and wind power, Sri Lanka must look at closer partnerships with countries that have the capacity to help us get to these targets. One good example is China. With a mix of policy pushes and practical considerations, China has developed a huge renewable energy capacity over the last decade. It is not unusual to see hundreds of kilometres of Chinese roads, highways, and local streets being lit up by solar-powered lights, and the emergence of a number of Chinese renewable energy companies with competencies rivaling those in the West. Specialised companies like the China Power Engineering Consulting Group have developed capabilities to undertake international contracts. Last year, China emerged number one globally in the installed capacity for wind power. There is a prima facie case to be made for Sri Lanka to cooperate with China closely to access the required technical capacity and technology transfer, as well as possible joint ventures and foreign direct investment, in order to meet our NCRE goals. The proposed China-Sri Lanka Free Trade Agreement could include a separate environmental goods section, and the FTA could be leveraged to build technical and technology partnerships beyond just the trade in goods.
Enhancing Technical Capacity and Research
A recurring theme throughout the Symposium – from the speech by the Hon Minister of Power and Energy to the comments by the technical experts – was the need for an aggressive push to enhance Sri Lanka’s local capacity in the energy sector. As the energy mix changes, new domestic energy sources are explored (like oil and gas resources in the Mannar basin), and more complex energy innovations occur globally with relevance for Sri Lanka, the country will need to move away from the over-reliance on foreign expertise and build up the engineering, technical, and planning talent in the energy sector. Encouragingly, the Symposium revealed that there is a lot of interest and latent knowledge among Sri Lankan academics on various aspects of energy. Yet, as acknowledged by many of us who spoke at the sessions, there is room to increase the volume and quality of energy-related research. For instance, a Sri Lankan university can explore setting up a specialised Centre for Energy Security, while another can introduce a postgraduate degree in Energy Economics. An existing engineering faculty can consider introducing a new Petroleum Engineering specialised degree to cater to an era where domestic resources like those in Mannar are tapped. Partnerships can be forged with specialised South Asian think tanks like the Centre for Science, Technology and Policy (C-STEP) in India that is conducting influential policy research on energy efficiency and smart grids. The Ministry of Power and Energy could play a lead role in helping universities and research institutions develop new research programmes to cater to the knowledge needs of the energy sector so that national policies as well as firm-level strategies regarding energy can be better informed by evidence and cutting edge ideas.
This is the 17th article in the ‘Smart Future’ column that advances ideas on competitiveness, innovation, and economic reforms.