AS THE peace deal between the United States and Iran is set to be formalised into a written agreement in a few hours from now, there is a renewed hope of maritime traffic returning to normalcy in the strategically important Strait of Hormuz. Though a change in status for merchant vessels in the waterway does not mean immediate restoration of status quo ante, nations in South-East Asia can have a breather from the daily pressure of replenishing their energy reserves. This situation has turned focus on the overdependence of S-E Asian nations on oil and gas coming from the Hormuz gulf. The Iran war has totally exposed the major risks these nations carry by depending on just one energy source.

 

Similar warning has been issued by the International Energy Agency in its latest report which urges countries in South-East Asia to diversify sources of energy more quickly to save billions of dollars. The Iran war has brutally exhibited the risks involved with overreliance on oil and gas transported through the Strait of Hormuz. Every country in the region, including India, is struggling with high oil and gas prices and depleting reserves as energy supply chains have been severely affected due to the blockade of the Hormuz waterway. Since the start of the US-Israel combine’s ill-planned aggression against Iran in late February, energy supplies have been badly hit in S-E Asia. In many countries, the West Asia crisis has transformed into an internal fiscal crisis with fuel prices touching new highs. With no fresh supply and limited reserves, there was no option than to put curbs on fuel sale by hiking prices for these countries totally dependent upon energy stocks coming through the Strait of Hormuz. India remained among those who could manage the crisis with limited damage yet there is a pressing need for the policy planners in New Delhi to scout for alternative oil resources and new energy sources.

 

To its credit, India has already embarked upon forging new partnerships with oil producing countries. New Delhi was fearless in exercising its strategic autonomy by purchasing oil at discounted rate from Russia when the US imposed a ban on carrying out business with Moscow in wake of the Ukraine war. The bold step has helped India mitigate the energy crisis due to the closure of the Strait of Hormuz. Yet, it is just one step in cutting down on the reliance on oil supplies from the now-vulnerable maritime route. The pact with the United Arab Emirates and the Gulf country’s decision to chart its own course by exiting OPEC has put India in a vantage position in solving its energy needs. However, there is also an urgent need to tap other sources to cater to the growing power needs in the country. As per the IEA report, the Iran war has spurred a change in thinking of many countries. It is reflected in the rising sales of electric vehicles, renewed interest in nuclear power, and a boom in installation of rooftop solar and other renewable systems. It is a welcome change as the diversification will go a long way in making India self-sustaining in the energy sector. A larger and honest push is now needed from the Centre and all States to incentivise people opting for alternative energy sources.

 

The rooftop solar installation is a major driver of change and it is incumbent upon the Centre and States to allow full benefits to the end consumer instead of finding ways to monetise the system to support its own power utilities. The Iran war has proved that diversification of energy sources and supply routes must become a central policy for all countries in S-E Asia. China has already shown the way by cutting down on oil imports and using indigenous sources to cater to its power needs. In fact, China’s decision was a major factor in ensuring good oil supply to India. The need of the hour is to introduce sweeping reforms, allowing utilities and the private sector to tap renewable energy sources. India has started the push for ethanol-based fuel but it also needs to work at a rapid speed in installing supporting infra for electric vehicles.