Assessing Energy Security in South Asia: A Composite Index Approach Incorporating Governance, Sustainability, and Socioeconomic Dimensions

Munazza Akhtar, Muhammad Ilyas and Ashfaq Ahmad

Asian Journal of Applied Economics, 2026, vol. 33, issue 2

Abstract: Background and Objectives: Energy security extends beyond resource availability and affordability to encompass governance, environmental sustainability, and socioeconomic dimensions that are critical for sustainable development. In South Asia, rising energy demand, rapid population growth, and urbanization are intensifying pressure on limited energy resources. A comprehensive assessment of energy security helps identify structural weaknesses, including import dependence, inefficient energy use, and unequal access to modern energy services across countries such as Pakistan, India, Bangladesh, Nepal, Bhutan, and Sri Lanka. It also provides insights into institutional effectiveness, environmental performance, and the long-term resilience of energy systems. Accordingly, this study develops a multifaceted energy security index for South Asian countries over the period 2001–2022.Methodology: Data suitability is assessed using the Kaiser–Meyer–Olkin (KMO) measure and Bartlett’s test of sphericity. A KMO value above 0.05 indicates adequate sampling, while a significant Bartlett’s test (p < 0.05) confirms sufficient correlations for factor analysis. Internal consistency among indicators is evaluated using Cronbach’s alpha (acceptable range: 0.7–0.9). Principal Component Analysis (PCA) is then applied to reduce dimensionality and extract latent components. Component weights are derived from eigenvalues, reflecting their contribution to total variance. The Min–Max normalization method is used to standardize variables, which are subsequently aggregated into a composite index based on weighted components.Key Findings: The results indicate strong internal consistency (Cronbach’s alpha = 0.733) and high sampling adequacy (KMO = 0.863), with Bartlett’s test confirming significant inter-item correlations. The PCA yields a Multifaceted Energy Security Index (MFESI) comprising eight dimensions: energy sustainability, governance and efficiency, socio-environmental sustainability, affordability, energy access, human resilience, energy transition, and labor market dynamics. The index rankings show that India leads in overall energy security, followed by Pakistan, Bangladesh, Bhutan, Sri Lanka, and Nepal. Classification into four categories, Poor (1–2.5), Fair (2.5–5.0), Good (5.0–7.5), and Excellent (7.5–10) reveals that most countries fall within the “Fair” range. Dimension-wise analysis highlights India’s strength in sustainability and renewable energy, Bhutan’s strong governance performance but weak sustainability, and Pakistan’s strengths in socio-environmental sustainability alongside affordability challenges. Nepal consistently ranks lowest in governance and resilience, indicating structural constraints.Policy Implications: The findings highlight significant regional disparities in energy security and underscore the need for coordinated policy responses. Strengthening regional cooperation through cross-border electricity trade and renewable energy collaboration is essential. Policy priorities include improving affordability through targeted subsidies and tariff reforms, enhancing climate-resilient energy infrastructure, and promoting institutional reforms. Country-specific strategies suggest improving governance and affordability in Pakistan, enhancing human resilience and sustainability in India, expanding energy access in Bangladesh, diversifying energy sources in Bhutan and Nepal, and strengthening governance and renewable energy development in Sri Lanka. These measures are critical for achieving Sustainable Development Goals (SDGs) 7, 13, and 16.

Keywords: Resource; /Energy; Economics; and; Policy (search for similar items in EconPapers)
Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:ags:thkase:406294

DOI: 10.22004/ag.econ.406294

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