Perspectives
The IPI gas pipeline: No more a pipedream
EVEN though much more remains to be done, Pakistan and India seem to have made a major breakthrough on the issue of the much-hyped gas pipeline from Iran to Pakistan and India late last month. Given the history of the project, tied as it is to the mercurial bilateral relations between Islamabad and New Delhi, as well as domestic politics in both the countries, optimism without reservation would, however, be unwarranted. This approximately 2775 km pipeline project has already bumped into uncertainty, with India somewhat sidelining it since the US nuclear deal was under consideration in the Lok Sabha. Several other factors also stood in the way of materialisation of the IPI although the idea was broached originally as far back as in 1993, when it was expected to cost $3.3 billion. With the prospect of the US nuclear deal having been shelved for now, India has renewed its interest in the project, although its cost has now escalated to $7.6 billion.
America's hostility towards Iran, and New Delhi's sensitivity to Washington's concerns, being a major damper for the project, it was practically put in limbo for all these years. As a result, India stayed away from three meetings between Pakistani and Iranian officials during the last nine months when Dr Singh's UPA government remained beholden to the US neo-con wizardry. However, hard economic realities, coupled with a domestic backlash launched by anti-imperialist Nehruvians within the increasingly rightist Congress, have combined to force a rethinking in New Delhi. Many Indian politicians especially those on the left and sections of the media have scathingly criticised what, to them, appeared to be their government's lack of spine in standing up to US pressure.
That resulted in India's "re-entry" into the IPI Projecta very welcome development in regional cooperation now underway among Iran, Pakistan and India. Iran may be under several layers of sanctions. But that is no reason that the three countries should abandon a project that serves the economic and energy interests of all of them. The project will, however, require a renewed push to make up for the time lost.
The failure of the Singh government to obtain the Lok Sabha's approval for the US civilian nuclear deal, and the inklings of China's favourable response to Pakistan's suggestion that it join the project, brought the Indian oil minister rushing to Pakistan, and that, perhaps, clinched the issue for New Delhi. The oil ministers from both India and Pakistan told a press conference in Islamabad on April 25 that a final agreement could be signed in weeks, if not in days. President Mahmoud Ahmedinejad's visit to the two capitals -- Islamabad and New Delhi -- will, no doubt, help expedite the project which, besides meeting the two countries' fast expanding energy needs, is not without profound geo-political importance.
In tandem with the IPI gas pipeline, another major project of similar nature, the Turkmenistan-Afghanistan-Pakistan-India (TAPI) also appears to have received a fresh boost. In fact, during the last fortnight, Pakistan and India demonstrated refreshing interest and also a good deal of alacrity in this project. First, it was the Islamabad meeting on April 24 of the petroleum ministers from Turkmenistan, Afghanistan, Pakistan and India which resulted in the Gas Pipeline Framework Agreement (GSFA), an important indicator of their seriousness.
Interestingly, the Bush administration has been strongly supportive of this 1680 km long project, confident that it would reduce interest in the IPI project and thereby prevent Iran from extending its influence to a critical part of the world. Consequently, the Asian Development Bank expressed its willingness to assist in the preparation of comprehensive feasibility study and in the formation of a consortium of the investors to undertake the project.
However, some reservations still surround the project, and doubts persist with regard to Turkmenistan's actual gas reserve. There are also doubts as to whether those reserves are under Turkmenistan's control or have been pledged to Russia, as claimed by Gazprom. The Turkmen minister tried to address those concerns, claiming that huge new gas fields were discovered recently. There is no such hitch in the case of Iran with regard to the IPI project, for both Pakistan and India have been assured of abundant gas supply from Iran's South Pars gas field. The concerned authority claimed that the IPI pipeline, to be completed in 2012, would carry 2.4 billion cubic feet of gas a day, to be shared equally by Pakistan and India.
Informed sources said that the two sides, Pakistan and India, had narrowed their differences by agreeing on a "template" for finalising the transportation tariff which was linked to the cost of constructing the pipeline. The fee would be worked out when Pakistan finalised the contract for building its section of the pipeline. As regards the transit fee, there were indications that it could somewhere around 40 cents per million British Thermal Unit of gas. It would mean an earning of $148m per annum in transit fee for Pakistan.
It is by now clear that both Pakistan and India do recognise that unless they moved boldly to ensure guaranteed energy sources their development would be stalled. But some observers remain unsure whether it would be finally possible for New Delhi to involve itself fully in the IPI. After all, New Delhi, for all of its moral claims, had no hesitation in casting its vote against Iran at the IAEA ostensibly under US pressure. There are, however, some silver linings. Last week, India's Foreign Minister Pranab Mukherjee expressed annoyance at the US comment that India should ask the Iranian president to suspend Iran's enrichment activity.
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