The Hindu Business Line : Pipeline of opportunity

THE IN PRINCIPLE agreement arrived at earlier this month in Yangon among the Oil Ministers of India, Myanmar and Bangladesh on cooperation in gas exploration and building an overland pipeline holds great potential for using effectively the available gas resources in the region. However, the road ahead may not be as smooth as is expected because of Dhaka's insistence on getting the most out of the deal. Admittedly, the Bangladesh Government does not have much room for manoeuvre because any decision that might strengthen India's interest could face a political backlash.

From the economic point of view, there are major advantages for all the three countries involved from the proposed 290-km pipeline estimated to cost around a billion dollars. For Myanmar, the pipeline — which will evacuate gas from the Shwe gas-field's A-1 site in which ONGC has a 20 per cent and GAIL a 10 per cent stake — will add to its revenues from gas exports which, currently, top the list of its foreign exchange earners. (Myanmar earns around $400 million every year from gas sales to Thailand from its Yadana and Yetagun gas-fields in the south.) That Yangon is seriously pursuing the project is indicated by, among other things, its recent efforts to flush out Karen rebels from the areas through which the pipeline will pass. Apparently this action encouraged New Delhi to press ahead with the project.

For Bangladesh, the spin-off will be immediate and even more pronounced. Apart from the employment-generating potential of the project, Dhaka stands to get an annual income of $125 million in transmission and management fees. It will also get a "one-off, right of way charge" of $100 million and, according to the Bangladesh Energy and Mineral Resource Minister, the project will yield investments worth $350 million. Most important, Dhaka will get practically for free an expensive gas-transport infrastructure which it could use to link its own production and consumption centres. Also Dhaka is expected to press for the right to use the pipeline for gas imports it might make from Myanmar or exports to India from its own fields.

New Delhi should find it relatively easier to agree to these conditions as also pipeline-management issues than those relating to a Bangladesh-Nepal trade corridor and transmission of hydro-electric power from Nepal and Bhutan to Bangladesh using India's transmission grid. These subjects have been discussed by New Delhi and Dhaka for some years and need to be sorted out but without much reference to the proposed pipeline. While there cannot be any let-up on hard bargaining (by suggesting the possibility of using the CNG route for gas imports from Myanmar or a costlier overland route skirting Bangladesh), some flexibility of approach may be necessitated by the role the Myanmar gas pipeline will play in meeting India's future gas requirements through imports and helping ONGC move gas from Tripura, where production has been capped at 30 per cent of capacity because of evacuation constraints.

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