The Hindu Business Line : Pipelines or pipe-dreams?

NEW Delhi has indulged in two notable flip-flops in its relations with Pakistan in recent days. After initially insisting that passports would be required for travel across the LOC in the proposed Srinagar-Muzzafarabad bus service, it back-tracked on this demand when Mr Natwar Singh visited Islamabad last week. The Government had earlier agreed to drop its insistence on linking progress on the proposed Iran-Pakistan-India gas pipeline with trade and transit concessions from Pakistan.

The Petroleum Ministry was authorised to proceed with proposals for pipelines to India from Iran, from Turkmenistan through Afghanistan and Pakistan and also from Myanmar through Bangladesh. The insistence on passports to travel from Srinagar to Muzaffarabad was illogical, as we regard the whole of Jammu and Kashmir an integral part of India.

sOne does not require passports to travel within one's own country. But questions still remain on our newfound haste to base our energy security on pipelines through some politically volatile and not-too-friendly countries. Less than a decade ago, our High Commissioner, Mr Satish Chandra, asked Pakistan's then President, Mr Farookh Leghari, what guarantees he could give that Pakistan would not halt energy supplies to India id we agreed to the proposed Iran-Pakistan-India gas pipeline. Mr Leghari blandly told Mr Satish Chandra that as India-Pakistan conflicts had never lasted beyond a few weeks, supplies would, at best be interrupted by Pakistan for a few weeks!

The other "concern" in New Delhi is that the proposed pipeline would traverse 750 km of the Baluchistan province — an area that has been in turmoil ever since it was forcibly taken over by the Pakistan army in 1948.

The turmoil in Baluchistan manifested itself dramatically on January 11, 2005, when Bugti tribesmen and the secretive Baluchistan Liberation Army (BLA) attacked Pakistan's largest gas producing plant in Sui that accounts for 45 per cent of the country's gas production. About 430 rockets and 60 mortar rounds were fired at the Sui gas plant. Even after thousands of troops were rushed to the Sui area, protests continued. The attack on Sui was followed by mortar and rocket attacks on electricity transmission lines, railway tracks and telephone communication networks. After these attacks, steel, fertiliser and electrical plants were forced to curtail production. Domestic consumers in cities like Karachi had supplies cut for over twelve hours a day. While Gen Musharraf initially warned the Baluchis of severe military action, wiser counsel appears to have prevailed.

A Parliamentary Committee headed by Senator Wasim Sajjad has been in touch with Baluchi leaders to consider their demands, including greater autonomy, the end of army dominance of the province and greater royalty from exploitation of the province's gas and mineral resources. But given the Pakistan army's rapacious appetite for acquiring Cantonment lands and wielding a monopoly of power throughout the country, it remains to be seen how the legitimate Baluchi aspirations will be fulfilled.

If the Baluchis can manifest their discontent by blowing up Pakistani pipelines and communication networks they can hardly be expected to have any qualms about dealing similarly with pipelines headed towards India. Added to this is the fact that even the CIA has indicated not too long ago that unless Pakistan mends its ways and ends its indulgence of jehadis, it is entirely possible that by 2015, the writ of its Federal Government will be confined to Punjab and a few urban hubs like Karachi.

New Delhi has rightly indicated that it will deal only with Iran on issues such as prices, guarantees of assured supplies and penalties for non-fulfillment of contractual obligations. Gen Musharraf initially appeared to have rather exaggerated expectations of receiving royalties of over $500 million annually as transit fees.

Mr Ifitqar Rashid Ali, Additional Secretary in Pakistan's Ministry of Petroleum, recently confirmed that contrary to popular expectations, Pakistan could expect transit fees of around $70-80 million annually. (When the hard-headed Iranians finish negotiating with the Pakistanis the amount will probably be less.)

Mr Ali added that Pakistan's hopes of a pipeline from Qatar had been found to be uneconomical and that the prospects of gas from Turkmenistan via Afghanistan are uncertain because of the volatile security situation in Afghanistan and the non-availability of certification of the Daulatabad gas fields in Turkmenistan.

There are also indications that Moscow wants Turkmen gas pumped through its pipeline network and not southwards. It thus appears that despite unwarranted optimism in New Delhi, there are still serious uncertainties about getting gas from Central Asia via Afghanistan and Pakistan.

Pakistan is itself soon going to need to import gas for its domestic needs. It is known that Iran would have little interest in constructing a pipeline just to meet Pakistan's needs. Hence Pakistan's keenness to have the pipeline project extended to India, even though the transit fees it will actually get will be far below its initial expectations.

India has secured 30 per cent equity participation in the exploration of gas off the Myanmar coast. While several options are available to transport this gas to India, we seem to be focussing primary attention on a pipeline through 290 km of Bangladesh territory.

Bangladesh has demanded that India should give transit rights to Bhutan and Nepal, facilitate electricity supplies from these countries and also grant unilateral trade concessions to enable it to balance its trade deficit with India, before it considers the Indian proposal for a Pipeline through its territory.

Its Minister of State for Energy, Mr A. K. M. Mosharraf Hossain, proclaimed: "If India does not allow these, we shall not sign any tripartite agreement (on a gas pipeline)." Bangladesh, of course, refuses to grant road and rail transit rights across its soil for India. It also makes no demands on China to reduce its huge trade deficit as it does with India.

It is strange that India is willing to consider all these demands when the Khaleda Zia Government denies that its citizens are being virtually facilitated to illegally cross into India and actively provides support to almost every insurgent group in our North-East.

It appears that the proposals for pipelines are being processed without due consideration of their security and foreign policy implications. Were these proposals studied by the National Security Advisory Board and the National Security Council before a final decision was taken by the Cabinet?

While we are actively pursuing projects for Liquefied Natural Gas (LNG) from Iran, have we devised arrangements to deal with disruptions in supplies through Pakistan, other than some limited storage facilities in Gujarat?

Have we carried out a detailed study of how Bangladesh is saddled with uneconomic contractual obligations with western oil companies and may soon have little option but to market its gas in India if its gas enterprises are to avoid going bankrupt? Why should we not examine options like LNG, CNG or undersea pipelines for delivery near Haldia from offshore gas fields in Myanmar, instead of pandering to Bangladesh? Such LNG terminals would assist economic development in West Bengal.

Further, the suggestion made by Swaminathan A. Aiyar that the best balance between security and costs would perhaps be achieved by constructing fertiliser plants in Persian Gulf countries endowed with immense gas resources also needs to be considered seriously. Flip-flops and decision-making marked by over-zealousness and haste are not entirely desirable in pipeline projects.

(The author is a former High Commissioner to Pakistan.)

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