The Hindu Business Line : Benefits in the pipeline

Given the pipeline’s many advantages for India’s energy and political scenario, New Delhi should quickly sort out all problems and establish its place in the project.

Last June, the Union Petroleum Minister, Mr Murli Deora, had said after a meeting with Mr H. Ghanimi Fard, special representative of the Iranian Petroleum Minister, that most of the major issues regarding the India-Pakistan-Iran gas pipeline project had been sorted out and that only “small issues” remained to be tackled. If the present state of the project is any indication, Mr Deora’s statement was an over-simplification, if not misleading. Things have c ome to such a pass now that there is serious talk of India being left out of the project altogether and, what is of greater concern, China replacing it as the third partner.

This project is very important for India, not merely from the economic standpoint but also on geo-political grounds. Economically, Iranian gas would supplement domestic supplies, which currently fall short of demand. Admittedly, the recent discoveries in Andhra Pradesh and elsewhere are expected to boost production in the future, though there are uncertainties associated with actual exploitation of proven reserves. Geo-politically, the pipeline would strengthen ties in the region, which would almost certainly have a beneficial fallout on the politics and diplomacy. This apart, the Chinese interest in the project is, to say the least, disconcerting for reasons other than purely economic. Considering all this, it is surprising that New Delhi should be dragging its feet on an issue as trifling as the transit fee vis-À-vis Pakistan (basically the opportunity cost to Islamabad for allowing India to use the pipeline), an issue that is not only more political than economic but is known to have been waived in similar projects elsewhere. That this issue has held up the project (in the works since 2005) for the past few months suggests that New Delhi has other reasons for not expediting it, which is unfortunate given the consequent impact on gas availability. True, there are issues such as the price of the gas being supplied by Iran and the price-revision schedule that are yet to be settled to the complete satisfaction of the parties concerned (the latter more so than the former), but the fact remains that the transit-fee problem has been cited as the main reason for holding up Indian involvement in the project.

Clearly, it would be totally unacceptable if India is left out of the project. There is in fact still some hope because, among other things, Teheran has gone out of its way to say that, as of now, New Delhi remains a part of it and that there is as yet nothing concrete about China’s participation. Strongly in New Delhi’s favour is the fact that without Indian participation, the economic viability of the project stands to be weakened. But this should not lead to complacency in New Delhi in view of the pipeline’s many-faceted advantages for the country’s energy scenario and the favourable regional political spin-offs.

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