The Hindu Business Line : Pipeline realities

On the face of it, last week brought good news on the two gas pipeline projects that have been on the drawing table for some time now. As regards the $7.6-billion Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline, which will carry gas from Central Asia to the subcontinent through the troubled territory of Afghanistan, India has now been officially included in the project. And Islamabad and New Delhi are reported to have cleared up issues related to the $7.5 billion I ran-Pakistan-India (IPI) project, specifically regarding the transit fee issue, seen as one of the last hurdles to the project’s implementation.

India will, no doubt, be very happy to receive gas through both the pipelines, given the country’s burgeoning energy requirement and the inability, as of now, to boost domestic production to satisfactory levels. However, especially with regard to the IPI project, which has been in the works since the mid-1990s, movement has been excruciatingly slow, mainly because of the imperatives of international politics. Washington has been against the project because of the involvement of Iran, which is on its blacklist. But Teheran would like New Delhi to participate because of its huge market as also for other diplomatic reasons. Islamabad has been playing its own game by inviting China to be a partner in the project, a move about which the Iranians have been less than enthusiastic. The meeting in Islamabad last week has been officially described as a success because a “consensus” was arrived at on the “principles of which the bilateral agreement would be concluded” on three subjects — the structure of the company that will execute and manage the project, the transportation tariff, and the transit fee”. However, there seems to have been little concrete progress. This is because the central issue plaguing both the transportation-fee and transit-fee subjects has been one of quantum and not of structure. In particular, the transit-fee (a royalty of sorts) issue is strictly political and a breakthrough on it would signal that the political opposition in Islamabad to Indian participation in the project has been watered down.

What this in effect means is that while there has been clear progress on the TAPI front — a far more risky project than the Iran pipeline because of its dependence on the current uncertainties of Afghan politics (more than 700 km of the pipeline will have to pass through Afghanistan) — the same cannot be said of the IPI pipeline project. The bottomline is that a bilateral accord between Islamabad and New Delhi is yet to be concluded. As regards the transit fee, there is as yet no indication that the gap between what New Delhi has offered to pay and what Islamabad is demanding (as of last year, 15 cents and 57 cents a million BTU, respectively) has been narrowed down. Much more ground therefore remains to be covered.

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