Iran-Pakistan-India gas pipeline plan stuck in political dilemma

Jun 14, 2000 02:00 AM

Seven years after India began exploring the prospects of importing natural gas through a trans-national pipeline, the project remains a pipe dream. There are plenty of prospective sellers: Iran, the United Arab Emirates, and the Central Asian states. But an overland pipeline would have to pass through Pakistan, a hostile neighbour with whom India has fought three wars in the past 52 years.
"A sea route, skirting Pakistan, suits India but it is very expensive and the amortisation period may run into hundreds of years," said Anjan Roy, an economist. India and Iran signed a memorandum of understanding in 1993. But the tense relationship between India and Pakistan has blocked completion of a feasibility study for an overland pipeline more than 1,000 km (625 miles) long.
India signed another agreement with Oman in 1994 for the import of gas by a sub-sea pipeline. The project failed to take off because of costs involved and inability of the gulf state to meet India's long-term demand.

US President Bill Clinton's visit to South Asia in March has raised a glimmer of hope. He seems to have prodded Pakistan and Bangladesh into realising the potential of economic co-operation with India, especially on helping to supply gas.
India's burgeoning industry is desperately looking for natural gas, the cleanest and cheapest fuel. India's existing demand of 151 mm cmpd is likely to shoot up to 391 mm by 2025. The present domestic gas supply is 65 mm, according to government statistics.
Clinton had a private meeting with businessman Dhirubhai Ambani and his sons, Anil and Mukesh, India's top industrial family. They have built one of the world's largest petrochemical complexes at Jamnagar near the India-Pakistan border in western Gujarat state. The Amabanis' Reliance Industries is expected to be a key buyer of the piped gas.
Less than a month after Clinton's visit, Pakistan approved the pipeline project and has offered security for a continuous flow of natural gas to India from Iran. A cash-starved Pakistan is expected to earn nearly $ 600-700 mm a year from transit fees. Pakistan also is keen to import gas using the same pipeline.
Pakistan wants the pipeline to pass through the Makran coast in south-western Baluchistan province and north of Multan in eastern Punjab province and into India, Pakistani Petroleum Minister Usman Aminuddin said. "Pakistan will give security guarantees because the project is beneficial for the country," he said.

Indian External Affairs Minister Jaswant Singh recently visited Tehran and discussed with the Iranian leadership long-term co-operation in the energy sector. "There was no way India could agree to an overland pipeline, unless some fundamentals were addressed," he was quoted as saying.
K. Subrahmanyam, a member of India's National Security Council, is optimistic about the project and cites the example of the Soviet gas pipelines that fed western Europe through Eastern Europe even during the Cold War.
"There should be no problem as long as the supplier is firm and Pakistan is told that if it interferes with the supply its own supply will also be stopped," said Subrahmanyam. The Indus Water sharing agreement between India and Pakistan, arbitrated by the World Bank in the 1950s, survived the 1965 and 1971 wars between the two rivals. The water flowed uninterruptedly during both conflicts.
With India and Pakistan now on non-speaking terms following a new conflict a year ago, the communication gap appears to be widening. But there are also signs of a possible breakthrough. In Islamabad, Aminuddin, the petroleum minister, said: "We have confirmed this (pipeline) in writing with Iran, which is now pursuing the project with India." "The government is committed to it at the highest level," he told. "It also is a gesture of goodwill toward India."
India and Pakistan had been opening up trade in recent years until a confrontation on the icy peaks of Kashmir in May last year snapped dialogue between them. Pakistan military ruler Gen. Pervaiz Musharraf is scheduled to visit Iran in the coming weeks and is expected to the discuss the pipeline deal with Tehran officials.

Source: NewsEdge Corporation via Newspage
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