An inter-governmental agreement has been signed this past fortnight on an ambitious gas pipeline project, known by its acronym TAPI, to transport natural gas from fields in Turkmenistan to India via Afghanistan and Pakistan. This will put a question mark over the future of the other ambitious and much discussed gas pipeline project, the Iran-Pakistan-India (IPI) pipeline, which unlike TAPI does not enjoy the backing of the United States.
India is a lucrative market for gas export; the demand for natural gas and other forms of energy outstrips the supply. The demand for gas is estimated to be 260 million cubic metres a day but supply is just 180 mcm.
But US support will amount to little if it is not backed by more concrete things, beginning with arrangements for assured finances. Nothing much is known about the financial and technical issues that will be encountered in executing TAPI. The countries participating in the project will have to build a consortium for funding as the Asian Development Bank, an enthusiastic supporter of TAPI, is not going to pick up all the tabs. It is mystifying that the schedule for the completion of TAPI–2014—has already been prepared.
Whether it is TAPI or IPI, the fact is that both these projects will face huge safety and security problems. The proposed gas pipelines will pass through Pakistan’s restive territories. TAPI will traverse much of Afghanistan where the Taliban holds sway—Kandhar and Heart—before entering the Pakistani areas that are pro-Taliban.
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In the case of Pakistan, India has to take into consideration the additional factor of ingrained hostility. Pakistanis say that safety of the pipelines is in their own national interest as the cash strapped country expects to earn handsome revenue from India as transit fee. That is not a reassuring argument because a paranoid Pakistan, as India knows well, will attribute damage to the pipeline to the ‘non-state’ actors and disclaim responsibility for any act of sabotage.
A member of the Indian Planning Commission has suggested that a way out of this problem. For the IPI project the suggestion is to build an underground pipeline from Iran all the way to Jaisalmer in Rajasthan and then distribute and deliver the gas to India and Pakistan.
That proposal sounds good but must remain in the realm of utopia as also another proposal that a special security force be created for the protection of the pipeline. It is impossible to imagine that Pakistan will agree to such a proposal because it may considerably reduce Islamabad’s expected income from transit fee and will also deny Pakistan the opportunity to upset India by disrupting the gas flow to express its pique.
Pakistan will draw inspiration from one of its own myths. It has been alleging that India ‘steals’ water from the western river that flow from Kashmir in violation of the Indus Water Treaty. Since the Pakistani allegation has not been supported by evidence or any international agency it is waiting to pay India back in the same coin!
Aware that IPI may run into trouble because of US ‘pressure’, the Iranians are said to be willing to negotiate a fresh deal with India that will transport natural gas from the Pars fields to an India port via an under sea pipeline. India has in the past held that it will hike the project far beyond the present estimate for a surface pipeline and render it unviable.
As one understands it, the industry in India—or any other sector—will need uninterrupted flow of gas and for several years to come, no matter where it comes from. Depending on a source of supply that passes through hostile territories does not look like a good proposition.
The financial arrangements for either project are not clear, though it has been announced that the Asian Development Bank is ready to fund the $7.6 billion TAPI project. What is doled out by ADB will depend on the way negotiations with it go. That negotiation is some distance away. There are also reports that India will be asked to become the lead player, suggesting that the bulk of the finance should come from India.
Afghanistan has good reasons to be enthusiastic about TAPI. But the Taliban-ravaged country has no gas distribution network and has no big industrial facility that is hungry for energy. Of course, Kabul could consume all the gas that may flow in from TAPI.
The matter of fixing the price of gas is also crucial. India’s experience with Iran has not been very happy as it went on raising the price periodically even as the negotiations were under way. Turkmenistan may also adopt the same tactic. Turkmenistan warmed up to TAPI after it encountered problems in exporting its natural gas to Europe via Russia. India could buy as much of natural gas from Turkmenistan as Europe has been.
TAPI will traverse through Kandahar and Hirat in Afghanistan where the Taliban holds sway—before entering pro-Taliban areas in Pakistan.India is a lucrative market for gas export as the demand for natural gas and other forms of energy far outstrips the supply. The natural gas demand in India is estimated to be 260 million cubic metres a day against a supply of 180 mcm.
It goes without saying that India has to look all over to meet its energy needs, even if it means going to countries like Iran—and Myanmar—frowned upon by the US. But that search cannot be allowed to create a situation where India is asked to pump in millions, if not billions of dollars, without being sure of commensurate returns due to unsure supplies and hostile intentions.
