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A pipeline through Pakistan

Amberish K Diwanji | August 18, 2004

The ministry of petroleum is rooting for a pipeline from Iran to India through Pakistan to help meet India's burgeoning petroleum and gas requirements.

Minister of Petroleum and Natural Gas Mani Shankar Aiyar has sent a proposal to Prime Minister Manmohan Singh backing the proposal for a pipeline through Pakistan.

According to sources, the minister is keen for the project to take off soon in the new atmosphere of peace prevailing between the two countries and with both nations talking of enhancing economic ties. Furthermore, delays will only push up costs.

Dr Rajendra K Pachauri, Director General of The Energy and Resources Institute (formerly Tata Energy Research Institute) and who has been pushing for a pipeline, said he expected a favourable decision soon. He admitted that there were many apprehensions, but said most had been met.

"The biggest concern is what if Pakistan turns off the spigot. But we have got the Iranians to agree that they will only be paid for the gas that India receives, not for what it pumps. So it will be in Tehran's interest to ensure that Pakistan does not disrupt the line," he said.

India's ministry of external affairs and ministry of defence are chary of a pipeline through Pakistan, fearing it will give Pakistan a massive leverage over India and prefer the option of a submarine pipeline through the Arabian Sea. But such a pipeline is extremely expensive, so much so as to put a question mark on the sheer viability of the project.

It has been estimated that a 2,500-kilometre pipeline from Iran to northwest India will cost about Rs 300 crore (Rs 3 billion); an undersea pipeline could cost almost 10 times as much!

Pachauri points out that cost is a very important criterion: if the cost of import is too high, then no one would even buy it.

Sources also admitted that it was the sheer price difference between an overland pipeline and an undersea pipeline that had tilted the decision in favour of a pipeline through Pakistan, even though few deny that it holds huge risks. The threat to the pipeline is not what Pakistan might do; with international guarantors and financing, Islamabad will little room to manoeuvre.

The fear is of terrorists attacking the pipeline.

But that is threat that prevails even in India. Terrorists in the North-East, especially in Assam, regularly blow up the pipelines taking petrol out from Assam.

A source said that it has been estimated that any damage could be repaired at no huge cost. "It is only when a long length of the pipeline is blown up that it is a cause for concern. Our experience has been that any terrorist attack that blows up a section of the pipeline does not take too long to repair," said the source.

Pachauri too agrees that a terrorist threat is for real. "Any pipeline anywhere in the world will need a huge defence and protection mechanism to ensure that there is no sabotage. We also have to ensure a deal that if the supply is stopped then Pakistan will have to compensate any losses suffered. This will put the onus on Islamabad to ensure the pipeline's safety," he added.

Ironically, the security argument goes against the undersea pipeline too. Granted that it would be much more difficult for terrorists to attack and blow up a section of an undersea pipeline, but should they succeed, repairing an undersea pipeline would also be much more expensive and time consuming compared to the quick repairs that can be done on land.

In the present atmosphere prevailing between India and Pakistan and where the next thrust is to be on economic ties, a gas pipeline could help bring about such a trust. "Pakistan can earn about $500 million as transit fees, which is not a small amount," pointed out Pachauri.

Small wonder then that Pakistan too is keen to have a pipeline through its territory, and had been clamouring for such a pipeline even in the troubled days just after the Kargil war.

Paradoxically, India's eastern neighbour, Bangladesh, with whom ties are supposedly much better, has been extremely cool to a Myanmar-India pipeline through its territory. But the difference here is that since India too borders Myanmar, Bangladesh can be avoided if it acts too pricey.

Also, an undersea Myanmar-India pipeline will not be too expensive since the Bay of Bengal continental shelf is much higher as compared to the Arabian Sea's continental shelf.

Incidentally, there is also talk of linking the overland pipeline to Islamabad according India Most Favoured Nation status. Under the World Trade Organisation rules, Pakistan has to accord MFN status to India but has so far managed to stall doing so, fearing a flood of Indian goods entering the country.

"Right now, the only thing holding back the work from starting is the final go-ahead," said Pachauri. "The political leadership now has to bite the bullet and decide and everything will fall into place."

Finally, he pointed out that should, in the event of hostilities, Pakistan ever stop the gas flowing into India, in return India could stop the Indus water from flowing into Pakistan.

"This is not spoken of openly, but it will always be India's weapon," he concluded. The Pareechu experience has shown that this is possible.

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