Energy & Power

Column
Reverse Swing

Bring Derailed Talks Back to Tracks
Farid Hossain

In 2005 the energy ministers from India, Bangladesh and Myanmar met in Yangon to discuss energy cooperation. They agreed in principle to cooperate in exploration of gas and construction of a pipeline to carry Myanmar gas to India through Bangladesh territory.

At the end of the meeting then-Indian Petroleum Minister Mani Shankar Aiyar said if the signals from Bangladesh and Myanmar were right then “there should not be much problem in arriving at an agreement."

Energy analysts then predicted that it could take at least two years to finalize the contracts. Negotiations would have focused on pricing, right of way, and environmental issues.

Since the Yangon meeting two years have passed. But the tri-nation
pipeline is no where in the horizon of the three neighboring nations.
Even the negotiations have been shelved.

Let us recall what the then-Bangladesh Foreign Secretary Hemayetuddin said during a visit to India in 2005. Asked by a reporter about the proposed gas pipeline, Hemayetuddin said Bangladesh was not opposed to the project but it wanted to settle certain other things with India before agreeing to become part of the project.

In fact, Bangladesh put some preconditions. Dhaka wanted New Delhi to import more Bangladeshi goods to reduce its trade gap, provide for Nepalese goods to Bangladeshi ports and access to hydro-electric potential in Bhutan.

During that visit the Bangladesh Foreign Secretary also ruled out Bangladesh exporting gas to India. He said Bangladesh would first have to properly assess its own gas reserve and its requirement.

So, the negotiations on the pipeline fell through even before it started. New Delhi began searching alternative ways of meeting its soaring demand for the energy. The same year India signed a 25-year deal to import 7.5 million tons of liquefied natural gas a year from Iran.

The agreement will be effective from 2009. India is also exploring and
finding its own gas reserve that analysts believe can make the energy-hungry country self-sufficient in natural gas in a few years.

India's daily demand for natural gas by 2025 is estimated at 400 million standard cubic meters, up from today's 90 million standard cubic meters. The gas find in Myanmar was considered a blessing for India. The pipeline was one of several options India has been considering to bring gas reserves from the Shwe Field's Block A-1 site. India's state-run Oil and Natural Gas Corporation has a 20 percent stake in Myanmar's A-1 and A-3 Blocks, while the Gas Authority of India has a 10 percent stake in the two sites.

India turned to Bangladesh to transfer the gas from Myanmar to West
Bengal. According to the original proposal the pipeline would run through Arakan state in Myanmar via the Indian states of Mizoram and
Tripura before crossing Bangladesh to the Indian city of Calcutta. Bangladesh was told that it could earn about $125 million annually in
just transit fees from the proposed pipeline. The pipeline would also
generate jobs in Bangladesh. Such deals are not new in the region.

Myanmar earns some 400 million dollars per year from its annual gas
sales to neighboring Thailand from its Yadana and Yetagun gas fields in the south.

As Bangladesh virtually poured cold water on the project, India looked
for alternative ways. One of those alternatives was to pipe the gas through the northeastern Indian states avoiding Bangladesh. India meant business.

Bangladesh dithered on the project mainly on political consideration. The then-government of Bangladesh Nationalist Party-led four-party alliance was too concerned about the possible political impact from the
deal. General election was not then far away.

With an interim government now in charge Bangladesh seems to be changing its mind. It is keen on resuming the stalled negotiations. That's what Foreign Advisor Iftekhar Ahmed Chowdhury said after a recent visit to Myanmar. Similar statement came from Energy Advisor Tapan Chowdhury.

Efforts are under way to bring the derailed talks back to tracks. Better
late then never. We believe the train is still there waiting for Bangladesh.