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$3b project of Iran, Pakistan and India gas pipeline

All the three parties have realised the need to go ahead with the project by forming a consortium

Dec 25 - 31, 2000

It is heartening to learn that the long stalled Iran, India gas pipeline through Pakistan is to be revived soon as all the three parties i.e. Iran, Indian and Pakistan have, at last, agreed to form a multinational consortium to implement the 3 billion dollar pipeline project which will carry Iranian gas to India's energy starved northern states via Pakistan.

The project would have started long ago, but far the reluctance on Pakistan's part in the initial stages. The present government, however, took a very realistic view of the situation that the project was in the economic interest of all the 3 countries. Iran had surplus gas and India needed it badly. Though Pakistan does not need to have any gas at the moment but can always depend on the pipeline in case of any emergency besides earning over 500 million dollars annually in the form of commission. When Pakistan gave a green signal to the project, India, as a result of increased hostility in the Post-Kargil scenario, became reluctant to carry it supplies through Pakistan which they feared could be stopped in case of any emergency. For over a year experts remained engaged in investigation if the gas pipeline could be run under deep sea bypassing Pakistan's territorial waters.

Finally Iran told India that its proposal for laying deep-sea pipeline for the transportation of Iranian gas to India was unviable technically and commercially, and the only viable option was an overland route through Pakistan. The Indian government reportedly asked the Iranian government to ensure the commitment of Pakistan to the project even after the present government has nodded in consent.

This assurance came from the highest level in Pakistan. Gen. Musharraf personally contacted President Khatami of Iran and assured that Pakistan will guarantee security for the gas pipeline and it smooth running through Pakistan. The Minister of Petroleum and Natural Resources, Usman Aminuddin sent a letter to his Iranian counterpart assuring full protection and support to the proposed pipeline project. "Pakistan was prepared to address all concerns of Indian government in this regard and extend all guarantees they required" the minister said. While addressing the first ever ECO energy conference in Pakistan last month President Mohammad Rafiq Tarrar said "given the unique geopolitical position in Asia, Pakistan could offer ideal transit access to promote energy trade from ECO's energy producers to potential consumer markets. He reiterated Pakistan's commitment of allowing uninterrupted gas supply to neighbouring India through a pipeline from Iran was one example of regional cooperation."

In fact India's fear that Pakistan could stop its gas supplies was unfounded. Theoretically, Pakistan could turn of the supplies if the circumstances so warranted, but that is against the established norms of international behaviour. Hence, it has never been an issue simply because such projects are normally safeguarded through international guarantees. The three countries agreement to form multinational consortium is in line with that practice. It would ensure that any untoward political development does not affect the supply of gas to India. In fact, a somewhat similar problem was successfully tackled in the sixties on the more crucial issue of water distribution between India and Pakistan. Pakistan being a lower riparian state, its major river system starts in the upper riparian areas controlled by India. Yet in spite of two major wars the two countries have fought, the Indus Basin Water Treaty, backed by international guarantees, has ensured that the water flow remained unaffected no matter how grave the state of the Indo-Pak hostilities.

The major argument in favour of the gas pipeline project is that Pakistan also stands to secure much economic gain from it. It would get an annual transit fee of 500 million plus gas worth 200 million for its own needs, which Iran is willing to provide on a special discount. In view of the government's stated policy of replacing oil with gas wherever possible thereby reducing the country's enormous oil import bill, the availability of gas on concessionary rates should be very welcome. In fact, it was the lure of such a good deal that the previous governments in this country had been indicating a strong interest in the construction of the pipeline. If they had to back down it was because of political inhibitions. They wanted to say yes and yet found it hard to be openly associated with a project that held economic interest for India. Curiously enough, this was happening at a time the two countries were exchanging scores of items by way of bilateral trade, and thus further weakening the argument of the anti-pipeline lobby in the government against allowing Iran to supply gas to India via Pakistan.

India too would have preferred to do without the pipeline having to pass through Pakistan. Hence it tried to explore the other option of laying it in a deep sea route, away from Pakistani territory. It is reported to have carried out a feasibility study, which, unfortunately for that country, revealed that the idea would be unworkable both on technical and commercial grounds. Finally, good sense has prevailed and all the three parties have realised the need to go ahead with the project by forming a consortium that is to secure their respective interests.