The $7 billion Iran-Pakistan-India (IPI) pipeline project — together with the Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipe-line — is finally taking shape and is not all gas, after all. The recent talks between the oil ministers of India and Pakistan registered ‘significant progress’ on the IPI proposal. Significantly, both countries appeared determined to go ahead with it regardless of the US’s reservations on this proposal. <b1>
America’s concerns are largely over Iran’s nuclear programme and it has held out the threat of sanctions if non-US companies invest in oil and gas worth $ 20 million in that country. But this sort of pressure appears to have had no bearing whatsoever on fast-growing developing econo-mies like India and Pakistan that need access to oil and gas supplies. But this doesn’t imply that India has no concerns of its own regarding IPI or TAPI for that matter. India has had an on-off attitude regarding IPA ever since it was first mooted way back in 1989 by R.K. Pachauri, then director of Teri (The Energy and Resources Institute) and a deputy foreign minister of Iran. Simply put, its enthusiasm has hardly been ecstatic due to ongoing tensions with Pakistan and fears that transit fees paid to it would only fund jehadi terrorism. the security of the project was also in question as the 2,135-km pipeline passes through insurgency-ridden Balochistan. Which is why after participating in initial rounds of trilateral talks, India has not taken part in such negotiations since mid-2007.
For all its security concerns, India’s decision to rejoin the project is to be welcomed. For starters, the Iran gas pipeline is a win-win situation for both India and Pakistan as both are short of gas supplies. In the case of India, gas-based capacities in the power sector are generating less power due to this factor. As against an overall requirement of 77 million standard cubic metre per day (mmscmd) of gas between April 2007 and January 2008, only 37 mmscmd was supplied. These demand-supply mismatches will worsen unless India secures access to gas supplies through pipelines or LNG imports. The big question is how cheap can it get such supplies when oil prices have zoomed past the $100 a barrel mark. The progress in bilateral talks, however, clears the decks for the IPI project to finally take shape.