Bangladesh decides to join TAPI gas pipeline project

Dhaka will have to hold negotiations with project member countries.

ISLAMABAD:

Bangladesh, powered by its economic growth, has decided to join the $7.5 billion Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline project, which enjoys the backing of the United States and the Asian Development Bank (ADB).

According to sources, Bangladesh has approached Turkmenistan, expressing the desire to import gas through the TAPI pipeline, which will start from the Daulatabad field of Turkmenistan, pass through Afghanistan and reach Pakistan and India.

“In response, Turkmenistan has asked Bangladesh to hold negotiations with Pakistan, India and Afghanistan before going for a deal for gas import,” a senior government official told The Express Tribune.

The development came in a meeting of the steering committee on gas import held in Turkmenistan on May 23.

“India could benefit if Bangladesh joins the project as Dhaka would have to pay transit fee to Delhi,” the government official said.

The US is playing a key role in pushing the TAPI pipeline project in an apparent bid to drive Pakistan away from the Iran-Pakistan gas pipeline project as well as isolate Tehran. The US has also told Pakistan that it could finance the TAPI pipeline while Islamabad is still struggling to secure financing for the Iran pipeline.

Developments are fast taking place in connection with the TAPI project, which is expected to be completed by October 2017.

At the steering committee meeting, Pakistan and Turkmenistan signed a gas sale and purchase agreement for supply of 1.3 billion cubic feet of gas per day (bcfd).

Pakistan will pay 70% of Brent crude price to Turkmenistan for gas supply, which will be equal to $10.28 per million British thermal unit (mmbtu) if calculated at the rate of $100 per barrel. Gas price will be reviewed after every five years. However, the price Pakistan has agreed to pay to Iran for gas supply is higher at 78% of crude price.

GAIL (India) Limited has also signed gas sale and purchase agreement after agreeing to a transit fee of 49.5 cents per million British thermal units (mmbtu) during tripartite talks between Pakistan, Afghanistan and India in Islamabad. The transit fee will be paid to Afghanistan for transmission of gas to Pakistan and India. On its part, the Afghan government will be bound to protect the pipeline from terrorist attacks.

According to the government official, the Export-Import Bank of the US and Overseas Private Investment Corporation (OPIC), an independent US government agency, have offered to finance the TAPI project. ADB has become a transaction adviser for the project and will raise funds by forming a consortium of leading lenders.

The US is also supporting Pakistan in liquefied natural gas (LNG) import and for this project also OPIC has offered funds.

Published in The Express Tribune, June 7^th, 2012.