Bangladesh decides to join TAPI gas pipeline project

Published: June 7, 2012
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India could benefit
if Bangladesh joins
the project as Dhaka
would have to pay
transit fee to Delhi. ILLUSTRATION: JAMAL KHURSHID

India could benefit if Bangladesh joins the project as Dhaka would have to pay transit fee to Delhi. ILLUSTRATION: JAMAL KHURSHID

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 7th, 2012.

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Reader Comments (12)

  • John B
    Jun 7, 2012 - 8:11AM

    Good, now everyones interest is protected and guarded by the others. Collective prosperity.

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  • BlackJack
    Jun 7, 2012 - 9:05AM

    Strange – I would have thought that Bangladesh would be able to import its required gas from Myanmar, which is much closer (even if there is no dedicated pipeline). Possibly the net price of gas despite distance and uncertainty is a deciding factor.

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  • imran
    Jun 7, 2012 - 9:32AM

    good development, all in the favour of afghan, pakistan, india and bangaldesh.

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  • Noor
    Jun 7, 2012 - 10:18AM

    @imran:
    only if uncle SAM allows the locals to live in peace.

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  • Whats in the name
    Jun 7, 2012 - 10:39AM

    My sincere suggestion to Bangladesh. TAPI itself is a non starter. I would rather wish that they devote the same energy, time and other resources on building this alliance into some other venture but for the same resources/cause. Atleast the energy, time and money spent will be worth the cause but certainly not this one. Its a non starter for me.
    Rgds
    P

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  • Nasir
    Jun 7, 2012 - 10:48AM

    Paper project just to pull Pakistan from IP.

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  • Nas
    Jun 7, 2012 - 12:36PM

    we are All talk no action – exactly what we done with our dams. 10 years from now our incompetent leaders will still be discussing TAPI

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  • Naeem Siddiqui
    Jun 7, 2012 - 5:12PM

    I smell something Fishy!
    This News is like a Joke, if true this TAPI project going no where :)

    Bangladesh can easily import Gas in much cheaper price from Mynamar, Starting from Turkemanistan the gas will bcome exteamlly expensive when it will reach to Bangladesh borders .

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  • hasan
    Jun 7, 2012 - 7:33PM

    @Naeem Siddiqui: Both Bangladesh and Myanmar don’t have financial capital and technical know how to set up a plant and then distribute the gas. Possibly this is the reason why Bangladesh finds it more easy to get it from India and pay a transit fee to India.

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  • BlackJack
    Jun 7, 2012 - 7:56PM

    @hasan:
    That is not correct. One of the first pipeline projects that was proposed in the region was the Myanmar – Bangladesh – India project; it was an attractive option – the distance (and hence uncertainty) is less, and Bangladesh would be the one earning the transit fees – however, this was effectively scuttled by the Khaleda Zia govt under the assumption that Bangladesh has sufficient reserves to meet its own requirements and even to export to other markets (along with Indian lethargy). Subsequently, the Myanmar – China pipeline project was put in motion and Myanmar lost interest in the MBI option by the time Bangladesh woke up in 2007 and the Indian govt got its act together.

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  • antanu g
    Jun 7, 2012 - 8:33PM

    Though very well intended….I doubt US will scuttle the project at the last moment.

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  • Sonya
    Jun 7, 2012 - 11:24PM

    TAPI boat is overloaded – bound to drown.

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