2

India-Pak gas trade faces challenges

The energy transfer project has suffered setbacks over the past two months due to on-going tensions between the two countries.

Kabir Taneja  New Delhi | 16th Nov 2013

The LNG, which requires extensive storage facilities, will be required to be turned into gas form in order to supply to Pakistan.

he long awaited gas deal between India and Pakistan remains stalled due to narrowed down points by both New Delhi and Islamabad. After India's Gas Authority of India Limited (GAIL) demanded that its counterpart across the border, the Inter State Gas Service Company (ISGSC), commit to a sovereign guarantee for the gas it will provide, as reported by this newspaper in June, Pakistan has now in return asked India to lower its price demands for the intended supply.

The energy transfer project pushed by a then enthused Prime Minister Dr Manmohan Singh has suffered setbacks over the past two months due to on-going tensions between the two countries on the LoC in Kashmir. The gas sale purchase agreement was for New Delhi to supply Pakistan with up to 400 million cubic feet of gas per day via a 120 km pipeline from Jalandhar in the Punjab to Jallo, near Lahore, via the Wagah border.

The gas that India intends to sell to Pakistan is imported from Qatar. The import of the gas including taxations and transport charges will cost around $20 per million British thermal units. The LNG, which requires extensive storage facilities, will be required to be turned into gas form in order to supply to Pakistan as it does not have any LNG storage terminals.

Five rounds of negotiations have taken place over the issue and the delivery and procurement methods and systems have been found to be acceptable enough by both parties to deem the project as feasible to execute.

However, geo-political challenges remain, as always, the main reason for slowdowns on Indo – Pak trade. Even as Pakistan struggles with a chronic energy deficit, it has relented in giving India the Most Favoured Nation (MFN) status even as trade between the two nations jumped from $275 million in 2009-10 to $2.6 billion in 2012-13.

At a recent event in New Delhi organised by FICCI to bolster Indo–Pak trade, Mr Arvind Mehta, Joint Secretary, Ministry of Commerce and Industry, Government of India, recognised the growing trade between the two countries and called for the dialogue process to be "uninterruptible and irreversible".

He added, "If Pakistan grants non-discriminatory access to India, India will provide a reciprocal market access to Pakistan at a 0-5 % duty rate, similar to what is being given to Bangladesh. Pakistan should recognize that by delaying non-discriminatory access to India, it was losing out to Bangladesh".

Meanwhile, the pipeline project between Jalandhar and Jallo is also looked as a small scale "practice run" for the larger Turkmenistan-Afghanistan-Pakistan-India (TAPI) and Iran-Pakistan-India pipeline projects.

However, according to experts, these pipeline projects are at least a decade away from being reality due to constant tectonic shifts in regional geo-political dynamics.

 
Newer | Older

tweet-and-win

 

Creative-for-SG


Powered by : Star Infranet