The Hindu Business Line : Still in the pipeline

THE CURIOUS THING about the plan to import natural gas from Bangladesh is that while Dhaka is still to make a firm decision, the technical preparations are so advanced as to appear that the project is already being implemented. The latest indication of this are the reports from New Delhi on the consortium of Indian oil companies that will plan and build the pipeline that will distribute the Bangladesh gas all over the country. The tale began in May when the Minister for Petroleum and Natural Gas, Mr Ram Naik, made public the Government's "approval" of the "formation of a consortium of three state-owned oil companies to import natural gas from Bangladesh". Reports in June described Indian Oil as the "leader" of the consortium. Now, the Government has asked the three companies to form India International Gas Company with 48 per cent equity holding by IOC, and 26 per cent each by GAIL and ONGC; the managing director is to be an IOC appointee, with the ex- officio chairman's post rotating among the three equity holders.

A turf problem has also emerged, the situation being made messier by the different strategies being suggested by the project participants. While GAIL reportedly favours a regional market — covering West Bengal, Bihar and Jharkhand, to start with — IOC wants a national market. Interestingly, as early as February, Unocal, the US oil major deeply involved in gas exploration in Bangladesh, wrote to Mr Naik that a national market would be more in the interest of India (and, of course, itself). In fact, reports in April indicated that GAIL had asked the consultancy major Mecon to undertake "a cross-country trunk gas pipeline route survey'', which was expected to be complete by November. Unocal too has drawn up plans to transport the gas. Reports some time back said the company had proposed a 1,350-km pipeline from Bibiyana (the newly discovered gasfield in Bangladesh) to link up with GAIL's HBJ pipeline. This, according to Unocal, would make available at least five billion cubic metres (bcm) of gas every year bringing in at least $900 million. However, gas supply on this scale can be effectively used only if fertiliser companies and power utilities are roped in. The Bibiyana gas could reduce India's gas-requirement shortfall which (according to Unocal's calculations) is expected to rise from 10 bcm in 2005 to 76 bcm over time. Given Bangladesh's annual trade deficit with India of over a billion dollars, it is apparent that the gas exports to India would help it greatly to improve its trade position.

Dhaka is also under pressure to allow gas exports to India, both from American oil and gas interests and multinational agencies, such as the Asian Development Bank, which feel that Bangladesh's natural resources should be used more effectively if it is to develop at a quicker pace. But politics (mainly India-baiting) is the stumbling block. For, whoever is in the Opposition in Bangladesh opposes any plan to sell natural gas to India even if the same party had argued otherwise when in power, as has been the case with Sheikh Hasina's Awami League. But it is more or less certain that, sooner rather than later, the green signal will be given for a project which could help India and Bangladesh in the long run, both economically and politically.

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