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Politics of energy

ayyab Siddiqui  Pakistan’s energy crisis is assuming alarming proportions, with no immediate solution in sight. Pakistan entered into negotiations with Iran and India on the IPI gas pipeline project in the mid-1990s. After inordinate delays, the agreement was finally signed on March 16 in Istanbul. India had earlier walked out of the talks. Under the agreement, Pakistan will receive 750 million CMFD (computational multiphase fluid dynamics) of gas per day by the middle of 2015 for the next 25 years. The total cost of the project is estimated at $7.4 billion.
The agreement had hardly been signed when US special envoy Richard Holbrooke reiterated US opposition to any deal with Iran in view of Washington’s standoff with Tehran on the nuclear issue. As an alternative, the US offered to assist Pakistan in obtaining liquefied natural gas (LNG) and electricity from Tajikistan via Afghanistan, within four years.
In June, President Obama signed into law the Comprehensive Iran Sanction, Accountability and Divestment Act. Under the law, the US can bar from the US markets and financial system foreign companies which have any investments in, or dealings with, the Iranian energy sector.
The US also offered an alternative pipeline from Turkmenistan. The $7.6-billion, four-nation project known as TAPI (Turkmenistan-Afghanistan-Pakistan-India) was conceived in the mid-1990s by the US as part of a grand design for a regional power grid stretching from Kazakhstan to India.
A report prepared jointly by the Asian Development Bank (ADB) and Pakistan, and sponsored by the Friends of Democratic Pakistan (FODP), supported Pakistan’s plan to import natural gas from Iran. Some of these discussions were presided over by Holbrooke, and hence the recommendations in the report were deemed to have US approval. It said “gas imports via the cross-border pipeline must start in the medium term (2014-15), then increase to cover the long-term gap”. However, the US appears to have had different ideas.
TAPI was revived in September and the four nations signed a new procurement agreement in Ashgabat, Turkmenistan. The project was formally approved by the federal cabinet on Oct 27 with the US promising to “fast-track” the project. Russia’s gas monopoly giant Gazprom may also participate in this project, “in any capacity, builder, designer participant, etc.,” in the words of Russian Deputy Prime Minister Igor Sechin.
The IPI (Iran-Pakistan-India) project has obviously fallen victim to geopolitics, and Pakistan has caved in, having little choice. Under the present circumstances, despite mutually beneficial initiatives, funding was the key issue. Since the funding decision would have taken time, even a positive response from China would have further delayed the project.
There are no indications that the IPI agreement has been renounced. In any case, it has not been formally revoked, perhaps to prevent any negative political fallout. The whole issue has been kept under wraps. But the signing of the TAPI agreement on October 27 amounts to abandonment of the IPI project.
The development is unfortunate indeed. The Iranians are understandably upset. According to media reports, President Ahmadinejad, foreseeing the abandonment, cancelled his trip to Pakistan scheduled for September for visits to the flood-affected areas. Pakistan must recognise the importance of its relations with Iran and should pursue their improvement with greater vigour, goodwill and understanding. We are already isolated in the region and should not add to our difficulties.
Addressing the UN General Assembly, the Iranian president expressed his sympathy, support and solidarity regarding assistance to the flood victims of Pakistan. He “urged everyone to assist their fellow men and women as a human duty.” How sad that such a friend is being rejected.
The writer is a former ambassador. Email: m.tayyab.siddiqui

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