Sunday, July 20, 2014

IPI and India Pak trade

Looks like IPI (Iran-Pakistan-India) pipeline is slowly coming back to discussion tables. Credit goes to US need to isolate Russia; which requires finding an alternate source of oil and gas supply to western European countries. This will again open Iran for international trade. Which means a pipeline from Iran to India through Pakistan is feasible.

However, I am not convinced of the viability of IPI pipeline. It has to pass through many of Pakistan’s most restive provinces. An explosion here or there will break the pipeline and create leakages. However, the other part looks attractive. Exporting the gas through Iran’s Chabbar port; receive at Indian LNG terminals and then distributing it to various parts of Indian and Pakistan. Instead of unsafe route through Pakistan, this one seems to be safe and viable.

In this situation, Arun Jeitley’s announcement of encouraging hydrocarbon exports to Pakistan through Jalandar (after receiving Gas at Dahej and then to Jalandar through existing pipelines) is a welcome statement. This will not only increase the business ties between Indian and Pakistan but also give some momentum in diplomatic engagements. Connecting this Indian city with Pakistan through a 103 km long gas pipeline (to be laid by GAIL) will add some more momentum to business. An additional export of 500MW electricity from India to Pakistan is supposed to strengthen the ties.

However Pakistan also need to reciprocate. One step Pak government can easily take is encouraging Indian business houses to directly trade with Pakistani companies. Instead of going all the way from India to Middle East and then to Pakistan. Won’t it be cheaper for Pakistani’s to bring commodities from Indian cities from couple of hundreads kms away?


No comments:

Post a Comment