New era of energy diplomacy with India

The fact that we are planning on sending Khwaja Asif, the federal minister for water and power, to India to discuss possible solutions for Pakistan’s energy crisis could have two possible implications. Either the desperation on the energy front has risen above head-level, so much so that we’re willing to seek the help of the “archenemy”, or Pakistan is actually working on ameliorating bilateral ties with India, as has been reiterated time and again by the recently elected government. And of course one cannot discard the most likely possibility that Pakistan vying to up the ante on energy diplomacy on the Indian front, could very well be owing to a combination of both the aforementioned factors.
As mentioned in this space last week, a gas pipeline from Jalandhar to Wagah, via Atari would be an integral part of the discussion when Khwaja Asif takes his place on the negotiation table with India. If India removes LNG from taxation, the gas price for Pakistan through this potential pipeline would come down to $16/mmbtu, which borders on affordability. Getting around 200 mmcfd of gas through this 60 km pipeline could go a long way in solving Pakistan’s gas troubles.
The second most important proposal that would be put forward by the water and power minister would be the transmission line from the Indian half of Punjab to Lahore, which would bring around 500 MW of electricity. This would significantly reduce the power outages, and in turn help businesses in Pakistani half of Punjab get back up on their feet again.
However, before we can bring India towards accepting these proposals there is a list of pending issues that need to be sorted out. At the summit of this list is of course the fulfillment of the promise of granting the MFN status to India. Other factors include deliberation over agriculture and textile exports, IT cooperation, relaxed visa regime, rail and air connectivity and enhanced banking relations. Furthermore, the future of TAPI pipeline is something that also needs to be mulled over by both the parties, as energy diplomacy might do what nothing has quite managed to successfully pull off over the past 66 years: bring India and Pakistan closer.
Energy sharing is one of the most sure shot ways of ensuring tranquility between two countries. When your energy and power sectors are dependent on another country, then for obvious reasons you bring a lot more flexibility on the negotiation table. With Pakistan seeking help from India on the energy front, Islamabad would then ensure more so than ever before that bilateral ties with India stay peaceful. However, one-way energy dependency can be a dangerous thing as it allows the energy supplier to be in more of a position to dictate terms. This is precisely why, for energy diplomacy to work seamlessly en route to ensuring peace among two countries, an energy symbiosis – where both parties are dependent on each other, in one form or the other – is the most ideal scenario.
India’s own gas troubles have meant that gas pipelines from the opulent zones of Central Asia (TAPI) and Iran (IP) have been proposed to bridge the demand-supply deficit. The primary reason why India backed out of the IP deal in 2009 was because of the tumultuous relation with Pakistan that had traced its nadir following the Mumbai attacks. Whenever the ties with a country are volatile, involvement in any bilateral projects becomes iffy. Being one wrong political manoeuvre away from being devoid of the gas coming from a pipeline that traverses Pakistan was the biggest concern for India, one that shrouds New Delhi’s participation in TAPI as well. By being the first to extend the friendship hand, Pakistan has thrown down the gauntlet to India to reciprocate and be a part of TAPI and maybe even IP, in turn strengthening the bilateral bond and ensuring stability in the region through energy sharing.
With TAPI looking the likelier of the two proposed pipelines, it would not only strengthen Indo-Pak ties, but also help drag Afghanistan out of the current crisis, with the interest of some of the Who’s Who of global oil and gas firms in the project. TAPI could end up being the hinge on which South Asia pivots towards tranquility. And it goes without saying that TAPI could be an integral part of this new era of Indo-Pak energy diplomacy as well.

The writer is Energy and Finance Correspondent, Pakistan Today.



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