May 14, 2012
By: Khalid Iqbal

The concept of energy security does not have a uniform meaning due to the complexities arising out of regional intricacies and global market dynamics. The World Bank defines energy security as “the sustainable production and use of energy at reasonable costs to ensure a certain quality of life.”

The flow of energy resources across states’ boundaries does not guarantee as such regional peace, unless it is supported by an enabling environment in the overall context. However, if managed in a prudent way, it does become a contributory factor and an enabling tool for achieving and sustaining regional peace.

In political and diplomatic terms, peace is achieved by eliminating and/or mitigating the causes of conflicts to bring the possibility of an armed conflict to zero. One could start the process from either way: begin with creating interdependencies and proceed to zero conflict state or follow the reverse path.

If prudence prevails, interstate flow of energy could cement the bonds of friendship and boost economic cooperation. With India’s withdrawal from the IPI project – at least for the time being – the focus is now on the negotiations over the IP and the TAPI projects. However, perception has it that after consolidating the gains of Agreement 123, India would disregard American pressure and rejoin the project.

Though there has been a great deal of optimism generated over the project among the TAPI partners as well as its lead developer, the Asian Development Bank, numerous hurdles continue to haunt. To start with, route security is an issue. The pipeline will transit some 730 kilometres through Afghanistan. Due to the ongoing insurgency in the war-torn country, concerns over the security of the pipeline remain absorbing.

Likewise, there are concerns about sections of the IPI and TAPI pipelines passing through Balochistan where the law and order situation is not satisfactory. However, we may observe that though domestic gas pipelines through Balochistan are targeted occasionally, the supply of gas has never been disrupted to the extent to cause a paralysis.

For security reasons, the Asian Development Bank has proposed alternative TAPI routes. Though the governments of Afghanistan and Pakistan are committed towards providing full protection to the pipeline, it would be better to select the most secure route.

Yet, another uncertainty is about the sustainability of gas supplies from Turkmenistan. Turkmenistan has already signed agreements with Iran and China to increase existing supplies to these markets; a similar understanding has also been reached with Gazprom. Therefore, questions have arisen over whether it will be able to meet its commitments for TAPI.

In addition, Turkmenistan’s gas sector suffers from several constraints, including lack of financial resources and technical capability to develop new projects. Turkmenistan also lacks adequate pipeline network infrastructure to deliver gas to its markets, and continues to be dependent on Russia’s network for exports to the West. Some experts are of the view that it is unlikely that it will be able to increase its export volumes substantially over the next 10 years.

Afghanistan and Pakistan would not only get the required gas, but also transit fees for the length of the pipeline using their respective territories. It would improve Pakistan’s bargaining position vis-à-vis Iran in negotiating a gas price from the proposed Iran-Pakistan (IP) project, and it would be less dependent on the gas from a single source. The TAPI agreement commits the four nations to providing government support, including security for the pipeline.

The dark side is that TAPI provides a cover for the Americans to maintain a potent military presence in Afghanistan, though for other strategic reasons. Both India and Pakistan are energy starved countries and need gas urgently from whatever source it comes.

Washington’s support implies that TAPI will attract the financiers more promptly. However, the overriding American objective to promote TAPI is to ensure that the IPI project is effectively killed. America has a history of bulldozing economically unpopular projects in exchange for politico-strategic gains. For example, in 2005, despite substantial opposition from within business and political circles in both the US and the Caspian States, a hugely expensive and logistically challenging pipeline from Baku in Azerbaijan to Ceyhan in Turkey, transiting a fractious Georgia, was built by an 11-member consortium led by British Petroleum under pressure from Washington.

The US government made finances available from government agencies such as the Overseas Private Investment Corporation (OPIC) and the US Export-Import Development Bank. The objective that America was seeking then was to provide a route that would circumvent the Russian territory and break Moscow’s stranglehold over the European gas market.

The tussle over the IPI and the TAPI is not a mere economic battle; it has far-reaching geopolitical dimensions. The IPI and TAPI are symbols of the ‘new great game’ – the main goal of which is gaining control of oil and gas reserves in this region. The US and its allies want Pakistan to abdicate the IPI and pursue the TAPI only; India has already done so. Now, China and Russia are supporting Pakistan to withstand the US pressure for giving up the IP project.

The imported gas price is likely to be around 80 percent of the oil price; hence, it will not be affordable by domestic and industrial consumers and could only be used for power generation. Moreover, with oil prices fluctuations, gas prices would also follow the suit adding a factor of uncertainty to our economy.

Pakistan is suffering because of overpriced power purchase arrangements reached with IPPs. Despite the generation capacity, we cannot have electricity because it is not affordable. Islamabad should not commit the same folly once again; it should purchase gas at a price that is economically viable.

Land, however, has to be reclaimed by the governments for these projects. In Pakistan, there are various means by which land can be acquired. Whatever pattern is followed, the affectees must be satisfied in terms of compensation and as far as it is possible, they should be made perpetual stakeholders through a kind of stipend, so that they have an abiding interest in the infrastructure’s safety and security.

An offset amount may also be pre-decided for the socioeconomic uplift of the areas through which the pipeline is to pass. Subject to no act of disruption, such an amount could be payable to local administration annually for financing public welfare projects.

With respect to international dispute settlement, diplomatic means are most commonly used. There is an array of dispute settlement mechanisms available to choose from. Comprehensive dispute settlement mechanisms should be worked out for both the projects, and such arrangements must be underwritten by appropriate institutions like the Asia Development Bank.

Apparently, IPI and TAPI present a win-win setting for all participants. Hopefully, ways and means would be found to materialise these two projects, which can be rightly termed as peace pipelines.

The writer is a retired Air Commodore and former assistant chief of air staff of the Pakistan Air Force. At present, he is a member of the visiting faculty at the PAF Air War College, Naval War College and Quaid-i-Azam University.

Email:khalid3408@gmail.com
-The Nation