India’s hunger for hydrocarbons, especially natural gas, is well known. The demand and supply gap for domestically sourced gas has led to constant upward pressure on gas prices. It is, therefore, natural that it is looking for foreign sources of this fuel.
Barely had the idea of the Iran-Pakistan-India (IPI) pipeline been buried that a new one Turkmenistan-Afghanistan-Pakistan-India (TAPI) began to be explored. Like the IPI, TAPI too is fraught with serious financial and other difficulties. So far, the four countries have not been able to identify a company that will take up the project and construct the pipeline.
There are formidable difficulties involved here. For one, the geopolitical risk involved is so high that a single company, or for that matter a group, is unlikely to take up the project. Unless, of course, it is given financial compensation that is more than adequate to offset that risk.
What can induce competent firms is an interest/share in the upstream (natural gas) part of the project. So far, Turkmenistan is unwilling.
The other component of this risk stems from the fact that except India, the other three countries are politically volatile and in case of government/regime changes there, the risk to investment for any company is likely to rise substantially. There are no mechanisms to offset this risk, so far.
Even in countries where economic interests are far stronger—such as the Russia-Ukraine-Europe gas supply pipeline—Russia’s erratic behaviour in the past has held other partners in the project hostage to its whims. Russia’s use of the pipeline and gas supplies as a “foreign policy tool” has led to bitterness in the past.
There is simply no way to prevent this behaviour (on the part of Pakistan, for example) after the pipeline becomes functional. No guarantees can obviate that risk for India. Before committing any money to the project, India needs to think the matter through.
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