GS-3, Indian Economy, Uncategorized

Government launches ‘SEVA’ App

Govt launched the Saral Eindhan Vitaran Application (SEVA),  for power sector consumers.
SEVA is a part of Digital Indiainitiative, which is aimed at increasing the Consumer Connect as well as the Transparency and Accountability in Coal dispatch.

The consumer friendly mobile app helps in tracking of coal dispatch to 118 Power Plants through Fuel Supply Agreement (FSA) of around 500 MT besides, dispatch through Special Forward EAuction and Bridge Linkage from more than 200 dispatch points spread over eight states of the country.

Environment, GS-3, Uncategorized

Ease of getting power: India’s rank up by 73

HIGHLIGHTS

  • India moved up to the 26th spot in global electricity accessibility ranking
  • It moved up from 99th rank in 2014 aided largely by govt’s rural electrification programme

Total power capacity increased by nearly a third (31%) from 243GW in March 2014 to 320 GW in March 2017.

In spite of the present government’s plan to set up 175 GW geeen power capacity by 2022, conventional power generation capacity too has increased by 26% from 214 GW in March 2014 to 270 GW in March 2017.

Conventional and Non conventional Sources of Energy

The conventional sources of Energy includes :

  • Coal, petroleum, natural gas are the conventional sources for Thermal power in India.
  • Water is the conventional source for Hydel Power, etc.

The Non-conventional sources (Renewable energy) of energy includes :

  • Solar Energy, tidal energy, geo-thermal energy, wind energy, etc.

Renewable Energy Sources: Meaning, Advantages and Disadvantages

Editorials, GS-2, GS-3, Indian Economy, International Relations, Uncategorized

Arctic opportunities

The Indian Express

One of the most dramatic effects of global warming is seen in the Arctic region. In recent years the ice in the Arctic Sea has been melting rapidly. In 2007, a large part of the Arctic Sea became ice free in summer months for the first time in living history.

The melting of the ice in the Arctic Sea has had two major geopolitical impacts:

  • One, new shipping routes between the Atlantic Ocean in the west and the Pacific Ocean in the East, linking Europe with Asia in the north, have opened up. These consist of the Northern Sea Route (NSR) and the North West passage.
  • Second, opening of the Arctic Sea has given way for resource mapping in the Arctic region. The Arctic Sea is estimated to have as much 10 to 20% of the world’s oil and nearly 30% of natural gas.

Importance of arctic region:

  • The territories in the Arctic Circle regions of Russia, Norway, Sweden and Finland have large minerals, particularly, the iron ore. Mineral exploration and exploitation is expected to pick up as Arctic shipping develops further in the future.
  • Apart from the minerals, the Arctic regions will emerge as a new source of fishing. The region is already being called the ‘kitchen of Europe’. The releases of new lands as a result of melting of ice will lead to development of the agriculture in the region.
  • Polar tourism is picking up too. The small Norwegian town of Kirkenes attracts nearly 200,000 tourists in the year.
  • The opening of the new sea routes and the scramble for resources makes for new geopolitics. The Arctic Council, an inter-governmental forum of eight countries — Canada, Denmark, Finland, Iceland, Norway, Russia, Sweden and the US — set up in the 1996 to deal with Arctic issues has been transformed into an active organisation where the future of the Arctic might be decided.

arctic council

India and the Arctic:

India’s engagement with the Arctic dates back to nearly nine decades when it signed the ‘Treaty between Norway, US, Denmark, France, Italy, Japan, the Netherlands, Great Britain and Ireland and the British overseas Dominions and Sweden concerning Spitsbergen’ also called the ‘Svalbard Treaty’ in February 1920 in Paris.

India has been closely following the developments in the Arctic region in the light of the new opportunities and challenges emerging for the international community due to global warming induced melting of Arctic’s ice cap. Today India’s interests in the Arctic region are scientific, environmental, commercial as well as strategic.

India and the Arctic council:

In May 2013, India became an Observer at the Arctic Council, which coordinates policy on the Arctic. (The Arctic Council has eight states as members, the five coastal states, Canada, Russia, the U.S., Norway and Denmark (through Greenland), and Sweden, Iceland and Finland.)

Other countries that joined India as Observers were China, Japan, South Korea, Singapore and Italy. The United Kingdom, France, Germany, Poland, Spain and the Netherlands are already Observers.

In becoming an Observer, India had to agree to the following criteria set by the Council:

  • Recognise the sovereign rights of Arctic states.
  • Recognise that the Law of the Sea and the U.N. Convention on the Law of the Sea, constitute the legal basis and the legal framework within which the Arctic will be managed.
  • Respect indigenous peoples, local cultures and traditions.
  • Be able to contribute to the work of the Arctic Council.

Why South Korea is important for India in this regard?

It is proposed that India should leverage trade talks with South Korea to have a greater say in the arctic, especially since we can’t have strategic partnerships with Russia or China going by our current US-leaning foreign policy. Our dependence on oil, especially crude oil, should make the Arctic doubly important when looking at India’s perpetual problem of energy security.

  • Currently, oil comes to Asia through the Suez Canal and is stored in Singapore, making Singapore the world’s biggest oil storage hub. When the Northern Sea Route (NSR) opens up, it will be a challenge to Singapore because the NSR is a shorter route and piracy issues plague the Suez Canal. Having sensed this opportunity, South Korea is emerging as the next hub for oil storage by planning to add tanks for storing almost 60 million barrels of crude and refined products by 2020. Korea has also come up with a master plan for the Arctic consisting of three policy goals, four strategies and thirty-one projects connected to the Arctic region.
  • Hence, having a stronger trade relation with South Korea is a politically sound judgement. To begin with, should the FTA come through, potential tariff concessions on Arctic oil (storage or transport) could help India immensely in the next 10-15 years. India is still heavily dependent heavily on fossil fuels with oil constituting more than 30 per cent of India’s total imports. ONGC and other domestic oil producers have been facing falling outputs each year, a trend that will most likely continue as India’s crude oil needs rise.

Way ahead for India:

India cannot remain immune from the developments in the region even though the area is remote and far away. India has a long tradition of polar research. It maintains a permanent research station in Svalbard. Much of the naval equipment India imports from Russia is based and tested in the northern regions of Russia.

The opening of the sea routes and the exploration of hydrocarbons present economic opportunities which Indian companies can also exploit. On the negative side, the enhancement of economic activity in the Arctic Region will accelerate global warming and lead to large sea level rise impacting the global climate to which India cannot remain indifferent.

Conclusion:

Whether or not India likes, the Arctic Sea is unlikely to be governed by an Antarctica type international treaty which makes the region a global common. India should remain engaged with the leading organisations like the Arctic Council where many important decisions on the future of the Arctic region will be taken. These can have direct or indirect impact on India. Indian universities and think tanks should pay greater attention to the study of analysis of the developments in the Arctic Region.

Editorials, GS-2, International Relations, Uncategorized

Four corners of a good deal

Article Link

The U.S.-Japan-India trilateral has gained momentum in recent years, with regular meetings and a variety of collective exercises. This proves that India has begun to exert its leadership in the Asia-Pacific region.

  • But, it is not possible for India to be a world leader or an Asian leader without first being a South Asian leader. For this to happen, the support of Australia is also necessary.
  • Few experts have been pitching for a greater cooperation between the U.S., India, Japan, and Australia. But, often this quadrilateral relationship is depicted only in defence terms. The four-way arrangement has made much less progress and has largely been limited to some meetings and naval exercises several years back.
  • But, a closer relationship between these four key democracies is necessary for India’s overall growth and can also boost India’s tenuous energy security in a big way.

India’s energy dependency:

India’s energy deficiency and ever increasing needs are well-known. It is also true that for Indian economic growth to return to double digits, energy supplies must increase by three to four times over the next few decades.

  • Deficits, however, are immense — including, for electricity alone, peak demand deficits of 25% in some southern States. This has made India largely depend on other countries to meet its demands.

Key facts:

  • 80% of India’s oil is imported.
  • Coal imports have also increased by as much as 56% in a single year.
  • India also imports 40% of its uranium.
  • Import of natural gas is also increasing.

Concerns:

India’s dependency on other countries is always fraught with risk.

  • Many, if not most, of its hydrocarbon imports come from unstable or faraway regions.
  • Two thirds of its oil comes from West Asia, and distant Venezuela is also a key source of oil. Additionally, India sees great potential in gas-rich Central Asia. However, because Pakistan denies India transit rights to Afghanistan, India lacks direct access to the region.
  • India is now planning to enhance its access to Central Asia by developing the Chabahar port in southern Iran. However, so long as Afghanistan remains unstable, access to Central Asia via Chabahar will be difficult.
  • TAPI pipeline project is a good move. But, Afghanistan’s security problems make this gas pipeline an unlikely prospect.
  • Meanwhile, the lifting of sanctions on Iran following its nuclear deal with the U.S. opens up energy possibilities for India, which has reduced its imports from Iran in recent years. However, New Delhi faces serious competition from other importers rushing to cash in.
  • India has also lost out many opportunities in this sector, while China has seized them.

How can Australia be a game-changer?

Australia can provide immense energy benefits to India. It already provides sizeable quantities of coal and uranium cooperation between the two countries has also been explored.

  • Australia is a top global producer of LNG. And in recent times, India has shown a strong desire to capitalise on Australia’s gas riches. With LNG prices having fallen by 75% since 2014, the timing could not be more ripe to explore deeper energy cooperation — particularly given the volatile location of Qatar, the top current source of India’s LNG imports.
  • Additionally, India could leverage a closer relationship with Australia to engage more deeply with the latter’s neighbour, Indonesia, which provides India more than 60% of its current coal imports. This would also help advance India’s “Act East” policy.
  • A closer relationship with Australia and Indonesia would further ease the burden on India’s naval forces of protecting energy assets in areas more far-flung than Southeast Asia.
  • Additionally, Indonesia and Australia — despite their proximity to the South China Sea and their susceptibility to Islamist militancy, including attacks by the Islamic State — are far more stable than West Asia, which would ease concerns about the security of Indian energy assets and imports originating in these two countries.

Way ahead:

The time is ripe for India to explore ways to increase cooperation with Australia. One way to achieve this is by reviving the quadrilateral relationship. This could also enhance energy engagement with the U.S. and Japan.

  • Besides, all four countries have an interest in energy infrastructure development. Japan, US and Australia have all signed on to the India-led International Solar Alliance. Japan and India are also offtakers for U.S. LNG projects.

Conclusion:

In recent years, a major roadblock to the quadrilateral relationship was Australia, which withdrew from the arrangement in 2013, citing concerns about China’s reaction. But, now with the new government the country has expressed renewed support for resurrecting it. For India, reviving the quadrilateral relationship may not make much sense from a national security perspective. However, viewed through the lens of energy security, it arguably makes very good sense.

Editorials, GS-3, Indian Economy, Uncategorized

Oil Price Slip & its impact

Article Link

Finance Minister Arun Jaitley has rightly affirmed fiscal rectitude and addressed the challenge of growth and rural distress in the recent Budget. However, analysts feel that the 2016 Budget has failed to lay out a clear roadmap for the petroleum industry, which is already in poor shape.

  • Finance Minister’s budget speech lacked a clearer enunciation of intent, especially since energy has been an important part of the prime minister’s agenda. This lack of clarity did lead to a sharp reaction from the market. The stock price of ONGC tanked by 10%.

Such reaction from the government raises the following three fundamental questions:

  1. Does the government appreciate the severity of the crisis facing the petroleum industry?
  2. Is it serious about reviving domestic oil and gas exploration?
  3. Is its emphasis on clean energy substantive or a rhetorical flourish?

Analysis of key proposals:

The Finance Minister made three policy announcements:-

  1. The price of gas from newly discovered fields would be determined through the market and linked to the price of alternative fuels.

But, initially it was not clear, whether “newly discovered” meant discoveries yet to be made or those already made but not monetised. It was also not clear whether the price would be linked to low-priced coal, the higher-priced imported liquefied natural gas or to a fuel between these two price points.

  1. The second was to switch the calculation of cess on oil production from a specific rate (fixed rupees per barrel produced) to ad valorem (percentage of value).

This is what the companies had lobbied for and it was a sensible move. The fixed charge of $9.1 per barrel produced was affordable when prices were hovering around $100 per barrel but a crushing burden in the current low price regime of around $35 per barrel.

  • However, the petroleum sector was not happy with the proposed ad valorem rate of 20%. For, at that rate, the tax burden came down by only $2 per barrel from $9 to $7 and for so long as the price of oil remained in the current range.
  • In the event prices rise to the average level predicted by analysts of $45 per barrel in 2016, this benefit will be wiped out and companies will find themselves in the same financial straits they are in today.
  1. Third proposal was to double the cess on coal production from Rs 200 to Rs 400 per tonne, and to direct that this money be used for financing clean energy.

This was a positive move. However, there is a concern that this money would be diverted for other purposes. Previous experiences also suggest the same. So far, the clean energy fund has been managed by the finance ministry and the money out of it has not always gone towards clean energy research but for financing unrelated activities like cleaning the Ganges.

  • Finance Minister seems to have missed the opportunity to allay these fears by assuring that the money would be managed by people with domain expertise and not subject to political or financial exigency.

Before proceeding further, the government must internalise three hard truths:

  1. One, India’s dependence on oil and gas imports will increase in the short to medium term.

We currently import around 75% of our requirements. This will go up to near 90% by the end of this decade. We are and will remain hugely vulnerable to the vicissitudes of the international market.

  1. Two, the petroleum industry is in terrible shape.

According some recent studies, every private oil company loses cash at $30 per barrel. All are now on a massive cost-cutting exercise. They estimate that over the period 2015-2017, the companies will take out $200 billion of expenditure and that exploration investment will drop from around $95 billion in 2015 to less than $40 billion in 2016.

  • Besides, cost-cutting will not save the highly leveraged companies from bankruptcy and there will be a plethora of stranded assets available for sale at a discount. This will automatically yield no interest in high-cost, complex and long-gestation exploration opportunities.
  • Hence, it’s time to concentrate in lower-cost, shorter-gestation and technology-intensive marginal fields and that too by niche players funded by speculative private equity funds.
  1. Three, our environment is under stress.

Indian cities are amongst the most polluted in the world. Also, forest cover is denuding along with the receding water tables. Clean energy is the sine qua non for breaking the currently unhealthy linkage between growth, energy demand and environmental degradation.

Now, what are the choices before the government?

  1. First, if it wishes to accelerate exploration, it will have to stop milking the ONGC cow. Private investors will not step into the breach. A downward recalibration of the ad valorem tax rate would be a positive first step.
  2. Second, if it wishes to increase domestic production, it should do what many oil-producing countries, including China, the US , the UK and Malaysia, have done in response to the current low oil price regime and offer tax credits and exemptions for incremental production from marginal fields and enhanced oil recovery.
  3. And third, if it wishes to give a fillip to clean energy, it should put together a more robust package of subsidies and concessions; place its flag on the masthead of electric vehicles and cement R&D partnerships between government entities, private corporations, universities and research

Conclusion:

In sum, in spite of a few positive statements and announcements that impact the oil sector, considerable omissions remain. The sector appears to be shining on the outside, but the tinted windows hide what lies underneath.

Editorials, Environment, GS-3, Indian Economy, Science & Tech, Uncategorized

Budget’s Impact on Renewable Energy

Article Link

This Budget has laid down the roadmap for taking India to the next level of growth. We not only see a clear direction in which the economy is going to be steered but also the key milestones that we need to cross on the way. Finance Minister Shri Arun Jaitley has identified 9 pillars for having a transforming impact on the economy and life of people which were – Agriculture, Rural Sector, Social Sector (healthcare), Education, Infrastructure, Financial Sector, Governance and Ease of Business, Fiscal Discipline, Tax Reform. The Budget was presented in the backdrop of an improving rural sector and infrastructure expansion; which were two of the prominent features of the Finance Minister’s Budget speech.

What’s in it for the Renewable Energy Sector?

The government has allocated an outlay of above Rs.10,000 crore for 2016-17 for the renewable energy sector. This outlay includes Rs.5,000 crore from the National Clean Energy Fund (NCEF) with the balance coming from Internal & Extra Budgetary Resource (IEBR).

  • A significant part of viability gap funding for solar power projects is intended to be financed out of such cash outlay.
  • The finance minister, in his speech, also mentioned diversification of sources of power for long-term stability and outlined his endeavour to augment investment in nuclear power generation in the long term. Changes have been proposed in the public-private partnership (PPP) mode to revive development of infrastructure.
  • On the taxation front, the clean environment cess on coal, lignite and peat has been doubled from Rs.200 per tonne to Rs.400 per tonne; encouraging the use of renewable sources of energy.
  • Other proposals include extension of benefit of additional depreciation to businesses engaged in the transmission of power and exemption of capital gains arising on account of the appreciation of the rupee against a foreign currency at the time of redemption of rupee-denominated bonds.
  • The final road map for phasing out of tax incentives has also been rolled out. No profit-linked incentives have been extended to the power sector, or renewable energy in particular.

What has been done so far for the Renewable Energy Sector?

At the UN Climate Change Conference held in Paris in 2015, India put forth its strong commitment towards clean energy and announced its climate change plan, i.e. Intended Nationally Determined Contribution (INDC) setting targets for domestic efforts against climate change.

  • Among other initiatives, key targets are 40% power installed capacity from non-fossil-fuel-based energy resources and reducing emissions by 33-35% of its GDP by 2030.
  • India’s INDC also sets a target of achieving 175 gigawatts (GW) of installed capacity of renewable energy—including 100GW of solar power and 60GW of wind power.
  • India also launched the International Solar Alliance (ISA), a coalition of solar resource-rich countries, to address energy needs and common concerns.
  • The Renewable Energy Global Investment Promotion Meet and Expo (RE-INVEST) organized in February 2015, received satisfactory response from global investors. India also signed an MoU with Germany to promote solar energy.
  • The government has also launched programmes, including the Green Energy Corridors, a nationwide transmission grid dedicated to power generated from renewable energy projects; setting up of 25 solar parks with a capacity of 50MW each; ultra-mega solar power projects scheme; and the viability gap funding scheme for setting up solar power projects by offering project developers capital cost support.

What’s holding India back from achieving the stated renewable energy targets?

A challenge remains in the capital funding required for such capacity expansion. With the finance minister deciding to stick to fiscal consolidation and reining in the deficit, India’s ability to further access debt resources is limited, due to an existing high debt ratio.

What else needs to be done to improve the energy sector (Renewable in particular)?

  1. Solve policy lag:

A lot of financing lined up for the deployment of wind and solar projects is stuck. This is due to lack of clarity at the individual state level on tariffs and policies preventing the execution of power purchase agreements (PPAs) in a time bound manner. This problem should be addressed soon.

  • Also, the renewable transition continues to be mired with litigation, discom financials and policy lag. Stressed projects are today a cause of systemic concern and there is a need to ensure that tribunal rulings are more or less binding and that going to courts is more a matter of exception than de rigueur.
  1. Capital allocation and incentives:

The extension of the 10-year tax holiday, inclusion of electricity under GST and clarity on domestic content requirement for renewables would help reduce the end cost of electricity to the consumer.

  • UDAY (Ujwal Discom Assurance Yojana) has the potential to transform the discom landscape but needs clear visibility on capital allocations and time bound focus on separation of content and carriage if the one off projected gains are to be sustained over a longer time frame.
  • Incentives and rebates should be given to the consumers to make solar an attractive and viable option. The solar rooftop industry will certainly need better non-recourse financing options by increasing power sector exposure limits of domestic banks.
  1. Need government reforms:

The government needs to design reforms in terms of pushing the initiative of biomass plants and more in 2016. Countries like Japan and India have identified a huge opportunity to further the energy cooperation across the energy value chain. The government needs to design reforms in terms of pushing the initiative.

  1. Push for solar power generation:

Also, the need of the hour is to create an effective ecosystem to enhance solar power generation capacity across India. While talking about rooftop solar in specific, extension of tax holidays, waiver of electricity duty and banking charge for solar rooftops, activating Renewable Energy Certificates (REC) benefits for rooftop projects and captive projects will certainly motivate more rooftop installations to come-up in cities and towns.

  1. Other reforms:

Enforcement of net metering guidelines across states and renewable purchase obligations, strengthening of grid infrastructure to accommodate intermittent solar power, and promoting storage solutions by way of incentives, subsidies etc.

Conclusion:

The recent budget appears to be focusing more on administrative issues within the limits of fiscal prudence, like providing a legal framework for dispute resolution in PPP projects and measures to curb litigation in order to promote a non-adversarial tax regime. However, in order to provide a fillip to the sector, especially in view of the ambitious targets for capacity enhancement set by the government, it should consider implementing the above mentioned reforms.

GS-3, Indian Economy, Uncategorized

Power Tariff Policy

What is the policy?
Tariff policy for power is governed under the Electricity Act. The policy is the guiding principle for setting power rates, power purchase agreements, sale and purchase of coal and power – both conventional and renewable energy
Why was it revised?
The policy revision was undergoing since 2006 in wake of increasing basket of power generation, corresponding growth of transmission & distribution and lack of regulations to tackle new issues cropping up in the ever dynamic power sector. Power ministry in its first draft said the revision was taken up “to provide affordable power to consumers and ensuring fair returns to generators, transmitters and distributors of power and to facilitate development of markets and market instruments in the power sector.”
 Major Amendments:
1. For optimal utilisation of land and other resources that are used for power projects, the policy allows increasing power production on the same project site to the extent of 100 per cent capacity. (Subject to regulatory approvals)
Impact: hassles of land acquisition, forest and environment clearance reduced without effecting power generation. Impetus to private investment.
2. Sale of surplus power generated which has no takers, in spot market through power exchanges
Impact: As spot market is mostly buyer’s market, cheap power would be available for states/discoms to buy. It would improve the PLFs of generating station which have to reduce the capacity when states don’t buy the contracted power.
3. All transmission projects to be awarded through tariff based competitive bidding. The basket of exceptions reduced to minimal list of security related projects. Even intra-state projects which are above a stipulated cost to follow bid regime.
Impact: The policy has given a clear directive to follow competitive bidding in both central as well as state transmission projects. This will allow greater flow of private capital into the lagging transmission sector.
 4. Hydro power projects to be awarded under cost-plus basis and not reverse bidding. The tenure of power purchase agreement extended by 15 years over and above the existing 35 years
Impact: Hydro power gets a new lease of life. Also, hydro when compared to thermal takes longer time and faces lot regulatory hurdles. Any forecast regarding tariff is difficult, so cost plus is a blessing for private investors in the hydel sector.
5. Solar Renewable Purchase Obligation (RPO) to reach 8 per cent by March, 2022. Also, the policy introduces Renewable Generation Obligation, which allows new coal/lignite based thermal plants to also establish renewable capacity to meet their RPO. Existing plants can set up such capacity subject to approval of procurers.
Impact: This will mandate discoms towards providing clean energy to the consumers and prevent payment default to the power producers. Market experts are however still reading the fine print of how much would 8 per cent solar power purchase entail on generation and demand for solar power.
6. Bundling of renewable power with power from those plants whose PPAs have expired or plants which have completed their useful life, subject to development through competitive bidd
7. No inter-State transmission charges and losses–No inter-State transmission charges and losses to be levied for renewable power (solar/wind) till such period as notified by GoI. Impact: One major worry that renewable energy investors face is procurement. “Leveraging existing power assets to expand capacity in both conventional and unconventional energy to boost generation suggests better utilization of invested capital. The continued preoccupation with renewable energy is heartening. This is in line with the growing expectation that cleaner energy like solar shall increasingly displace conventional sources in energy portfolios of developed and developing countries. The intentions have been reiterated, what remains to be seen is how these are implemented and the various parties involved held accountable to deliver the commitments proposed,”
8. Enhanced role of regulators: Both central and state regulators have been strengthened to take up hard tasks and be the final word in most cases. The state regulator would devise the trajectory for achieving 24*7 power by 2022 and closely monitor it as well. Regulator would also mandate compulsory purchase of power from micro grids set up in remote locations.
Impact: Tariff Policy being just a guiding principle is usually twisted by state regulators. The policy amends the legal position of SERCs to “may” which entails falling in line with most regulations. SERCs being given executive role also strengthen their role further.
 Other important amendments for:
Power Producers:
1. Cost pass through of change in domestic duties, levies, cess and taxes in competitive bid projects
2. Cost pass through for use of imported/E-auction coal in competitive bid projects which the producer had to use in case of shortfall contracted coal supply by Coal India.
3. Recovery of costs owing to variation in prices of fuel / power purchase etc. on monthly / quarterly basis.
Consumers:
1. To benefit from periodic cost variation as there would be no carry forward cost.
2. Upfront payment for several cost variables.
3. Smart meters to simplify billing, demand monitoring, help choose power supplier in future
4. Net metering for roof-top solar. Two way smart meters shall be provided to all consumers for roof top solar
GS-3, International Relations, Uncategorized

(TAPI) Pipeline Project

 

tapi1
TAPI Gas Pipe line

Almost 25 years after its inception, finally physical work has been started on the $ 10 billion Turkmenistan-Afghanistan-Pakistan-India (TAPI) Pipeline Project. Afghan, Pakistani and Indian leaders recently took part in the ground breaking ceremony of the 1,814 kilometres project that is due to be completed by 2019.

  • The pipeline, which will pass through Herat and Balochistan before reaching the Indian Punjab border, and will draw from the world’s second largest natural gas field of Galkynysh, comes full of promise.

Benefits of India:

  • It will bring India much needed energy at competitive pricing, and could easily supply about 15% of India’s projected needs by the time it is completed in the 2020s.
  • Energy is a growing need, and even if India is able to source energy from other countries like Iran and further afield, both the proximity and abundance of Turkmenistan’s reserves, that rank fourth in the world, will make it an attractive proposition.
  • This project also gives India an opportunity to secure its interest in Central Asia.
  • TAPI’s success will also ensure that India, Pakistan and Afghanistan find ways of cooperating on other issues as well.

Benefits for other countries:

  • Holding 4% of the gas reserves of the world, presently, Turkmenistan exports gas to only very few countries. But, with the TAPI pipeline, it will be able to diversify its exports to nations like India, Pakistan etc. Turkmenistan will also earn a lot of revenue by these exports.
  • The potential extension of the pipeline to the Gwadar Port in Pakistan will also enable Pakistan to export gas to several countries, thereby increasing its share of revenue.
  • Since the pipeline passes through Afghanistan, it will earn some revenue too in the name of transit fees.
  • This project could easily supply a quarter of Pakistan’s gas needs.
  • It will also reopen a historic route that reconnects South Asia to Central Asia, in the way it was before the British Empire sealed it off.

Challenges before the project:

  • The TAPI project crosses Afghanistan and Pakistan, the former deeply unstable and of uncertain future, the latter plagued by terrorist incidents and infested with militant groups that may find a gas pipeline easy pickings. Ensuring the security of those involved in the construction of the pipeline and then extending that security along its length once operational is going to be a challenge for all the signatories.
  • After its completion, maintenance in the presence of terrorist elements in Afghanistan and in the restive areas of Pakistan will also be a challenge.
  • Another critical issue is the fraught relations of Pakistan with India and Afghanistan.

Conclusion:

Turkmenistan has mind-boggling reserves of natural gas and it needs to export this precious commodity. Countries like India, Pakistan and Afghanistan are facing a severe energy crisis and badly need such a resource to give an impetus to their ailing economies. It is important for these countries to increase cooperation and take decisive action against the terrorists who are the main hurdle to any peace and development process. If utilized properly, the gas reserves can change the destiny of the people of these countries. It is a win-win situation for all stakeholder states and they must make up for lost time to explore this channel of prosperity.

GS-2, International Relations, Uncategorized

Indo-Pak resume talk

Sushma Swaraj said  in Islamabad : “We have decided to restart the Comprehensive Bilateral Dialogue. The dialogue that was earlier known as Composite Dialogue and later on as Resumed Dialogue will now be known as the Comprehensive Bilateral Dialogue.”download (1).png

The comprehensive bilateral dialogue will have all the “pillars” of Indo-Pak relationship and will include confidence building measures (CBMs), Siachen, Sir Creek, Wullar barrage/Tulbul navigation project, economic and commercial cooperation, counter-terrorism, narcotics control, people-to-people exchanges. Two new pillars have been added — humanitarian issues and religious tourism.

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India and Pakistan will participate in another ground-breaking event: e $10 billion Turkmenistan, Afghanistan-Pakistan-India pipeline (TAPI) project.

While the TAPI project has been discussed by Turkmenistan, which has the world’s fourth largest reserves of natural gas, since 1995, India only joined the project formally in 2008. The project has been stalled over the years over gas price negotiations, transit fees, and the problems of security in Afghanistan and Pakistan. Tensions between India and Pakistan only added to the problems, and despite signing the ‘gas purchase agreement’ in 2010, the talks did not go forward.

“Unless the security situation in Afghanistan is stable, this project won’t work. Particularly with the splitting of Taliban, rise of the ISIS, and the government’s inability to exert control in the western and southern parts, which does not look likely to be resolved anytime soon,”

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India’s share of 38 mmscmd would account for about 25% of its current gas requirements. The 1800-km pipeline project contract would provide energy to Afghanistan, Pakistan and India for 30 years, with Turkmengaz extracting the natural gas at a shared cost from the Galkynysh field, the world’s second-largest reservoir of natural gas.