TALKS in Dhaka last week between Bangladesh and India failed to resolve their differences over a proposed multi-million dollar trilateral pipeline to carry natural gas from Myanmar’s A1 block off Rakhine State.

The September 5 meeting between the Bangladesh Minister of State for Energy, Mr Mahmudur Rahman, and India’s Minister for Petroleum and Natural Gas, Mr Mani Shankar Aiyar, ended in deadlock.

It was aimed at settling differences over conditions sought by Bangladesh for allowing the pipeline to pass through its territory. The failure of the meeting to achieve a breakthrough has increased doubts about whether the pipeline will go ahead.

Mr Rahman told reporters after the meeting that Bangladesh had formally proposed the conditions under which it would approve the pipeline. They included a guarantee for India to reduce the trade imbalance with Bangladesh as well as New Delhi’s permission to use Indian territory to develop trade links with Nepal and Bhutan. Dhaka also wanted permission to import electricity across India from the two Himalayan kingdoms.

Mr Rahman said that while Mr Aiyar did not rule out agreeing to the three conditions, he wanted them to be settled as bilateral issues separate from the proposed pipeline.

“The main difference is that they in principle don’t agree to link any of the three issues to the tri-nation pipeline, which is in principle opposite to our position,” Mr Rahman was quoted as saying by AFP.

Other conditions set by Bangladesh for the pipeline are known to have included an annual US$125 million transit fee, which India has agreed to pay.
The state-owned Press Trust of India quoted Mr Rahman as saying he was told by Mr Aiyar that New Delhi would abandon the plan for the pipeline if it could not be built across Bangladesh as any other route would not be economically viable.

However, Mr Aiyar said after the meeting that it was constructive and negotiations with Bangladesh on the pipeline project were moving forward satisfactorily.

“The dialogue was constructive and satisfactory and we are moving forward,” said Mr Aiyar.

The one-day visit to Dhaka by Mr Aiyar also included discussions on the pipeline with the Bangladesh Prime Minister, Begum Khaleda Zia, the Foreign Minister, Mr Morshed Khan, and the Finance Minister, Mr Saiful Rahman.

At a meeting in Yangon last January, the three countries agreed in principle to build the pipeline from the A1 block, being developed by a consortium led by the South Korean conglomerate, Daewoo Corporation.

Daewoo holds a 60 per cent share while two Indian state-owned companies, the Oil and Natural Gas Corporation of India and the Gas Authority of India Limited hold a 20 per cent and 10 per cent share respectively, and the remaining 10 per cent is held by a South Korea’s state-owned KOGAS.

The differences between Bangladesh and India have delayed the signing of a memorandum of understanding on the pipeline project.

The MoU was drafted in February by a technical committee comprising energy officials from the three countries.

The delay in signing the MoU prompted India and Myanmar to announce in July that they were considering alternative routes for the pipeline, including one bypassing Bangladesh.

In a related development, New Delhi is reported to have proposed building a power plant in Myanmar using natural gas from the A1 block. Under the proposal, reported by the New Delhi-based Indo-Asian News Service on September 4, India would buy the gas and be supplied with the electricity it generated.

The new plan was proposed as an alternative to building the pipeline, Indo-Asian News Service reported.

It said the proposal was sent last month by India’s Petroleum and Natural Gas Ministry to the Myanmar government for consideration.