That pipeline project may be canned

Good. But unfortunately, not for the right reasons

This is an archived blog post from The Acorn.

Rediff reports that instead of co-investing in a pipeline project across Pakistan and Iran, India will seek to modify the deal putting the onus on Iran to deliver the gas at India’s border.

The (petroleum ministry’s) note says the full responsibility for ensuring safe and secure supply of gas to India would vest on Iran. Tehran would be solely responsible to ensure Indian supplies; arrange alternative supplies in case of disruption, and suffer penalties in case of supply disruptions.

The negative aspect of this arrangement is that the supply to India would be almost entirely dependent on the ability of Iran to ensure that Pakistan fulfils its obligations.[Rediff]It’s not a new idea and it remains to be seen if Iran is willing to accept these terms without a significant increase in price. In any case, India’s decision is a serious if not final blow to the pipeline project.

Unfortunately, the petroleum ministry felt compelled to do this ‘due to political and legal opposition from the US’. It would have been wholly unnecessary to create a situation where India’s actions are seen to be circumscribed by the United States if only the UPA government had had the good sense to realise that the pipeline was a fundamentally unsound idea in the first place.

Update: Mani Shankar Aiyar declares that India remains fully-committed to the project, and buying gas at the border is an old option being ’recalled.

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