As part of energy sector cooperation between the two neighboring nations, a 131.57-kilometer cross-border “Indo-Bangla Friendship Pipeline” was officially opened on 18 March 2023 as a new milestone in Bangladesh-India bilateral cooperation. Bangladesh will use this pipeline to import petroleum goods, particularly diesel, from India. The freshly constructed pipeline was solemnly launched by Prime Minister Sheikh Hasina and her Indian counterpart, Prime Minister Narendra Modi. While PM Modi was linked from his office in New Delhi, PM Hasina was connected from Gono Bhaban, her official residence. 126.57 kilometers of the pipeline are in Bangladesh, and the final 5 kilometers have been installed in India. Presently, Bangladesh imports 22,000 tonnes of diesel through train wagons each month. The agreement might be maintained for an additional amount of time. However, the Pipeline can move one million tonnes of high-speed diesel annually (HSD). In the beginning, it will provide HSD to seven districts in northern Bangladesh. It is an omen for a new era of energy cooperation.
While the whole world is suffering from an energy crisis, developing economies are the most vulnerable. There are sanctions on certain energy exporters and others are trying to cope with the growing energy shortage due to the supply chain disruption. Amidst such background, the inaugurated pipeline comes with a sigh of relief for both economies since Bangladesh can get uninterrupted supplies of diesel, and India on the other hand can be assured with stable economic prospects. The later sections will shed light on those.
The project is being carried out by the BPC, a state agency under the Energy and Mineral Resources Division, in accordance with a 15-year agreement with India to import 250,000 to 400,000 tonnes of diesel per year through the cross-border pipeline. After receiving the go-ahead from the Cabinet Economic Affairs Committee on August 23, the agreement was inked in 2017. To meet its demand, Bangladesh must import 6.6 million to 7.7 million tonnes of diesel annually. Bangladesh will receive the entire shipment of petroleum at the Parbatipur petroleum fuel depot in the north-western district of Dinajpur from India’s Numaligarh refinery, located in Golaghat in the north-eastern Indian state of Assam.
Besides, this is the first cross-border energy pipeline between India and Bangladesh. It was constructed at an estimated cost of Rs 377 crore; the Indian government provided grant aid for the construction of the pipeline’s Bangladesh section, which cost about Rs 285 crore.
However, the Indian government has offered approximately Rs 303 crore as a loan under its Indian line of credit (LOC) to develop the Bangladesh segment, even though the majority of the projected pipeline is to be laid in Bangladesh. India will operate its section of the pipeline while Bangladesh will operate its portion. According to the documents, Bangladesh will import 250,000 tonnes per year for the first three years, 300,000 tonnes per year for the next four to six years, 350,000 tonnes per year for the next seven to ten years, and 400,000 tonnes per year for the next eleven to fifteen years.
Such petroleum imports from India via transnational pipelines will assist in building up a supply of petroleum in the northern region to fulfill the region’s rising demand.
According to a statement made by the Indian Ministry of Foreign Affairs, the operation of the Bangladesh-India Friendship Pipeline will establish a dependable, affordable, sustainable, and environmentally friendly method of moving fuels from India to Bangladesh.
Moreover, Bangladesh will be less dependent on foreign petroleum products thanks to the pipeline, which will give it a more dependable and secure source of diesel supply. By doing this, it would be possible to guarantee that the nation’s energy requirements will be covered even when there are supply problems or geopolitical tensions.
It is anticipated that the pipeline will benefit both nations’ economies. Reduced diesel transportation costs in Bangladesh would aid in lowering the price of both electricity production and transportation. The development and growth of the economy would be aided by this. The pipeline would give India access to a new market for its petroleum products, supporting the expansion of its oil and gas sector.
In comparison to vehicles or ships, the pipeline is anticipated to have less of an environmental impact. This is so that the consequences of climate change could be lessened by reducing the carbon emissions caused by the transportation of fuel.
The successful construction of the diesel pipeline would signal increasing collaboration and cooperation between India and Bangladesh, two countries with a long history of friendly relations. This might encourage greater links between the two nations and support regional stability.
Also, the pipeline might help the BBIN, SASEC, and BIMSTEC regions better connect and integrate, which would encourage regional trade and investment, boost the growth of the energy sector, and advance the region’s economic and social development.
Every country or a region has its own unique distribution of natural resources and patterns of energy consumption. Connecting energy resources across borders can enhance efficiency, security, and resilience. Bangladesh and India, which are two of the world’s fastest-growing economies, have been increasing the global demand for energy as a result of their rapid economic development. In the past decade, these two nations have been working together on energy projects, and their cooperation has been successful and smooth.
This success in cross-border energy projects can serve as a model for future collaborations and synergies within the South Asian region. By leveraging each other’s strengths and resources, countries in the region can create more sustainable, efficient, and secure energy systems, which can support economic growth and promote stability. Overall, cross-border energy projects have the potential to provide significant benefits for the countries involved, while also contributing to sub-regional energy security and sustainability which will pave the way to a new era of energy cooperation.
– Syed Raiyan Amir is a Research Associate at the KRF Center for Bangladesh and Global Affairs (CBGA).
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