The Telegraph
Since 1st March, 1999
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Dhaka puts economy first in gas deal

New Delhi, Jan. 14: Bangladesh veered round to economic pragmatism and overcame its political fears to clear the decks for the Myanmar-India natural gas pipeline.

Dhaka will rake in $125 million or so in transit fee for allowing the pipeline to run through its territory and Bangladesh's Gas Transmission Company Ltd is also expected to make money on maintaining and managing the pipeline.

Bangladesh has also used this opportunity to obtain major trade concessions from India. The trade corridor to landlocked Nepal and Bhutan and access to cheap hydel power have also been thrown in to fatten the economic package.

This is the first time in 30 years that Bangladesh has allowed its territory to be used for transport of any commodity for a third country.

Bangladesh's decision ' to join Myanmar and India in signing an agreement in Yangon yesterday paving the way for the pipeline to Bengal and Bihar through its territory ' could have been prompted by the realisation that its capacity to play spoiler is no longer as potent as it used to be.

Another reason could be the fear of being totally excluded from the transnational project.

That the gas has to come from Myanmar and not from Bangladesh reserves has made Dhaka's task easier. Bangladesh has been fiercely possessive about its gas reserves and has repeatedly said these have been kept to meet its domestic demand.

The gas find in Myanmar has dramatically changed the energy scenario with a fresh economic opportunity springing up for the three South Asian countries.

Myanmar is lucky to have a market like India close at hand, while Bangladesh gets a chance to reap the gains of location. Laying a pipeline on the land route through Bangladesh is much cheaper than the sea route and this will drastically reduce the cost of gas for India.

A series of ministerial visits from Bangladesh have helped to pave the way for the pipeline deal signed by petroleum minister Mani Shankar Aiyar.

Bangladesh finance minister Saifur Rehman, who visited New Delhi last month, had indicated that Dhaka was ready to give the go-ahead to the pipeline. He had also reiterated that Bangladesh could not commit itself to exporting its gas to India as there was 'uncertainty' over the size of the reserves. Rehman had also said the two countries 'must now come together on a higher plane to give economic co-operation a sharper momentum'.

Union commerce minister Kamal Nath has said all trade issues with Bangladesh would be sorted out next month when he intends to visit Dhaka. Bangladesh commerce minister Air Vice-Marshal (Retd) Altaf Hossain Chowdhury had during his visit in November focused on tariff and non-tariff obstacles his country faced in boosting exports to India.

Dhaka's decision on the pipeline is being described in Delhi as a 'triumph for reason'. Some feel it is an attempt on part of the Khaleda Zia government to tell India that it was about time Delhi started looking at the Bangladesh National Party as a 'reliable partner' for trade and economic co-operation. With general elections due in about 18 months' time, the Khaleda Zia government may be taking steps to boost the economy.

However, indications suggest that Dhaka's decision came after months of internal debate in which hard-nosed pragmatists impressed upon the Prime Minister that Bangladesh had more to gain than lose. Aiyar had, during his meeting with Rehman in November, given a convincing argument on how much Bangladesh could benefit by joining in the project.

Even in Yangon, Bangladesh energy minister Musharraf Hossain agreed to be part of the trilateral deal only after provisions were made for Delhi to look into Dhaka's demand for transit rights for its goods to Nepal and Bhutan and access to hydroelectricity in these countries through Indian territory.

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