 By Sanaullah Baloch
Monday, 29 Jun, 2009
After a decade of delay, Islamabad and Tehran finally signed the Pakistan-Iran gas pipeline agreement and price accord in May and June in Tehran and Istanbul respectively.
The federal cabinet, without taking the matter to parliament or getting the consent of the government and people of Balochistan, agreed to allow the import of one billion cubic feet of gas from Iran at the rate of 80 per cent of the price of crude oil. However, Iran, desperate to export its gas and other energy resources to regional countries, held a detailed debate on the deal in its parliament.
Officials from the newly formed Inter State Gas System (ISGS) signed the controversial gas sale-purchase agreement silently in Istanbul. According to the price accord, Pakistan will purchase Iranian gas on various prices; there isn’t a fixed rate, which clearly extends great leverage and benefit to Iran to procure a high price for its exported gas. Iran will sell its gas to Pakistan for $7 per MMBTU, if the Japanese Crude Cocktail (JCC) price is $50 per barrel, $9.4 per MMBTU and $13 per MMBTU if the JCC price touches $70 and $100 per barrel respectively. The price does not include infrastructure, security and other costs.
The imported gas price would be 10 to 20 times more costly than the gas being extracted from Balochistan and Sindh by the central government. Pakistan Petroleum Limited is currently paying only 63 cents per MMBTU for Balochistan’s high heating value gas. However, those 63 cents go straight to the kitty of the central government and Balochistan receives only 12.5 per cent royalty against the gas produced. The level of discrimination and exploitation of Baloch wealth can only be gauged by these figures — Balochistan produces $1.4bn worth of gas annually but receives only $116m in royalties.
No doubt Pakistan’s civilian establishment has made a historic blunder by signing such a costly gas purchase accord. The price formula and the gas deal with Tehran indicate a great level of injustice as well as the inability of the political and official leadership of the country to negotiate a reasonable price formula with Iran; a country faced with immense global and economic pressures caused by international sanctions.
ISGS officials have said that this rather costly gas will be used for power generation. If this is true, then instead of placing thousands of kilometres of pipelines, the Pakistani establishment could save billions of dollars by simply importing cheap and surplus electricity from Iran which has been offered by the Iranian government. Pakistan could also encourage electricity-generating units to be installed within Balochistan near the border towns and supply the produced electricity through the existing power transmission system to the rest of the country.
There are several other unresolved issues which have been ignored and which will minimise the chances of success for the gas pipeline project. These include Balochistan’s unresolved political conflict in Pakistan and Iran, Tehran and Islamabad’s uneasy relations with the Baloch and Balochistan’s role in the overall gas pipeline project.
There is no disagreement that the Baloch as an entity, both in Pakistan and Iran, have longstanding grievances against the two centres of power. The province is the only potential land route for the proposed gas pipeline; a major part — some 1,500 km — of the proposed 2,100 km-long Pakistan-Iran gas conduit costing approximately $1.2bn, will connect Iran’s Pars gas field to Pakistan’s main distribution system in Nawabshah, and cross Baloch territory in Iran and Pakistan.
As usual, Islamabad made a major political blunder by overlooking the importance of Baloch consent on the proposed gas channel. Baloch opposition to transnational pipelines was voiced in 2005, when veteran Baloch nationalist Akbar Khan Bugti, who was killed by Pakistani security forces in August 2006, said that “only the goodwill of the Baloch people can allow the proposed gas pipeline from Iran and Central Asia to India to pass through their soil”.
In June 2006, exhibiting unprecedented unity, members of the treasury and opposition benches in the Balochistan Assembly unanimously passed a resolution seeking royalty for the province in the proposed multi-billion dollar Iran-Pakistan-India (IPI) gas pipeline project. And the assembly also demanded Balochistan’s representation in the IPI talks, free gas for adjacent population, 100 per cent jobs and a major share of royalty if paid by India.
No doubt, Iran and Pakistan have signed several economic deals, including those pertaining to the supply of electricity to the border districts of eastern Balochistan. But recently the power supply has been abruptly stopped by Iran after attacks in western Balochistan which indicates that Iran has some reservations with Pakistan over the issue of certain Baloch groups.
Iran also needs to improve its scratchy relations with its ethnic Baloch, the denizens of its largest province who feel politically and economically marginalised and administratively subjugated.
The Baloch in Pakistan are also frustrated with the repeated exploitation of their natural wealth and land. Despite providing fuel to the national economy for years, the province has only 3.4 per cent of gas consumers as compared to 64 per cent in Punjab alone, which produces only 4.75 per cent gas.
The upcoming mega energy pipeline project does not promise any economic and social benefit to the deprived people of Balochistan. Gas will be directly pumped from Iran to Sindh and Punjab. All power-generating units will be constructed in Balochistan, security will be handed over to the federal forces, technical jobs will go to urban youths from other provinces, and there is no guarantee that reasonable royalty including gas will be provided to the people of Balochistan.
Islamabad has always been short-sighted about its economic and political policies. Pakistan’s over-centralised political system has resulted in constant political and economic conflicts between the centre and the provinces.
Political unrest in both parts of Balochistan will continue to hamper the development of this gas pipeline. Until there is a positive breakthrough in the Balochistan conflict, this ambitious gas pipeline venture will remain a pipe dream for both parties.
The writer is former senator.
balochbnp@gmail.com |
