Bangladesh enters a new era of energy cooperation

As part of energy sector cooperation between the two neighbouring nations, a 131.57-kilometre cross-border 'Indo-Bangla Friendship Pipeline' was officially opened on March 18 2023. Bangladesh will use this pipeline to import petroleum goods, particularly diesel, from India.

The freshly constructed pipeline was 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 kilometres of the pipeline are in Bangladesh, and the final 5 kilometres 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). Initially, it will provide HSD to seven districts in northern Bangladesh. It is an omen for a new era of energy cooperation.

While the world suffers 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 supply chain disruption. 

Amidst such background, the inaugurated pipeline comes with a sigh of relief for both economies since Bangladesh can get uninterrupted diesel supplies, and India, on the other hand, can be assured of 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, under 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. Bangladesh must import 6.6 million to 7.7 million tonnes of diesel annually to meet its demand. 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 constructing 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.

There will be a positive shift in the energy cooperation domain.

Such petroleum imports from India via transnational pipelines will assist in building up a supply of petroleum in the northern region to fulfil 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 supply problems or geopolitical tensions exist.

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. This would aid the development and growth of the economy. The pipeline would give India access to a new market for its petroleum products, supporting its oil and gas sector expansion.

Compared to vehicles or ships, the pipeline is anticipated to have a less environmental impact. This will ensure the consequences of climate change are lessened by reducing the carbon emissions caused by fuel transportation.

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 energy sector's growth, and advance the region's economic and social development.

Every country and region has its unique distribution of natural resources and energy consumption patterns. However, connecting energy resources across borders can enhance efficiency, security, and resilience. 

Bangladesh and India, two of the world's fastest-growing economies, have been increasing the global demand for energy due to their rapid economic development. These two nations have been working together in the past decade on energy projects, and their cooperation has been successful and smooth. Their 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.

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