To consolidate cross-border energy security, Bangladesh and India scripted another golden chapter in their bilateral ties through the launch of the India-Bangladesh Friendship Pipeline (IBFP) operation for diesel supply on March 18.
The operation of the Bangladesh-India Friendship Pipeline will put in place a sustainable, reliable, cost-effective, and environment-friendly mode of transport in High-Speeded Diesel from India to Bangladesh. The Numaligarh Refinery Ltd of India and Meghna Petroleum Ltd of Bangladesh jointly implement the project.
The 131.57 km long pipeline project connects Siliguri, West Bengal, and Parbatipur, Dinajpur. Of the pipeline’s total length, 126.50 km is inside Bangladesh, while the remaining 5.07 km is in India. About 1 million metric tons of Diesel can be imported from India annually through the pipeline.
However, two and a half lakh tons will be imported initially. According to the 15-year agreement, the import volume will increase to 4 to 5 metric tons per year. Bangladesh can be benefitted from this High-Speed Diesel cost-effectively and sustainably.
The Diversification
First of all, the present energy crisis in Bangladesh is partly due to over-dependence on gas, which fulfills more than 70 percent of its energy needs. The present gas deficit against the national demand daily is expected to increase further in the future.
The crisis will deepen unless a greater share of renewable and no renewable energy is included in the energy mix. So, Bangladesh needs to transition from conventional energy sources to ensure its energy security & long-term sustainability. In this context, cross-border energy cooperation can be a sustainable energy transport mode that can help Bangladesh mitigate energy shortage.
The import of Diesel from India aids the diversification of Bangladesh’s energy industry. Bangladesh’s current heavy reliance on natural gas as its main energy source makes it susceptible to changes in price and supply. Diesel’s inclusion in the energy mix gives the nation a more reliable and secure energy supply.
Growth in Agricultural Sector
One of the main conditions for development is uninterrupted power and energy supply. The operationalisation of the India-Bangladesh Friendship Pipeline will enhance ongoing energy cooperation between the two countries and will further grow in Bangladesh, particularly in the agriculture sector.
As the demand for Diesel is highest in 16 districts of the northern region during Aman and Boro season, the government decided to import this fuel through the pipeline. If the project is implemented, Diesel can reach the consumer level in 16 districts of the Rangpur and Rajshahi divisions in a short time.
As a result, it will be able to provide it to the farmers at a low cost in a short period besides saving a huge amount of money. This pipeline will also open new employment opportunities for both countries.
Cost and Time Effective
India-Bangladesh diesel trade had been ongoing since 2017 carried by train. The cost of transportation was a huge sum of amount for Bangladesh Petroleum Company. About 2,200 tonnes of Diesel is sent from Numaligarh Refinery Limited (NRL) through West Bengal Railway every month.
Moreover, according to BPC, it has to pay an average premium of $11.50 per barrel (159 liters) for bringing fuel oil (including freight). It can be eight dollars if imported through this pipeline. A reduction of 5.5$ per barrel can save about 9.75 million dollars per 100,000 tons. People of 16 districts of the northern region will be able to enjoy this benefit in addition to taking less time in fuel supply.
Reduce System Loss and Carbon Footprint
This pipeline will be a milestone in providing quick and uninterrupted fuel supply to the country’s northern region in a cost-effective manner. Apart from uninterrupted, cheaper, and quicker energy supply security, the cross-border pipeline is expected to help BPC reduce the system loss that it incurs in the form of pilferage because no one can be able to reach the underground pipeline to commit petty theft.
The automatic and computerised process will reduce the system loss drastically. The Fellowship Receipt Terminal will be the country’s first modern automatic and computerized system. If something is done in the pipeline on the way or otherwise, the place of automaticity can be identified immediately.
Not only that, the supply of Diesel through the pipeline would reduce the system loos and as the pipeline is situated underground, it will also reduce the carbon footprint of the supply.
Enhanced Energy Cooperation
Through this pipeline, an alternative source of diesel import is being created for Bangladesh. In addition to reducing the cost, it has created a big ring for fuel security. At least 40,000 liters of fuel have been stored at the terminal and depot for two months. According to Bangladesh Petroleum Corporation, Bangladesh imports 6.5 million tons of fuel oil annually. Of that, 4 million tons of Diesel is imported annually. Through this pipeline, almost fifty percent of imported fuel will come to this country by reducing the significant amount of transportation costs.
Future Prospects of the Pipeline Energy Cooperation
This successful operation of this pipeline might bring new pipeline opportunities for Bangladesh. India also wants to use pipelines to secure the energy security of its northeastern states. India in its bid to save time and cost of transporting liquefied natural gas (LNG) and liquefied petroleum gas (LPG) to the North Eastern states, wants to set up facilities along the Bangladesh coast.
The IOCL has proposed to build an LPG bottling plant in a joint venture with BPC and LNG terminal in another joint venture with state-run Petrobangla imported LNG, after re-gasification, will be supplied to the North Eastern states using Bangladeshi pipelines, while the imported LPG will be bottled in the neighboring country and also be supplied there.
The pipeline project has been successfully implemented because of the true friendship between India and Bangladesh. Enhanced energy cooperation through bilateral and multilateral arrangements can address the challenges posed by high fuel prices in the wake of Russia Ukraine war. And India Bangladesh Friendship Pipeline is a striking example of bilateral energy cooperation. Once Diesel starts to arrive in Bangladesh, it will usher a new dimension to the energy cooperation between India and Bangladesh.
(The writer is PhD fellow, International Relations, University of Bucharest)
