Mehmood Ul Hassan Khan
Energy is life and Energy Charter Conference [ECC] is striving hard to maintain life easy and smooth by achieving the desired goals of energy efficiency, diversification, investments and above all uniformity of the legal framework among the members countries. Central Asian Counties [CACs] are blessed with natural reservoirs of oil and gas. Turkmenistan is working very hard to utilize its gas resources for greater regional connectivity and socio-economic prosperity.
Pakistan is an energy deficit country which is seriously considering importing energy supplies even beyond region. Pakistan has signed many bilateral as well as trilateral energy MOUs with many Central Asian Countries. Pakistan’s serious engagements with TAPI [Turkmenistan, Afghanistan, Pakistan and India Gas Pipeline] and CASA-1000 show its strategic importance. But somehow, the government of Pakistan seems to be reluctant to rectify the energy charter treaty. Its some concerns are genuine which need to be resolved. Most of its fears are based on its past experience at international arbitrary forums which may be resolved mutually. Energy Charter Conference will be held in November 2017 in Ashgabat.
Energy Charter Treaty (ECT)
The Energy Charter Treaty is an inter-governmental organization. It is the governing and decision-making body for the Energy Charter process. It was established by the 1994 Energy Charter Treaty. The Energy Charter Treaty (ECT) is an international agreement which establishes a multilateral framework for cross-border cooperation in the energy industry. The treaty covers all aspects of commercial energy activities including trade, transit, investments and energy efficiency.
All states or Regional Economic International Organisations which have signed or acceded to the Treaty are members of the Conference. The member countries meet on a regular basis to discuss issues affecting energy cooperation among the Treaty’s signatories, to review the implementation of the provisions of the Energy Charter Treaty and the Protocol on Energy Efficiency and Related Environmental Aspects, and to consider possible new instruments and joint activities within the Energy Charter framework.
Importance of Energy Charter Treaty
The Energy Charter Treaty is a unique legally binding instrument regulating the issues of energy transit, as reflected in the report of the UN Secretary-General “On Reliable and Stable Energy Transit and Its Role in Ensuring Sustainable Development and International Cooperation”, published in 2014. Signing the International Energy Charter that currently unites over 80 countries worldwide is the first step towards acceding to the Treaty, which aims to strengthen legal norms in the energy sector by applying uniform rules binding for all participants and minimizing the risks associated with investment and energy trade.
Energy Charter Process
The Energy Charter process has developed two main multilateral political agreements the European Energy Charter (1991) and the International Energy Charter (2015), and planed the binding legal framework of the Energy Charter Treaty. It was signed in December 1994 and entered into force in December 1998.
Remarkable Legal and Financial Implications
The Energy Charter Treaty (ECT) has remarkable legal and financial repercussions for commercial energy relations between member countries, above all concerning investments, trade and transit. It covers all forms of energy and all stages of production and consumption. It extends to issues of competition, environment and energy efficiency, but has less binding force in these areas. The ECT stands for formal mechanisms for dispute resolution. It is based on international arbitration, which have been widely used in disputes between states and private investors, but rarely used in inter-state disputes. The ECT also set up bodies to manage the Energy Charter process, in particular a multinational Secretariat and an intergovernmental decision-making body (the Energy Charter Conference).
Provision of ECT
The ECT stands for a multilateral legal framework for commercial energy relations between member countries. It is based on the rule of law and fair treatment of both investors and states. The ECT provides various mechanisms for binding dispute resolution. It was the first and only binding intergovernmental agreement applicable to all forms of energy i.e. fossil fuels, nuclear, renewables etc. and all stages of the supply chain i.e. extraction, production, transit and consumption. It has also delimitations. It is not applicable during the pre-investment phase of energy production, with negotiations on a supplementary treaty covering pre-investment in the 1990s proving too difficult for member countries to reach agreement.
Right of Member Countries
The ECT ensures the right of member countries to decide how they manage their natural resources, and does not mandate third-party access. It imposes no obligation on member countries to open up their energy sectors to foreign investment, and even allows the right to expropriation, provided this is done in a legal manner with due compensation at fair market value. Yet once a member country does allow foreign investment in its energy sector, then such investors have the right to fair treatment under the ECT framework, with the possibility to seek legal redress through international arbitration.
Resolution of Investment Disputes
The use of the ECT to resolve investment disputes highlights the value of its binding multilateral framework. Moreover, the fact that proceedings have ruled in favour of both states and investors implies it is broadly balanced. Nevertheless, the proliferation of cases in recent years, as well as their concentration in particular countries, could undermine political support for the ECT among some signatory states.
Energy Charter Forum
Most recently, the Energy Charter Forum titled “Towards a Multilateral Framework Agreement on Transit of Energy Resources” was jointly organized by the International Energy Charter and the Government of Turkmenistan on April 30-31 2017. During the energy charter forum the development of the Framework Agreement on the Transit of Energy Resources was thoroughly discussed under the chairmanship of Turkmenistan.
The Energy Charter Forum discussed in details the improvement of mechanisms for international cooperation in the energy sector and development of a multilateral framework agreement on transit of energy resources.
Energy Charter Chairmanship of Turkmenistan
The above given diagram clearly shows proactive role of Turkmenistan as a chairman of Energy Charter Treaty/Conference. Its chairmanship ensures the multivariate nature of energy flows, expanding their geographies, energy efficiency and energy saving, introducing innovations, environmental dimension and renewable energy sources, reliability and security of international transit of energy carriers on an equitable, fair basis, improving the efficiency of investments and their protection.
Under the Chairmanship of Turkmenistan the forum 2017 discussed the issues of transit and cross-border transportation of energy resources, including natural gas, oil and electricity. The representatives of the governments and international organisations highlighted the complexity of ensuring the security of energy transit, and the need for establishing clear and consistent principles of multilateral cooperation among the participants. They all agreed on the importance of international energy cooperation for achieving global energy security and implementing the sustainable development goals.
Energy Charter Forum Aims
Under the Chairmanship of Turkmenistan the forum 2017 discussed the issues of transit and cross-border transportation of energy resources, including natural gas, oil and electricity. The representatives of the governments and international organisations highlighted the complexity of ensuring the security of energy transit, and the need for establishing clear and consistent principles of multilateral cooperation among the participants. They all agreed on the importance of international energy cooperation for achieving global energy security and implementing the sustainable development goals.
Importance of Geographical Expansion
It is hoped that the geographical expansion of the Energy Charter vector in a rapidly changing energy landscape will allow the existing and new members to define the principles of global interaction in the energy sector, including the transit issues on the agenda. Active participation of UN regional commissions, international energy and financial organisations should work on drafting a Multilateral Framework Agreement on Energy Transit, thus continuing the wide global dialogue initiated by the UN General Assembly Resolutions adopted in 2008 and 2013 on reliable and stable transit of energy resources.
It was concluded that considering the leading role of the International Energy Charter in energy transit issues, such meetings must be held on a regular basis in the regional context with a view to subsequently summarize the results of activities in this area
Interactive & Elaborative Sessions
The forum 2017 provided a platform for a policy dialogue on energy transit in order to promote open energy markets, diversification of supply sources and routes, and sustainable development. The forum addressed operational, regulatory and legal aspects of energy transit, including natural gas, oil and electricity. It brought together government officials, representatives of international organizations, industry and academic institutions to discuss existing challenges and opportunities stemming from cross-border energy flows.
Strategic Priorities of 2017
Serious Efforts of Multilateral Framework Agreement on Transit of Energy Resources
Under the Chairmanship of Turkmenistan 2017 the subsidiary bodies of the Energy Charter Conference are currently working towards developing the conditions for starting negotiations on a Multilateral Framework Agreement on Transit of Energy Resources. In particular, the main task this year is to identify specific issues and challenges relating to transit and to develop possible alternative solutions reflecting the needs of the Energy Charter’s member countries.
Importance of Transit of Energy Resources
During the said energy forum 2017 it was also pointed out that the transit of energy resources, which necessarily includes the issues of transportation and conditions for infrastructure access, is one of the most important elements of the entire interconnected chain of energy supplies to international markets.
Interactive Sessions
During different sessions issues of trade, transportation and transit of natural and liquefied gas, oil and electricity were discussed. All sessions highlighted the complexity of ensuring the security of energy transit, and emphasized the need for clear and consistent principles of multilateral cooperation among the participants, as it is often observed that different players tend to pursue their own particular interests. Issues of energy-importing countries were also discussed which heavily depend on foreign resources for proper functioning of their national economies. Energy-exporting countries and their enterprises placed great emphasis on the issue of market stability, as foreign trade is vital source of their income. Ultimately, all countries are interested in minimizing transit risks to ensure their own security during different sessions.
Transit Facilitation
The current work within the Energy Charter Process under the Chairmanship of Turkmenistan on the development of a Multilateral Framework Agreement on the Transit of Energy Resources is one of the possible instruments for developing international trade in energy resources.
UN General Assembly Resolution 67/263
The importance of transit in the context of global energy security has already been addressed in the UN General Assembly Resolution 67/263 “Reliable and stable transit of energy and its role in ensuring sustainable development and international cooperation” developed at the initiative of Turkmenistan and adopted by consensus on May 17, 2013. However, there remains the need to develop multilateral legal instruments providing uniform principles and rules and regulating the relations among energy producers, consumers and transit countries.
Energy Investments
The speakers of the forum noted that there are issues related to the practical feasibility of investments, non-discriminatory access to the infrastructure, and general pricing principles using existing infrastructure. The creation of an international legally binding transit regime for cross-border transportation of natural gas, electricity and oil is a complex task. It was emphasized that the development of a single legally binding instrument on transit depends on the political will of the International Energy Charter member countries.
Role of Turkmenistan
The Government of Turkmenistan will submit a report to the UN General Assembly on the work in the field of energy transit accomplished jointly with the International Energy Charter in pursuance of the UN General Assembly Resolution 67/263. Moreover, Turkmenistan as the chair of the Energy Charter Conference in 2017 calls on the co-sponsors of this Resolution to join the Energy Charter Process by signing a political declaration the International Energy Charter with a view to fully participate in the development of uniform energy transit principles and rules.
Government of Turkmenistan’s Efforts for Greater Energy Cooperation
The participants of the event highly appreciated the efforts of the Government of Turkmenistan and the International Energy Charter to promote a multilateral instrument on energy transit with a view to achieve a balance of interests of exporting countries, consumers and transit countries, and expressed gratitude to the Government and the President of Turkmenistan Gurbanguly Berdimuhamedov personally for the support provided for Ashgabat International Energy Charter Forum. In addition, it was noted that the participants hope that these conclusions will be taken into account and reflected in the political declaration to be adopted on the results of the 28th session of the Energy Charter Conference in Ashgabat on November 28-29 of the current year.
Turkmenistan’s National Energy Policy
Before the energy charter forum the government of Turkmenistan presented its new agency draft concept of energy charter conference which was the extension of its national energy policy. One of the main salient features of Turkmenistan’s national energy policy is regional cooperation and liaison with international organizations for achieving greater energy security, sustainably and efficiency. It is blessed with unlimited energy reservoirs which it plans to utilize for the greater regional prosperity, peace and development.
The successful holding of Energy Charter Forum and International Media Forum further strengthened the pace of development of effective long-term models for international cooperation in the energy sector, based on a balance of interests of all parties involved. Turkmenistan was unanimously elected Chairman of the Energy Charter Conference for 2017, at a meeting of the Conference held in Tokyo on 25-26 November 2016.
Showcasing of Turkmenistan’s Regional & International Achievements
It clearly showcased Turkmenistan’s liaison with international organizations in different field’s mainly energy cooperation, sustainable development, sustainable transport system, and millennium development goals. Turkmenistan has already achieved recognition of a reliable international partner at international level because of its progressive foreign policy of President Gurbanguly Berdimuhamedov, which main aspect is international energy cooperation and recently held energy charter conference has reaffirmed Turkmenistan positive, productive and prospective role in the further development of energy resources and cooperation. It reaffirmed that energy diplomacy of Turkmenistan was successful which was always distinguished by active position and interest in search for new and efficient solutions, finds broad response among the representatives of the world business and expert community.
Chairmanship of Turkmenistan has unique concept for Energy Charter Conference which emphases on the further enlargement of geography and multi-dimensional energy flows/supplies ensuring their consistency and security of the international transit of energy on an equal and fair basis which is the need of the hour to maintain price stability at regional as well as international energy markets.
Turkmenistan’s Concept of Energy Cooperation/Development of Resources
Salient Features of Energy Concept
It includes energy proficiency/optimal utility, and saving, introduction and implementation of modern and smarter technologies, the ecological balancing and the use of renewable sources of energy (solar, wind, thermal), beneficial energy investments, friendly government policies for the development of renewables and principles of economic and commercial viability of investments in the energy sector, their protection and efficiency. The drafted concept also focused on international transit of energy on equal and fair basis and improvement of efficiency of capital investments and their protection in the regional as well as international energy policies, programs and markets. For its international media projection a program of international events was held in Ashgabat, Brussels, New York, Beijing, Hong Kong and Tehran.
Turkmenistan: Leading Energy Country
Being a leading energy rich country, Turkmenistan actively cooperates with major international organizations, including the Energy Charter, and is the venue for multilateral meetings and forums. In December 2014, the Ashgabat in conjunction with this specialized structure arranged the Ashgabat Forum “Reliable and stable transit of energy resources”, as well as in accordance with the resolutions adopted at the “67th session of the UN General Assembly” held the first international meeting of experts on the said topic. During this interactive forum, specialized experts meetings were organized in 2015 in Brussels and Beijing, and in 2016 in Tirana.
H.E. President of Turkmenistan’s Proposal
H.E. President of Turkmenistan put forward the proposal for the establishment of an international legal mechanism to ensure energy security in 2007, at the 62nd session of the UN General Assembly. Special resolutions on reliable and stable transit of energy resources to global markets were adopted by UN in 2008 and 2013, which set out the basic principles and approaches to cooperation in this field.
Turkmenistan’s Activity Plan
The Resolution of President Gurbanguly Berdymuhamedov has approved the Activity Plan on Turkmenistan’s chairmanship in the Energy Charter Conference for 2017. The Plan provides for variety of activities, to be held in Turkmenistan and abroad.
Turkmenistan: Pioneer of ECT
Turkmenistan is one of the founders of the Energy Charter and chairing of Turkmenistan is aimed at development and consolidation of international energy cooperation, establishment of quality new ground for discussion of topical issues of the development of the world energy, provision of the global energy security as integral part of universal sustainable development in the context of practical realization of relative Resolution, which was initiated by President of Turkmenistan Gurbanguly Berdimuhamedov and adopted by the UN General Assembly.
Chairmanship of Turkmenistan at energy charter conference pledges its enormous natural resources for the welfare of humanity, realizing the policy based on the principles of combined modernization of fuel and energy complex and diversification of energy supplies to the world markets.
Turkmenistan considerably increased production rates of fuel and energy resources. Moreover, transport routes of energy have been diversified. Moreover, the role of Turkmenistan in supply of energy to the world market grows and determines the level of its geopolitical influence. It has also adopted policy of “diversification of transport infrastructure”, which enables to supply energy resources via ramified network of multiple-choice pipeline system. Thanks to energy policies of Turkmenistan which stipulates integrated development of energy cooperation not only between the countries suppliers, transit and consumer countries but interested parties and international organizations including the UN and the Energy Charter as well.
TAPI: A Regional Energy Cooperation
Turkmenistan is blessed with huge natural reservoirs and resources in shape of oil & gas and other precious metals. Moreover, its export-oriented energy policy makes it one of the ideal countries in the Central Asian Countries and the world to do businesses. Its outstanding commercial diplomacy holds secret of its high ratios of exports.
TAPI and Strategic Importance of Energy
Energy is power and pro-development. Energy simulates economic and business activities. Furthermore, a cheaper and green energy source i.e. gas creates more comparative advantage than other energy sources (oil, diesel, electricity etc.). Turkmenistan-Afghanistan-Pakistan-India (TAPI) the dream gas pipeline has a strategic importance, utility, productivity and durability to achieve greater regional peace and prosperity in the days to come. It would provide crucial inputs to achieve a stable and sustainable growth patterns for all the participatory countries.
TAPI: A Game & Fate Changer Project
It is indeed a game and fate changer mega project for the entire region. TAPI would boast the regional economies and open up unlimited avenues of prosperity. It would be win-win situation for all the four countries.
TAPI’s Basic Information & Technicalities
Moreover, according to Turkmen Ministry (April, 2016) Turkmenistan will make an investment of around $25 billion Total $15 billion will be poured into developing the gas field whereas $10 billion will be spent on laying a 17351 km long pipeline.
Latest Development about TAPI
According to Turkmen Ministry (April, 2016) Turkmenistan is now constructed of linear part of the Turkmen section of the TAPI. Turkmennebitgazgurlyshyk” has already prepared more than 6,312 meters of pipes with a diameter of 1,420 mm for welding-up of pipe sections. After laying the linear part of the gas pipeline, automation and remote control system will be introduced in the Turkmen section. This system will make it possible to carry out the management of the entire gas pipeline network from a single control point: to increase and reduce gas flows depending on export requirements.
In addition, on the route of the pipeline from the Galkynysh super-giant field till the border with Afghanistan, the designers have completed a topographic survey and a complex of engineering and survey work. This will make it possible to select the best route for the gas pipeline and to determine the characteristics of the pipe used for gas transportation.
Also, work continues on the analysis and the selection of equipment that must be installed on the linear part of the pipeline and its ground supporting sectors.
Turkmenistan’s Energy Reserves
Turkmenistan has the world´s fourth-largest gas reserves, started building its section of the TAPI gas pipeline project designed to further diversify its energy exports. Turkmen state energy firm Turkmengas is the main shareholder of TAPI Pipeline Company Limited, the joint venture set up to carry out the project. Other investors are Afghan Gas Enterprise, Pakistan’s Inter State Gas Systems Ltd and GAIL (India) Ltd.
Finalization of Modalities
Now, all the participatory countries have agreed to proceed further and complete its mega project in 2019-2020. It has got tremendous momentum during last two years. Rigorous commercial diplomacy among all the countries has now made it reality. Its ground breaking ceremony was held last year in Turkmenistan. Turkmenistan, Afghanistan, Pakistan and India (TAPI) project agreed on to invest $200 million in studies and engineering for the pipeline.
Significant Achievement
It is a significant achievement as the project was lingering since 1990. Within past two and half years partner countries worked hard to initiate the project. All the member countries were eager to initiate the project as they faced serious energy deficits. Finally Turkmenistan government obliged all the countries and took the decision to become lead financer and now construction of TAPI had been started.
TAPI’s Ground Breaking Ceremony
On 13th December 2015, the Ground Breaking Ceremony (GBC) of TPAI was held at Mary, Turkmenistan. Earlier in November 2014, the Pipeline Consortium, TAPI Pipeline Company Limited (TPCL) was incorporated in Isle of Man, a British Crown dependency. The Share Holders Agreement of TPCL was also signed on 13th December 2015. The shareholding percentage in the TPCL would be Turkmenistan 85 percent, Pakistan 5 percent, India 5 percent and Afghanistan 5 percent.
Strategic Importance
(a) Asian Development Bank (ADB) Latest Assessment
Most recently, even Asian Development Bank (ADB) has also termed TAPI a “doable project” which has tremendous socio-economic significance for the participatory countries as well as the region. TAPI exemplifies ADB’s key role in promoting regional cooperation and integration over the past 20 years. It will unlock economic opportunities, transform infrastructure, and diversify the energy market for Turkmenistan, and enhance energy security for the region.
ADB says that the $200 million investment includes funding for detailed engineering and route surveys, environmental and social safeguard studies, and procurement and financing activities, to enable a final investment decision, after which construction can begin. Construction is estimated to take up to 3 years.
(b) Beginning of a New Era
TAPI gas pipeline project would be the beginning of a new era of cooperation and interconnectedness at the regional level. The project will connect Central and South Asia with each other. The launching of TAPI gas pipeline project is a revolution in energy sector.
(c) Alternative Energy Supply Source
TAPI will provide an alternative supply source of gas with dependable reserves leading to enhanced energy security. It will further diversify the fuel basket to the benefit of Pakistan and Indian economies.
(d) China’s Willingness
Most recently, China also expressed interest in becoming part of the TAPI gas pipeline project. The extension of the pipeline to China through Gwadar would give a boost to economic activities in Balochistan. The pipeline would connect a wider region if Bangladesh formally joins it.
(e) Greater Regional Pace & Prosperity
TAPI would bring regional stability that ultimately would lead to peace and prosperity. It has the potential to create a joint economic ring in the region and, in the long-term, the economic profits will guarantee regional security.
(f) Formation of New Markets & Opportunities
It provides golden economic opportunities to Pakistan, India and Afghanistan. Due to more economic opportunities, new markets will be opened for even Turkmenistan as it can extend its exports to the East where there is a remarkable demand for energy.
(g) Total Capacity
It is estimated that TAPI gas pipeline project would bring 3.2 Billion Cubic Feet Gas per Day (BCFD) of gas to all the participatory countries and it would be completed by December 2019.
(h) Solution to Energy Deficit
TAPI gas pipeline project will be helpful to overcome energy shortage in Pakistan, India and Afghanistan. Under the agreement that was signed recently in Turkey, Turkmenistan will invest 85 percent and rest of the three countries 5 percent of the total cost in the project.
Official Document
According to an official document “the agreement between the partners is for a period of 25 years and the area from where gas will be supplied has proven reservoirs of 21 Trillion Cubic Meters (TCM) of gas which can last for 100 years. The work on Pakistan’s segment of the pipeline would likely to start by early 2017 and the gas price at Afghanistan border will be around 8 percent of the Brent oil and if added the tolling fee of the pipeline at current oil prices it will cost in the range of $5.7-6.2 per MMBTU. It total cost may reach to $10 billion.
Turkmenistan’s government Financial Kindness
Turkmenistan government is kind enough that it will invest an estimated amount of $25 billions in developing gas fields and prepare 1680 kilometer gas pipeline. Each of the other partner country will have five percent shares in the construction of the pipeline.
TAPI and Pakistan
Pakistan has been suffering from a dire energy crisis which has multiplier effects. It is not only affecting different sectors of the economy, but also diverse segments of society.
According to Pakistan’s government by 2050, Pakistan’s electricity requirements will grow three-fold. If sufficient resources are not allocated and utilised effectively and efficiently, the energy crisis will further aggravate. It is estimated that TAPI volume would overcome almost 70 percent of the current gas shortfall and save almost $1 billion per year by replacing liquefied fuels for power generation.
In Pakistan during chilly winter season, the common people and industrialist use to face acute shortage of gas supply in the country. Life and machine use to become standstill. Keeping in view all these emerging trends/factors, government planned to import of gas supply from different sources and the TAPI was one of them. Gas supply in Pakistan is currently 71m cubic meters per day, which is estimated to increase by 50 per cent in the next five years. At present, Pakistan produces 4 bcfd of gas against demand for 6 bcfd.
Gas production in Pakistan is expected to increase substantially. The government is trying its level best to increase its oil and gas production. It is assumed that in the near future Pakistan will face a sever shortfall in the future despite meager gas discoveries, which would be insufficient to meet the rising demand.
TAPI Pipeline Company Limited (TPCL) Responsibly
TAPI Pipeline Company Limited (TPCL) is responsible for laying a 56-inch diameter 1680 kilometer pipeline from supply source at Gylkynish and adjacent gas fields, sneaking through Heart-Kandahar-Chamman-Zhob-DG Khan-Multan and Fazilika-Pakistan- India border.
TAPI’s Distribution Scheme
According to agreement out of total gas volume, Afghanistan would get 500 mmcfd and Pakistan; India each will get 1,325 mmcfd. However, either Pakistan or India could purchase more gas if Afghanistan wanted to provide the natural gas out of its total share. It is a vital project for Pakistan as it would generate employment for thousands of Pakistani youth.
TAPI: Cheapest Price
TAPI gas would be cheapest in terms of its price. Pakistan will get $250 million from India as transit fee and Afghanistan will also get the same amount from Pakistan. The agreement is between the states and the change of any government in any partner country will have no impact on the project.
Government of Pakistan must remove all obstacles in the way of the project as it has a vital importance for the national economy in general and export-oriented industry in particular in the country. It is predicted that Pakistan’s industrial growth would certainly go up when sufficient energy would be available to keep the wheels of industry moving through TAPI.
Moreover, early execution of TAPI gas pipeline project would enhance productivity of export-based industry that would give a boost to the country’s exports. Large Scale Manufacturing (LMS) sector would be able to manage their export orders easily and earn more and more foreign exchange for the country. TAPI would be Pakistan’s largest development project.
Its early completion of the TAPI project would also give a very good message to the foreign investors. It would not only reduce tensions in South Asia but would also create employment and economic opportunities in the country. It would not only help Pakistan overcome ongoing energy crisis but would also promote political and economic interaction between Pakistan and Afghanistan who were the main stakeholders of the project.
The strategic significance of the project is huge. Once completed, TAPI can become a game changer in regional geopolitics and regional economic integration. Due to significant transit, revenues if, the project is completed successfully, it could bring together Pakistan’s Central Asia’ policy and China-Pakistan Economic Corridor (CPEC) of the Chinese ‘One Belt One Road’ project.
Pakistan’s Domestic Consumption Patterns/Supply Channels
According to Pakistan‘s government 25 percent of gas would be fed to Sui Southern Gas Company (SSGC) and 75 percent to Sui Northern Gas Pipelines Company Limited (SNGPL) to inject it in their systems as per the decision of the ECC. TAPI project is the best manifestation of the government’s efforts to bridge supply and demand gap which had increased to around 2 bcfd.
Benefits of Pakistan
The Turkmenistan-Afghanistan-Pakistan (TAP) gas pipeline is based on mutual friendship, respect and need. It also comprises of economic prosperity, regional cooperation and above all smooth & easy availability of energy resources i.e. gas. Pakistan, expects to run out of its own reserves for few years, the pipeline will help sustain growth. It helps to provide a market to Turkmenistan for its substantial gas reserves.
Different Sectors/Sub-Sectors Benefits
Industrial It will bring Pakistan much needed energy at competitive pricing, and could easily supply about 35 percent of Pakistan’s projected needs by the time it is completed in the 2019-2020.
Social It will further diversify Pakistan’s pursuits to import more and more energy resources from different countries. It will be value-addition in the country.
Fertilizers It will supply interpreted energies to fertilizers in the country and ultimately increase its agriculture productivity.
Exports It will definitely enhance its exports because of easy and smooth supplies of energy through TAPI.
Revenues The potential extension of the pipeline to the Gwadar Port in Pakistan will also enable Pakistan to export gas to several countries, thereby increasing its share of revenue. Moreover, transit fees would also be an extra source of revenues.
HRM It will generate substantial new jobs in different associated sectors of the national economy in the near future.
Banking & Finance It is hoped that domestic banks and financial institutes may form a consortium to invest this mega development project.
Moreover, TAPI will provide cheap gas for Pakistan, India, transit fee for Afghanistan, and energy market to Turkmenistan, which will add to the economic prosperity of all the countries. It is estimated that the TAPI project will reduce poverty by expanding the use of natural gas resources and enhancing sub regional economic cooperation among Turkmenistan, Afghanistan, Pakistan and India. It will generate hundreds of thousands new jobs.
It would be one of main instrument for enhancing regional stability and improving living standards in South and Central Asia. It will be a joint-giant effort in linking the energy-deficit economies of South Asia to the hydrocarbon-rich Central Asian countries. It will provide cheaper and cleaner energy to consumers which would bring economic prosperity and also reduce high ratios of inflation.
It will generate incomes/revenues that can be used for developing the social sectors especially schooling, medication, clean water and housing and the last not but not the least it will bring regional stability, peace, harmony and brotherhood. It has multiplier effects.
Suggestions
For the further strengthening of regional energy cooperation and international legal framework, following suggestions must be taken into consideration:-
1. Energy Investment Bank
(a) There must be a ”Energy Investment Bank” in the Energy Charter Conference where every member states has the equal right to submit its proposal for seeking essential finances for its energy projects. Mobilization and channelization of funds may be generated through “energy bonds” to be floated/offered in all the member countries.
2. Capacity Building Bank
(b) There must be “Capacity Building Bank” comprising of energy professionals, technicians, researchers and experts to initiate energy projects in the member countries and also act as catalyst for the further strengthening of capacity buildings.
3. Energy Courts
(c) Formation of “Energy Courts” in case of any disagreements not any “international arbitrary forum” may be effective to remove fears of member countries, if any. It may also fasten inflows of energy investments among the member countries. Withdrawal of government support for the development of renewables is a serious concern especially cases brought before international tribunals must be rectified as soon as possible.
4. Technology Bank
(d) There must be a joint “Technology Bank” to introduce doable and innovative ideas and projects to all the member countries suiting to its environment and style of governance.
5. Full Membership For Pakistan
(e) Since Turkmenistan and Pakistan are cooperating in different mega trans-regional energy projects in shape of TAPI (Turkmenistan-Afghanistan-Pakistan and India Gas Pipeline) and CASA-1000 with other CIS, so, Pakistan ”Observer Country” status in Energy Charter Conference must be enhanced up to full membership for achieving desired goals of greater regional connectivity through energy cooperation. For further liaising genuine concerns of Pakistan must be resolved to encourage it to rectify the energy charter treaty to achieve the desired goals of greater energy cooperation and investments in the future. Keeping in view the multiplier effects of Energy Charter Treaty Pakistan must rectified mandatory protocols of it as soon as possible.
6. Inclusion of Shale Gas & Renewables
(f) Shale Gas and renewables have become reality in the energy sector around the globe which have elements of viability, reliability and sustainability too, which must also be included in the charter of Energy Charter Conference/Treaty.
7. Close Liaison OPEC
(g) Further strengthening of working relations of Energy Charter Conference/Treaty and OPEC (Organization of Oil Producing Countries) need to be streamlined.
8. Holistic Approach
(h) Geo-political and Geo-strategic considerations/compulsions of energy cooperation and transit should be thoroughly studied and resolved. There is an urgent need to have a holistic approach to resolve these issues unilaterally, bilateral, or tri-laterally.
9. Permanent Mechanism of Conflict Resolution
(i) Mechanism of “conflict resolution” needs to be further strengthened within the framework of Energy Charter Conference/Treaty.
10. Uniformity of Climate Change/De-Carbonization
(j) Standardized operationalization, channelization and implementations of climate change policies for all the member states to achieve ecological balancing.
11. Strategic Expansion
(k) More focus ought to be paid on its strategic expansion for its international functionality and acceptability in the days to come.
12. Massive Media Awareness
(l) There must be “Energy Charter Treaty” desk in all the member states embassies for easy and smooth liaison.