This also strengthens India’s LookEast policy initiative, closely following the Bhutanese ratification of the Bangladesh-Bhutan-India-Nepal(BBIN) regional transport agreement only days ago. It means the last official step towards finalising the agreement has been taken.

There is already talk on linking Kolkata and Siliguri with Khulna and Chittagong in the days ahead. Travelling through Bangladesh by roads will reduce the effective distance between Kolkata and the NE states by at least 900 kilometres. As the agreement comes into effect, Bangladeshi goods can be sent to Nepal and Bhutan via North Bengal and vice versa. There will be much saving of fuel and time, which should help in keeping the cost of trade and business lower.

Business and industry circles expect a quantum jump in the intra-regional movement of goods in the months ahead. They expect market hubs and trade centres to be set up at certain points in the new network of roads. Economically this could usher in a win-win situation for all the countries involved, they feel. The hitherto neglected NE states too would be connected more conveniently with the Indian mainland.

However, in the energy sector, differences exist over certain basic requirements of Bangladesh and the pricing of certain items. In view of the general congruence between Indian and Bangladeshi economic interests and the effectiveness of Delhi-Dhaka bilateral negotiations, it is expected that these will be eventually sorted out.

India stole a march over China as the Bharat Heavy Electricals limited (BHEL) secured the contract for building in Khulna, Bangladesh, a 1320 Megawatt thermal power station, estimated cost being $1.6 billion. Bangladesh authorities said that BHEL offered the lowest tender. The National Thermal Power Corporation (NTPC) has set up a joint company on a 50:50 basis with Bangladesh Power Development Board (BPDB) to help execute the project.
This will be the biggest power producing unit to be set up by India abroad.

The plant will need at least six million tonnes of coal annually, along with a three week buffer to provide for contingencies. The Coal India limited (CIL) is currently in competition with Chinese and Indonesian companies to secure the order. Bangladesh, according to Dhaka-based media reports, is pressing for a ‘rationalisation of pricing’ for various grade of coal with India. The recent CIL decision to increase prices by 6.29% for most grades has been taken into account by Dhaka. The decision would bring in an additional revenue of Rs 3234 crore for the CIL, but has added to Bangladeshi concerns as regards pricing.

Officials in India are hopeful that the issue can be sorted out through bilateral dialogue. As for meeting competition from China and Indonesia, two factors are of significant advantage for India: the proximity of Khulna from West Bengal and the possibility of dispatching large scale coal supplies using the waterways route that has become operative of late.

Meanwhile, while India is willing to supply power from the Palatana Power plant in Tripura to Bangladesh, Dhaka is pressing for a supply of natural gas from there. India has plans to use Tripura’s gas for use by other NE states as well. Bangladesh has been using 100 MWs of power daily to meet rising domestic demands, in addition to the 500 MWs it draws from Murshidabad in West Bengal.

To meet Bangladeshi demands for gas, India has put forward an alternate proposal. It has proposed Dhaka link up with the TAPI (Turkmenistan-Afghanistan –Pakistan-India) pipeline. Bangladesh had expressed its interest to join the project, which appeared to have been stalled at one stage. Now that prospects for the pipeline have been revived. India is willing to let Bangladesh meet its requirement from the Indian end of the project.

To strengthen its existing power generation and distribution network in the NE region, India has proposed to set up a liquefied natural gas (LNG) terminal at Kutubdia, close to Chittagong Port.

For supplying imported LPG to Bangladesh again, India feels that a Tripura- Chittagong link -up will be vital. It could also be used to send diesel from Numaligarh refinery to Parbatipur, Bangladesh. Even as Dhaka-Delhi consultations continue over these proposals, Bangladesh has protested against what it regards as a very high price charged by Numaligarh authorities. Excess cost per barrel of material imported from Numaligarh on average comes to $7, it has been pointed out, which is far higher than what it costs Dhaka to import its requirements from the Middle East. (IPA Service)