India-Bangladesh Friendship Pipeline to Ensure the Energy Security of Bangladesh
Recently State Minister for Power, Energy and Mineral Resources of Bangladesh Nasrul Hamid said the Bangladesh-India Friendship Pipeline will effectively contribute to the country’s energy security.
He said that one of the main conditions for development is uninterrupted power and energy supply, which the government of Prime Minister Sheikh Hasina has been doing very successfully for the past 14 years. Two and a half to three lakh tonnes of diesel will be imported annually from Numaligarh Refinery Station in India to Parbatipur Resort Terminal in Dinajpur through a 131.57km underground pipeline. In addition to reducing the cost, it has created a big ring for fuel security. At least 40,000 litres of fuel have been stored at the terminal and depot for two months.
Bangladesh and India are going to script another golden chapter in their bilateral ties through the launch of operation of India-Bangladesh Friendship Pipeline (IBFP) for diesel supply on March 18. The import of diesel from India through the pipeline is one of the prime examples of maximizing the geographical proximity with Bangladesh’s perpetual neighbor country. The pipeline is built at an approximate cost of Tk 306 crore financed under India’s concessional Line of Credit (LOC) to Bangladesh.
An agreement was signed between India and Bangladesh in 2018 to implement the project. The work started in March 2020. The duration of the project was till June 2022. But due to the Covid-19 pandemic, the project has been extended till December this year as the pace of work has slowed down a bit. The construction of the Bangladesh-India Friendship pipeline is finished. According to the project details, the construction period of the pipeline was fixed to complete in June 2023 at a cost of Tk 306 crore. The 131.57 km long pipeline project connects Siliguri, West Bengal, and Parbatipur, Dinajpur. Of the total length of the pipeline, 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, in the initial phase, two and a half lakh tons will be imported. According to the 15-year agreement, the import volume will increase to 4 to 5 metric tons per year.
Cost and Time Effective Project will Ensure Energy Security
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.
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 gesture from India will not only strengthen Bangladesh’s economic ties with India but also uphold the ties of friendship during the energy crisis as well as the dollar crisis.
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.
This pipeline will be a milestone in providing quick and uninterrupted fuel supply to the northern region of the country in a cost-effective manner. The Fellowship Receipt Terminal will be the first modern automatic and computerised system in the country. If something is done in the pipeline on the way or otherwise, the place of automaticity can be identified immediately.
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. Due to the introduction of pipelines, the supply of fuel in the country will increase and the cost of transportation of fuel will come down.
Through this pipeline, an alternative source of diesel import is being created for Bangladesh. 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.
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.
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