RICHARD Holbrook, US Special Envoy for Pakistan mandated to secure and promote US agenda in the region, is now a familiar figure with frequent visits to Islamabad. He has gradually become more intrusive in Pakistan politics and governance and consequently more unwelcome.

Holbrook carries an unsavoury record and reputation for his diplomatic exploits in Latin America. During his recent call on Islamabad, Holbrook evinced deep interest in the energy requirements of Pakistan and offered $1billion to boost the energy sector, stating that “US is determined to support Pakistan for peace and stability, for fight against terrorism and for alleviation of poverty”.

The offer however is not an altruistic as Holbrook made it out. The severe energy crisis that Pakistan is facing today has had enormous negative impact on its economic development and political stability. The long power outages across the country has made it an issue of extreme volatility causing suffering in the daily life of Pakistani and putting Pakistan's economic future in serious jeopardy .

Pakistan's energy requirements are increasing in geometrical ratio, and not only economic growth but political stability is directly linked with the availability of adequate energy resources. Pakistan initiated discussions with Iran in 1985 for construction of a natural gas pipeline linking Karachi with the South Pars natural gas field. The agreement called “peace pipeline” was signed by the president of Iran and Pakistan in Turkey on June 4, 2009, after considerable delay and lengthy negotiations, on price formula, security guarantee and transit royalties.

Iran has some 15.7 per cent of the world's natural gas reserves, second only to Russia. Although its share in the global market does not reflect it, primarily due to US sanctions against Iran since the Islamic Revolution in 1980. However, now Iran is following an aggressive export policy and it is expected that given the ever increasing demand for energy by China, India and Europe, Iran's total gas export will reach $18 billion in 2025.

The pipeline would run about 1,115 km in Iran, 705 km in Pakistan and 850 km in India, had it joined IPI. Total investment is estimated at $7.04 billion and may take 4-5 years for completion.

The US has continued its opposition to the proposed pipeline and urged India and Pakistan to abandon the project and instead explore alternative sources, such as coal, wind or solar energy. Samuel Bodman, Energy Secretary under Bush administration conveyed US concerns “If IPI is allowed to be formed in our judgment, this will contribute to the development of nuclear weapons by Iran. We need to stop this”. The US has periodically conveyed its concerns at the highest level. This policy remains constant and now even more strident in the context of Iran nuclear standoff with US.

Despite the fact that energy needs of Pakistan are desperate and immediate, the US ignoring this consideration has mounted strong pressure on Pakistan to abandon Iran pipeline accord. Ambassador Holbrook in his discussion with Pakistani authorities assured them that the US was well aware of the energy crisis confronting Pakistan. He told them that if Pakistan foregoes the agreement providing gas import from Iran the US would help import electricity from Tajikistan through Afghanistan via Wakhan corridor. It would construct high voltage power transmission lines from Tajikistan to Pakistan. Holbrook assured that within the next four years US will assist another mega project in Pakistan costing 1 billion dollars.

India was involved in the IPI project in the beginning but succumbed to the US pressure and opted out. Pakistan under the circumstances is not likely to resist any longer. The World Bank has also joined the US effort and warned Pakistan that major multilateral donors will stay away from the projects due to US opposition and hence the safe course for Pakistan would be to give up the project of Iran. It has instead proposed gas line project with Tajikistan known as TAPI.

TAPI is a 1680-km, 56-inch diameter gas pipeline starting from Dauletabad field in Turkmenistan to Fazilka at the Pakistan-India border, passing through Herat and Kandahar in Afghanistan and Multan in Pakistan. It is estimated that the pipeline will carry $3 to 5 trillion oil and natural gas from the Caspian Sea basin via Turkmenistan, Afghanistan, and Pakistan. Two oil refineries and four thermal power houses, with a 1,000 MW capacity will also be built for shipment of gas to other Asian markets. Pakistan government has already awarded the contract for laying the TAPI gas pipeline project to US-based International Oil Company (IOC).

The four nation — Turkmenistan, Afghanistan, Pakistan, India (TAPI) pipeline — project is part of the grand US design to set up a regional power grid stretching from Almaty to New Delhi. Central Asia with abundance of existing and potential oil gas and electricity sources can meet the growing demands of South Asia and also advance regional economic development and integration.

Given the US strategic interest in TAPI investment problems associated with IPI are not likely to prove a hurdle. ADB has shown interest in funding the project and agreed to a comprehensive review of the feasibility study to invite foreign investment. The four partners have agreed to formulate a long term pricing mechanism and a draft of the gas sales and purchase agreement would be ready soon. The issues of payment of transit fees to Afghanistan and Pakistan taxation structure and consortium procedures will be finalised by the end year. The supply is to begin in 2015.

While the prospects for TAPI appear bright, the challenges of security situation in Afghanistan and the state of relations between India and Pakistan put a question mark on the completion of the project within stipulated time frame.

The open and determined US opposition to IP project makes it highly improbable that the project signed between Pakistan and Iran on June 4, 2009 could be implemented. The project is not likely to get any investors and hence the project appears to be still born. Pakistan and Iran have already signed the Gas Sales Purchase Agreement and the deadline for the submission of conditions precedents (CP) by Pakistan was September 5, 2009 which in view of the constraint explained above has been extended until this month. The prevailing circumstances leave little space for Pakistan and it may have to opt out of the agreement.

The stakes for Pakistan are very high. Pakistan's diplomacy is facing its severest test. The negative impact on our bilateral relations with Iran could be well imagined in the event of Pakistan's withdrawal. Pakistan should continue meeting its obligations under IPI to protect its national interests and avoid friction with the United States. There are reports of China's interest in IPI. Pakistan should simultaneously intensify its diplomatic efforts to bring China on board, which given the rising cost of fuel and galloping needs of Chinese burgeoning economy may not be difficult to achieve. This is no small consideration for the sort of influence Pakistan would gain in resisting US pressure vis-à-vis IPI should TAPI run into serious schedule delays due to volatile security situation in Afghanistan.

The writher is a former ambassador.