The pipeline will run for 131 kilometres from Duttaphulia in West Bengal to Khulna in Bangladesh and is part of the overall agreement reached between the two countries during the recent visit of Bangladesh Prime Minister Sheikh Hasina to India.
Under the deal, Khulna will receive supplies of natural gas and diesel for the next 15 years from Dhamra terminal in Odisha state, which will be linked to Duttaphulia by a 61km pipeline. The length of the Duttaphulia to Khulna pipeline will be around 71km.
At Khulna, an international firm has been charged with setting up a terminal to receive the supply, at an investment of Rs5,000 (over Tk6,000) crore, according to officials in Bangladesh.
Delhi-based officials said in putting up a network for internal supplies and dispersal of the fuel within Bangladesh, many companies would be involved, including Indian Oil Corporation Limited.
Apart from West Bengal, the northeast states in India will also be linked with Bangladesh, expanding the intra-regional gas and diesel supply structure.
The deal marks a reversal in energy flow between the two countries since the 1980s, when India had been counting on procuring natural gas from Bangladesh in view of it rich gas reserves.
However, Bangladesh indicated that its reserves, estimated at around 14.16 trillion cubic feet not counting the offshore potential, would be urgently needed to develop and strengthen its own domestic industrial sector, as well as exports.
In fact its reserves, Dhaka argued, would enable the country to build up a strong infrastructure and a flourishing manufacturing sector. But after a period, it would be necessary for the country to rely on fuel imports.
Influential circles in India were not initially convinced by such arguments. They felt that Bangladesh authorities were taking a political rather than economic decision in ruling out large energy exports to India, their nearest and automatic market.
These misgivings were further strengthened as a proposed energy pipeline involving Myanmar, Bangladesh and India, for offshore supplies, could not be built because of various problems.
It is currently estimated that Bangladesh daily needs nearly three billion cubic feet of gas to keep its industries running and to maintain its domestic supplies.
Even this leaves it short of meeting its ever-growing demands, a sure indication of how fast the country’s economy has been growing in recent years. It also means the country will certainly go the import route both for gas and petroleum products, like diesel, even in the long term.