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India set to route oil for the Northeast through Bangladesh

Connectivity with Bangladesh brings direct benefits to the northeastern states (Image courtesy: Govt)

Following the four-day tour of Bangladesh Prime Minister Sheikh Hasina’s India visit, Dhaka is considering sourcing fuel from India. It is also likely to allow transit rights to New Delhi for transporting fuel to the northeastern states through its territory beyond the November 30 deadline. While India will have to pay taxes to Bangladesh for using its territory for transit, the facility is expected to open up options for Dhaka to import New Delhi’s excess fuel. Importantly, Dhaka could even look at sourcing Russian oil at a discounted price routed through India.

Typically, to transport goods to the northeast would mean crossing the hilly areas of Silchar in Assam. This is time consuming and prone to natural disasters.

“We’re going to procure fuel from them and an agreement was signed with an Indian oil company,” Bangladesh’s Foreign Secretary Masud Bin Momen told the Financial Express (Bangladesh). “So we will also discuss whether they can transport fuel for us too while carrying fuel for their NE states through our land,” he said in the interview.

Recently, India was given such transit rights for carrying fuel to flood affected northeastern states by Dhaka up to November 30.

Meanwhile, Russian oil major Russneft has offered to supply petroleum to the Bangladesh Petroleum Corporation (BPC) at a highly discounted price.  At present, prices of WTI crude – the world’s most actively traded commodity, are hovering around $87 a barrel.

Deepening energy cooperation and security will be the thrust for the two countries which have already embarked on boosting connectivity.

India’s proposed oil export to Bangladesh and also using the country’s territory as a transit route to take consignments to the northeast is part of the larger strategy.

Prime Minister Narendra Modi and Hasina reviewed the progress which both sides made on the India-Bangladesh Friendship Pipeline Project (IBFPP). The project connects Siliguri in West Bengal and Parbatipur in Dinajpur district in Bangladesh.

Industrialist Gautam Adani, who met Hasina during her visit here, has assured completion of the transmission line that is being constructed as part of the 1,600 MW Godda power project by this December. This power plant is critical for power exports to Bangladesh, which is currently facing an acute electricity shortage driven by the global energy crisis.

“We are committed to commissioning our 1600 MW Godda Power Project and dedicated transmission line to Bangladesh by Bijoy Dibosh, 16 Dec 2022,” Adani said in a tweet.

Under Hasina, Bangladesh made significant progress in the energy sector. However, due to the current geopolitical instability driven by rise in global energy prices, Bangladesh has been once again facing acute power shortage.

Also read: Modi and Hasina send a big message—India and Bangladesh are re-shaping Asia

Is India positioning itself as Bangladesh’s major energy supplier?