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turkmenistan and afghanistan agree on tapi pipeline construction plan

Turkmenistan and Afghanistan Agree on TAPI Pipeline Construction Plan

Author:Haley Nelson

Oct 19, 2022

Image source: Asian Development Bank

On October 9, in Turkmenistan, the delegation of Afghanistan and Turkmenistan’s Ministry of Foreign Affairs (MoFA) reached an agreement on several aspects of the Turkmenistan-Afghanistan-Pakistan-India Pipeline project (TAPI). Developments to the construction of TAPI are intended to help Turkmenistan emerge as a diversified energy supplier. However, credibility is lacking for Turkmenistan and Afghanistan, who have made similar agreements in the past. If the construction plan is followed, it will show improvement in Turkmenistan's mediation ability. However, if the project falls through, it will further undermine the validity of the original pipeline agreement.

Shafay Azam, a senior official of Turkmenistan’s MoFA, stated, “First, the two sides agreed to form a schedule for the acquisition of land and the pipeline construction. Second, the two sides agreed to establish a network to distribute gas to the residents of Herat and industrial parks.”  However, Herat currently does not possess gas infrastructure, and there are presently no investors for the project. In fact, the Taliban has announced on several occasions that it plans to start construction soon- never actualizing the plan.

This pipeline, stretching from Galkynysh, Turkmenistan, to Fazilka, India, hopes to export 33 billion cubic meters of natural gas to Afghanistan, Pakistan, and India. However, without existing energy infrastructure in Herat, the predicted pipeline capacity is lessened. It is possible for them to obtain funding to string a pipeline the short distance to Herat, with no compressor station, and transport a small volume of gas. However, without a sufficient budget for a compressor station designed to reduce friction and pressure to speed up transport, the annual capacity would be much less than the vaunted 33 BCMA. Additionally, the project has been delayed several times due to regional conflicts, policies in Turkmenistan, and the absence of financing. Although this recent development between Afghanistan and Turkmenistan showcased a continued interest in Turkmenistan’s energy security, it is also demonstrating the difficulties in collaborating within Turkmenistan’s political framework.

If this agreement falls through and construction does not go as planned, it further proves the limitations of this project. TAPI was initially conceived in the 1990s, but the inter-governmental agreement wasn’t officially signed until 2010. Shareholders, Turkmengaz, Afghan Gas Enterprise, Inter State Gas Systems, and Gas Authority India Ltd. (GAIL) agreed to take on the project in 2013. Afghanistan is expected to receive $400 million annually in transit fees at full capacity, with India and Pakistan receiving 42 percent of TAPI’s gas flows. Initially, the pipeline, which began construction on December 13, 2015, was intended to be completed by 2019. However, commercial doubts from India have dampened the process of construction.

In September 2022, Afghanistan’s Deputy Prime Minister Mullah Abdul Ghani Baradar said Afghanistan is ready to begin construction. He added that the current political climate has created the perfect conditions for implementation. Additionally, the Ministry of Economy of Afghanistan illustrated the department’s interest in investment, emphasizing the project’s importance for regional connectivity. A spokesperson for Afghanistan’s Ministry of Economy (MoE), Abdul Rahman Habib, said “The TAPI project is one of the important and fundamental projects that can facilitate political engagement, regional cooperation, and regional development.” However, as these announcements have often fallen flat, their credibility is difficult to determine.

Looking at the developments on Turkmenistan’s side, on October 9, Turkmenistan’s President Serdar Berdimuhamedov called an expanded meeting of the Cabinet of Ministers to discuss developments in the socioeconomic sphere of the country. Regarding Turkmenistan’s production capacity and ability to diversify its energy exports, Berdimuhamedov said the country needs “to accelerate the implementation of the international project Turkmenistan-Afghanistan-Pakistan-India and build new plants for the processing of hydrocarbon raw materials.” President Berdimuhamedov is seemingly aiming for hasty completion of the project in order to begin the construction of a 1,000-km-long power transmission line, which would run parallel with TAPI. On October 10, he addressed this upcoming priority, “the continuation of the construction of the country's internal energy ring and the Turkmenistan-Afghanistan-Pakistan power transmission line, attracting investments for the construction and energy industries.”

The purpose of these economic projects is “to promote the sustainable socio-economic development of the entire region, its successful integration into the system of world economic relations, and the strengthening of regional peace and stability-" President Serdar Berdimuhamedov stated during a meeting with the State Minister of Oil of the Islamic Republic of Pakistan, Musadiq Masood Malik. The TAPI project promotes regional connectivity and promises to aid in the political stability between Pakistan and India, giving Turkmenistan a modest role in a major geopolitical issue. Therefore, Turkmenistan can immensely benefit from completing the TAPI Pipeline, but it has a long way to go.

As Turkmenistan has received backlash for its cooperation with Russia in the past few months, the completion of TAPI could project an image of multivectorism, distracting from its economic policy that is often sympathetic toward Russian interests. This is a notable improvement in its ability to facilitate international agreements, especially as Turkmenistan hopes to benefit from the construction of alternative trade routes. This increases the investment potential and attractiveness of Turkmenistan's energy economy.

However, although TAPI promises a lot, and despite the recent progress, the process may be slowed in the future due to regional political instability and the inability to gather funds. The project is estimated to cost around $40 billion USD, and investors haven’t been eager to invest in the Taliban government or a project which demands diplomacy between India and Pakistan.

With regard to Afghanistan, the Special Inspector General for Afghanistan Reconstruction (SIGAR) stated that the Taliban has been struggling with power exports because not only does “the Taliban face potential technical and personnel difficulties in managing the country’s power infrastructure, particularly as trained personnel leave the country, but they now face severe revenue shortages that inhibit the ability to provide both domestically and externally generated electricity to the power grid.” Afghanistan will likely struggle to fund the pipeline construction as foreign investors are hesitant to offer funds to a country continuously receiving major aid packages from the U.S. government to cover the billions of dollars in debt that the Taliban has amounted in the past 12 months. Additionally, India has repeatedly expressed concern over both the transit fees Pakistan will receive and the ability of Pakistan to slow flows during times of high tension.  

As the primary beneficiary of the TAPI pipeline, Turkmenistan will inherit the role of its guarantor of success. Without the backing of foreign investors, Turkmengaz has been pushed into the role of the consortium lead, and it is now responsible for ensuring funds for the pipeline's completion. China may choose to invest in the project; however, with upstream costs uncertain, the benefits of investing are still unclear. Therefore, the pipeline continues to face financial issues. On the other hand, if Turkmenistan successfully finds funds for the portions of the pipeline in Afghanistan and Pakistan, Turkmenistan will further it's economic diversification efforts while showcasing its ability to mediate internationally. But despite the potential this project has, the agreement reached on October 9 is unlikely to become a significant development for the prospects of TAPI. The project is still far from completion, and without optimistic prospects for financing the pipeline, its future is still unclear.


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