Indo-Myanmar Relation: Strengthening Ties through Energy and Infrastructure
The existing bilateral ties between Myanmar and India have the capacity to grow much deeper provided they are calibrated in a manner that is beneficial to both countries. Energy and infrastructure could be the bedrock for such a strong relationship. The new government in India now has an opportunity to shape its relationship with Myanmar based on pragmatic projects’ implementation and strong linkages as this neighbour could act as a marker for geo-economic alliances.
Myanmar has an estimated 283 billion cubic metres of proven gas reserves. Further on, its deepwater reserves are estimated to be sizeable too. Myanmar’s offshore bidding process for 19 deepwater offshore fields in November 2013 elicited a lot of interest amongst global energy companies due to the fact that they had freedom to operate without local partners that are required to develop shallower fields. The biggest prize is the proximity to the energy hungry Chinese and Indian markets. The rush to get a slice of the acreage was based on the success already enjoyed by first movers in the exploration process.
Earlier, China gained the most from an isolated Myanmar. But as Myanmar has moved towards normalisation of ties with the rest of the world, China does not enjoy the same clout it once did in that country. China has already constructed pipelines from the port of Kyaukpyu in Myanmar to China’s south-western Yunnan province. The oil pipeline is scheduled to commence operations later this year and will carry 440,000 barrels of oil per day to China. China is also constructing 12 storage tanks in Kyaukpyu with a capacity of 10,000 cubic metres each amounting to nearly 7.5 million barrels of oil. A parallel gas pipeline went into operation in July 2013, which is capable of transporting as much as 12 billion cubic meters of natural gas per year across Myanmar to China.
India’s oil and gas companies have been increasing their investments in Myanmar lately. OVL and GAIL have announced $1.3 billion investment in China-Myanmar gas pipeline project. It can be recalled that India did not benefit from investments in the Sittwe gas field in Myanmar due to lack of infrastructure and it has thus started to pay more attention on infrastructure development. India renovated the Thanlyin Refinery in 2005-06 and is currently undertaking the up-gradation of the Thanbayakan Petrochemical Complex. India had offered $150 million of credit for project exports for establishing a SEZ at Sittwe.
Infrastructure Development in Myanmar
Apart from pumping huge investments in the energy sector, India is also actively engaging to upgrade infrastructure in Myanmar as this would enhance the economic ties between the two countries. India has undertaken a few key projects to improve connectivity between the two countries. They are:
- The Kaladan multi modal project.
- The Tamu-Kalewa-Kalemyo road.
- Trilateral Highway Project.
1: The Kaladan multi modal project: In order to develop closer economic ties and also provide access to the landlocked Northeast states of India, the Kaladan multi modal transport project was initiated which would ensure three vital things:
- Sea connectivity to India’s Northeast and roads connecting India to ASEAN
- Greater economic cooperation between the two countries
- Ensuring an alternate market for Myanmar’s gas supplies
This project involves development of a trade route between the two countries along the river Kaladan. The river Kaladan is navigable from its confluence point with the Bay of Bengal near Sittwe up to Setpyitpyin (Kaletwa), Myanmar, on its North. Beyond this the river is not navigable owing to shallow water depth and frequent rapids. Therefore, transportation by road is proposed for this stretch. From Sittwe Port to Kaletwa, transportation will be by waterway and from Kaletwa to India-Myanmar border transportation will be by road. The project was undertaken in three phases:
- Dredging and modernising Sittwe port
- Dredging sections of Kaladan river
- Construction of roads from Palewta (Myanmar) to Mizoram.
Although the deal was signed between the two governments in 2008, work on the project commenced only in 2011. The sea link of the project is to connect Kolkata with Sittwe. The port of Sittwe is being developed by India and all project work is expected to be completed by June 2014. Work on the port was delayed as the Myanmar government took time to hand over the land at Sittwe port. The port-cum inland waterway project involved building of the port and dredging of the Kaladan river till a length of 158 km to make it navigable.
2: The Tamu-Kalewa-Kalemyo road: The road is nearing completion and is to be handed over to Myanmar; nearly 71 bridges on this stretch are to be upgraded under the Trilateral Highway project.
3: Trilateral Highway Project: The trilateral highway project will be a game changer for India, notably for its Northeast states. The highway is expected to connect Moreh in India to Mae Sot in Thailand via Myamar. Myanmar has asked India for the highway to be built connecting Mandalay as it is an important commercial city in Myanmar.
The project’s importance can hardly be overstated as it would connect the Mekong sub-region with India. It would enhance connectivity between ASEAN and India. Also from an economic viewpoint it would benefit the Northeast states in India.
From Myanmar’s perspective this enhanced connectivity between India and the ASEAN would mean enhanced trade opportunities and greater access. Myanmar has been consistently supportive of India’s deepening ties with the ASEAN and it sees itself as a bridge between India and the ASEAN. There is a considerable level of convergence between Indian and Myanmar in developmental ties through multilateral institutions such as the MGC (Mekong-Ganga Cooperation). Multilateral organisations like Asian Development Bank too have been eager to fund trans-border projects between India and its neighbours.
It would certainly be in India’s interest to harness the goodwill and build trade corridors across its neighbourhood so that its neighbours have a vested economic interest in India’s economic growth, which would then translate to symbiotic growth for them as they get access to the great Indian markets. But the pace of development needs to be increased so as to build the necessary infrastructure. A stronger economic partnership between India and Myanmar will also result in strategic benefits for India.