Dhaka is going ahead with the project as there is no change of heart in the state level although Indian media hinted Delhi wants to bring in the natural gas from Myanmar, bypassing Bangladesh.

Officials say they have not received any message from India about dismissing the bilateral treaty sought by Bangladesh or any other negative indication. India's representatives at a tri-nation technical level meeting in Myanmar last month signed a draft memorandum of understanding (MoU) agreeing to three proposals of Bangladesh that outline the context of the bilateral treaty. Till now, this draft remains effective, sources said.

They say India remains open to three proposals of Bangladesh in exchange for the pipeline deal despite the border tension and other recent problems.

State Minister for Energy AKM Mosharraf Hossain repeatedly said Bangladesh will not sign the tri-national gas pipeline agreement unless India signs the bilateral treaty with Bangladesh.

Our New Delhi Correspondent, on the other hand, reports that India's external affairs ministry recently sent a letter to the petroleum ministry stating that bilateral issues should not be a part of the three-nation MoU proposed to be signed in Dhaka soon.

India is also reviewing whether it will be profitable to import Myanmar gas in the proposed configuration. Myanmar has indicated a price of $4.27 per million British thermal unit (MBTU) for its offshore gas to be transported via a 290km pipeline through Bangladesh to India.

After including the transit fee to be paid to Bangladesh, the delivered price of the gas is estimated at over $5 per MBTU, petroleum ministry sources said, adding this is 20 percent higher than the price at which India will import liquefied natural gas from Iran.

In view of this, the state-owned Gas Authority of India Limited (GAIL) is working on a detailed feasibility report for transporting the gas from Myanmar through other options, such as in the form of compressed natural gas by ships or LNG or by overland pipeline bypassing Bangladesh, said the sources.

But officials in Dhaka said New Delhi in principle agreed to Dhaka's proposal for a trade corridor facility through India to Nepal and access to hydropower from Nepal and Bhutan at the Yangon meeting last month. It also agreed to work on reducing the trade imbalance on the basis of an 'agreed framework'.

"India asked us to bring in the details of the three proposals at the upcoming meeting likely in April," said a well placed source in the energy ministry.

"The ball is now in our court and we are making progress," he said. The pipeline project is viewed as a vital factor to improve Indo-Bangladesh relations, reduce the trade gap that has soared up to $ 1.5 billion and defuse border tension between the two nations, he pointed out.

However the energy and power and commerce ministries are working slowly over framing specific proposals, sources said.

The power ministry is expected to frame proposals on getting power from Nepal or Bhutan and a corridor access through India to obtain that power. The commerce ministry is likely to sharpen its efforts to reduce trade gaps with India by making specific proposals.

Both ministries have not yet done anything special to take advantage of the transnational pipeline project --raising questions whether Bangladesh will reap the benefits of the deal as it plans to.

When a two-member technical committee headed by Petrobangla Chairman SR Osmani returned to Dhaka from the Myanmar meeting, the prime minister instructed the ministries of energy and power and commerce to make coordinated efforts to formulate proposals.

"We want to buy Nepal and Bhutan's hydropower," said State Minister for Power Iqbal Hasan Mahmud. Nepal has potential for 70,000 mw hydropower and Bhutan 30,000 mw, he mentioned.

Asked if the government has approached Nepal or Bhutan in this regard or if there is any specific proposal to utilise this prospect, the state minister said, "At the last meeting of the Sari (South Asia Regional Initiative), our prime minister proposed setting up a common power grid for the Saarc region. If India agrees to the concept of a Saarc grid, we can take electricity from there."

Sari is a USAID-funded organisation working from 2000 for regional energy cooperation.