The Hindu : Front Page : Accord on fee for carrying gas

Online edition of India's National Newspaper
Friday, Jun 29, 2007
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Accord on fee for carrying gas

Sujay Mehdudia

Iran-Pakistan-India pipeline

NEW DELHI: India and Pakistan on Thursday reached an in-principle agreement on transportation charges that New Delhi would pay Islamabad for the Iran-Pakistan-India $7.4-billion gas pipeline, even as Iran sought the last-minute inclusion of a clause for a revision in the price of natural gas every three years. Both India and Pakistan are opposed to this demand.

On the first day of the tripartite Secretary-level talks here, Iran sought revision every three years based on international fuel prices and the energy mix. The talks will continue on Friday and a declaration is expected. A Ministerial-level meeting will be held next month to sort out the issue before a formal agreement is signed.

India and Pakistan had agreed on the Iranian formula, according to which gas would be priced at $4.93 per million British thermal unit (mBtu), and wanted it to remain the basis of pricing for the entire 25-year duration of the contract.

Sources said India and Pakistan reached an agreement on the formula for computing the charges payable to Islamabad for transporting gas through the 1,050-km section of the pipeline in that country. However, the issue of transit fee for allowing passage of the pipeline to India could not be resolved, and it was left to be decided at the Ministerial-level talks.

The Indian side was led by Petroleum Secretary M.S. Srinivasan and Pakistan by his counterpart, Ahmad Waqar. They were joined in the post-lunch session by Hajjatollah Ghanimifard, special envoy of the Iranian Oil Minister. The discussions were centred on the delivery point and schedules, framework agreement, legal and financial provisions in the contract and safeguards.

The proposed pipeline will initially carry 60 million cubic metres of gas, split equally between Pakistan and India. The delivery point will be at the Iran-Pakistan border.

Pakistan was seeking a transportation tariff of $0.70-0.75 per mBtu, while New Delhi was not willing to pay more than $0.55.

On Thursday, India decided to agree to Pakistan’s proposal.

Islamabad is seeking $0.493 per mBtu as transit fee, while New Delhi has offered $0.20.

The project is expected to take three-five years for completion, and will benefit India and Pakistan, which do not have sufficient natural gas to meet their increasing domestic demand for energy.

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