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Gas transit fee issue sorted out: Deora

ISLAMABAD: India and Pakistan on Friday said they had made “significant progress” towards an agreement on finalising the transportation cost and transit fee for the Iran-Pakistan-India (IPI) gas pipeline project.

Petroleum Minister Murli Deora and his Pakistan counterpart Khwaja Asif denied there was pressure from the United States asking the two countries not to go ahead with the project, and said work would begin in 2009 and be completed by 2012.

The ministers met for talks on the IPI after a two-day meeting of the Turkmenistan-Afghanistan-Pakistan-India pipeline project.

The main issues that were taken up included the structure of the pipeline company that will execute the project, and the transportation tariff and the transit fee India must pay Pakistan.

At a joint press conference later, Mr. Deora said the contentious issue of transit fee, on which the two countries were unable to agree so far, was sorted out and would soon be announced.

Mr. Asif said all that remained was for the two sides to consult their governments. “The whole process will take only a few days or at the most some weeks, and the agreement will be concluded.”

A Pakistani Oil Ministry official said the two countries had agreed on a “range” for the transit fee that was “mutually acceptable” and the formulation was based on the best international practice.

India earlier proposed 15 U.S. cents per million British thermal units of gas as the transit fee, while Pakistan wanted 59 cents.

Indicating a compromise after the meeting, both sides described the transit fee as a “very minor” issue.

Petroleum Secretary M.S. Srinivasan said the transit fee would be finalised and announced within a week.

A Pakistani Oil Ministry official urged journalists after the press conference to consider that the annual saving for Pakistan on its fuel bills, when the gas begins flowing in, would be $ 1.7 billion.

He said insisting on a transit fee that India would not accept was to miss the wood for the trees.

He said the presence of Mr. Deora in Islamabad, and the scheduling of a special session on the IPI after the TAPI talks showed the sincerity of the Indian government.

The two sides have also agreed on a “template” for the transportation cost based on the actual cost of construction and maintenance of the pipeline, which will be determined to a large extent by the prevailing price of steel.

Officials said that instead of fixing the cost now and working on the escalations later, it was decided to agree on a formula, and the numbers would be filled in when construction began.

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Gas transit fee issue sorted out: Deora

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