Islamabad: Clearing the decks for the $7-billion Iran-Pakistan-India (IPI) gas pipeline project, the Pakistani government approved the gas sharing arrangement with New Delhi on 10 April.
The Economic Coordination Committee of the Cabinet (ECC), chaired by Prime Minister Shaukat Aziz, also cleared several other issues related to IPI gas pipeline project, Secretary Petroleum Ahmad Waqar told a press conference here.
Giving details about the IPI project, Waqar said Iran would provide 2.1 billion cubic feet of gas a day, which India and Pakistan would share equally. In the second phase, Iran would provide 5.3 billion cubic feet out of which Pakistan would get 2.1 and India 3.2 billion cubic feet of gas per day.
The meeting also approved recommendation of the Ministry of Petroleum for a segmented approach for the project structure implying that Iran would construct the pipeline upto Pakistan border and Pakistan upto the Indian border. It followed the 4 April talks between Prime Minister Manmohan Singh and Aziz during which the IPI project was discussed.
Construction of the Pakistani portion of the pipeline, which would be in the range of 750-1,050km, would cost around $3 billion, Waqar said without referring to the Indo-Pak differences over the royalty.
Iran wants to sell natural gas to India and Pakistan at $4.93 per million British thermal unit ($60 per barrel crude oil price). On top of this, Pakistan wants a transit fee of $0.49 per mBtu (10% of the gas price) and a transportation tariff of $1.57 per mBtu, making the delivered price of gas at India-Pakistan border $7 per mBtu.
During the bilateral talks here in February, Pakistan had proposed 57 cents per mBtu as transit fee whereas India said it cannot be more than 15 cents.
According to Indian officials, as per Pakistan’s calculations the transit fee worked out to $220 million (10% of delivery of gas) whereas India believed it should be around $70 million. India proposed the Transit fee be determined based on commodity price and not delivered price as it amounted to double accounting, they said.