Cost, security holding up India-Pakistan progress

Cost, security holding up India-Pakistan progress
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First Published: Thu, Mar 22 2007. 02 17 AM IST
Updated: Thu, Mar 22 2007. 02 17 AM IST
New Delhi: Progress on the Iran-Pakistan-India gas pipeline hinges on New Delhi and Islamabad resolving the critical issue of how much Pakistan wants to be paid for allowing the gas to transit from Iran to India.
Another important issue is security, and both are on the agenda as petroleum ministry officials from both sides meet here on 23 March.
“As required by Iran, we have responded within the four-week time period to the pricing formula,” said an Indian petroleum and natural gas ministry official, who didn’t want to be named because of the nature of the talks.
“However, the issue will be able to move ahead only when we can resolve the transportation costs and the transit issue with Pakistan. Our first meeting on this issue in Islamabad last month was inconclusive. We are hopeful of some progress tomorrow and are expecting concrete results by April,” the official said, adding Iran was also being invited to the meeting as an observer.
The 2,000km pipeline is expected to cost $7 billion (Rs30,800 crore). Some 60 million metric standard cubic metres a day (mmscmd) of gas that is likely to flow through the pipeline daily may be equally divided between India and Pakistan.
The pricing formula for the gas, linked to the Japanese crude cocktail price, is for the gas reaching the Iran-Pakistan border from the source. A further price escalation is expected because of transit rights and transport tariff to be paid to Pakistan by India.
“We want Pakistan to lower or waive the transit rights,” another petroleum ministry official added.
The discussions will also focus on deciding the project structure. “As of now, the possible avenues available include allowing a (multinational corporation) consortium to own and operate the pipeline. The other option available is that both Iran and Pakistan build and operate the pipeline in their territory and guarantee gas supply and security,” the official added.
The other issues that have stalled progress on the pipeline is funding as well as America’s sanctions on Iran. “We have to be satisfied about the safe delivery of gas and the pipeline,” the official said.
US energy secretary Samuel W. Bodman, on a recent visit to India, had said: “The pipeline is not an issue that will affect the 123 agreement. Our position is that as the Iranians are seeking nuclear weapons, anything that takes care of their interests is not good.”
India has a gas demand of 150 mmscmd of which only 90mmscmd is available. The shortfall has affected the power and fertilizer sectors in the country. Overall demand will go up to 300 mmscmd by 2025.
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First Published: Thu, Mar 22 2007. 02 17 AM IST