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India, Pakistan make headway on IPI gas pipeline

The South Asian neighbours narrow down differences over the tariff India is to pay for transporting gas from Iran.

india Updated: May 01, 2007 13:58 IST

India and Pakistan have narrowed down their differences over the charges to be paid to Islamabad for allowing the passage of the Iran-India-Pakistan gas pipeline.

Differences over the tariff India is to pay for transporting gas from Iran through the 1,035-km pipeline segment in Pakistan and the transit fee payable to Islamabad for allowing its territory to be used for the passage of the pipeline had threatened to derail the $7.4-billion project.

"We have made very good progress in narrowing the differences and the June-end deadline for signing of a tripartite agreement looks achievable," a top oil ministry official said.

Pakistan has climbed down from its earlier demand of 1.57 dollars per million British thermal unit to 0.70-0.75 dollars per mBtu as transportation tariff. India is willing to pay not more than 0.55 dollars per mBtu ($220 million annually).

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

"We are confident, we will be able to bring it down," the official said.

"Transportation tariff and transit fee have huge bearing on the cost of gas. The price of gas as per the tariff proposed by us will be $5.68 per mBtu at Indo-Pak border. Had Pakistan's original demand been accepted, the price would have been $7 per mBtu," the official said.

Iran wants to sell natural gas to India and Pakistan at $4.93 per mBtu (at $60 per barrel crude oil price). Transportation tariff and transit fee are in addition to this price.

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