India, Pakistan agree on gas transportation charges, Iran yet to decide on pricing

28 June 2007

However, Iran has reportedly sought last-minute changes in the agreement on pricing of natural gas that it is to supply India and Pakistan through the $ 7.4 billion pipeline.

India and Pakistan had agreed on the price formula proposed by Iran , according to which gas would be priced at $4.93 per million British thermal unit, and wanted it to remain the basis of pricing of natural gas for the entire 25-year duration of the supply contract. However, at the tripartite talks in New Delhi, Tehran sought insertion of a clause for revision in pricing formula every three years based on international fuel prices and energy mix.

This stipulation has been opposed by both India and Pakistan. The official level talks, possibly the last before a ministerial meeting next month for signing a final deal, will continue on Friday.

The source also said India and Pakistan reached an agreement on the principle of computing the transportation charges payable to Islamabad for wheeling the gas through the 1,050-km section of the pipeline in that country.

The issue of transit fee payable to Islamabad for passage of the pipeline to India has not been resolved and the issue may be best left for the political leadership to discuss.

The three countries are negotiating laying a 12,670-kilometre pipeline, initially carrying 60- million cubic metres (2.2 billion cu ft) of Iranian gas to meet Pakistan and India''s growing energy requirements. Later on, the pipeline capacity would be increased to 150 million cubic metres.