The Telegraph
Since 1st March, 1999
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Iran hitch in pipeline progress

New Delhi, June 28 (PTI): Iran today sought last-minute changes in the agreement on the pricing of natural gas to be supplied to India and Pakistan through a $7.4-billion pipeline even as New Delhi and Islamabad reached an agreement on transportation charges.

At the tripartite talks here, Tehran sought the insertion of a clause for revision in pricing formula every three years based on international fuel prices and energy mix, a stipulation that was opposed by India and Pakistan, a source said.

India and Pakistan had agreed on the price formula proposed by Iran, according to which gas would be priced at $4.93 per mmbtu, and wanted it to remain the basis of pricing of natural gas for the entire 25-year duration of the supply contract.

The official level talks, possibly the last before a ministerial meeting next month for signing a final deal, will continue tomorrow. 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 1,050km section of the pipeline in that country.

The amount of the transit fee, payable to Islamabad for allowing passage of the pipeline to India, will be decided at the ministerial meeting.

While the transportation tariff was purely an economic issue related to the cost involved in transmitting the gas, transit fee was more of a political goodwill issue and the charges, many times waived, depend on an agreement between the nations.

The source said the transit fee issue would be decided when oil ministers of India and Pakistan meet just before the tri-nation ministerial conference in the second half of July.

Petroleum secretary M.S. Srinivasan and his Pakistani counterpart Ahmad Waqar led discussions yesterday evening and in the pre-lunch session today on the rates to be paid to Islamabad for allowing the passage of the pipeline, security and other technical parameters.

In the post-lunch session, they were joined by Iranian officials to discuss among other things the delivery point, delivery schedules, framework agreement, legal and financial provisions in the contract and safeguards. The proposed pipeline will initially carry 60 million cubic meters of gas, split equally between Pakistan and India. The delivery point would be at the Iran-Pakistan border. Pakistan was previously seeking a transportation tariff of $0.70-$0.75 per mmbtu.

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