Iran seeks changes in gas pipeline agreement

NEW DELHI: Iran on Thursday 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 even as New Delhi and Islamabad reached an agreement on transportation charges.

At the tripartite official level talks here, Tehran sought 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 dollars 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.

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.

However, the issue of transit fee, payable to Islamabad for allowing passage of the pipeline to India, was not resolved as the officials decided the issue may be best left for the political leadership to discuss.

While the transportation tariff was purely an economic issue related to the cost involved in transmission of gas, transit fee was more of a political goodwill issue and the charges, many times waived, depend on 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 second half of July.

Petroleum secretary MS 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 cu m 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 million British thermal unit.