India proposes talks on gas pipeline; Iran yet to respond

India proposes talks on gas pipeline; Iran yet to respond

India proposes talks on gas pipeline; Iran yet to respond

India last month proposed a meeting of the India-Iran Joint Working Group (JWG) between May 23 and 28 in New Delhi to discuss the Iran-Pakistan-India gas pipeline project, but Tehran has not yet confirmed the data, sources said.

India has been boycotting project talks since 2008 over concerns on safe delivery of gas and frequent changes in price of gas. New Delhi wants Iran to stick to the price agreed between them in 2007 and also wants it to be responsible for safe passage of gas through Pakistan.

India's External Affairs Minister, S M Krishna, who is here to attend the G-15 Summit, is likely to discuss resumption of dialogue on the IPI project when he meets his counterpart Manouchehr Mottaki.

Sources said the delay in Iran's response essentially means that talks cannot happen between May 23 and 28 and new dates will now have to be discussed.

The pipeline has been on the drawing board since the mid-1990s, when Iran and India inked preliminary agreements to transport gas through Pakistan. It was dubbed the "Peace Pipeline", because of hopes it would lead to a detente between neighbours India and Pakistan.

India says it fears for safety of the pipeline in Pakistan's Baluchistan province, home to a militant Islamist separatist movement, and wants Iran to take responsibility for safe passage of gas through Pakistan. It wants pay for the fuel only when it is delivered to it at the Pakistan-India border.

Sources said Krishna will again flag India's concern on safety and pricing during the meeting to Mottaki. Unless the twin issues are addressed, it may not join the project even though Iran and Pakistan in March signed an Inter-Governmental Framework Declaration to support the gas pipeline. A Gas Sale and Purchase Agreement between National Iranian Gas Export Co (NIGEC) and Pakistan Inter-State Gas Co has also been concluded.

New Delhi is also upset with Iran's frequent changes in gas price. Iran had originally priced its gas at USD 3.2 per mmBtu but later in 2007 revised the rates to USD 4.93 per mmBtu at USD 60 a barrel crude oil prices, which was accepted by India.

Last year, it unilaterally revised it and according to the new pricing formula, the fuel will cost New Delhi USD 8.3 at an USD 60 per barrel oil price at the Iran-Pakistan border.
Added to this would be a minimum of USD 1.1-1.2 per mmBtu towards the transportation cost and transit fee that India would have to pay for wheeling the gas through Pakistan, they said.

Sources said Tehran wants to transfer ownership of gas to India at Iran-Pakistan border while New Delhi wants it to be at the Pakistan-India border, thereby making Iran explicitly responsible for safe delivery of gas.

While the 1,100-km pipeline from the South Pars gas fields in the Persian Gulf to the Iran-Pakistan border would be laid by an Iranian firm, New Delhi wants to take stake in the 1,035-km pipeline section in Pakistan.

India feels that its participation in execution of the pipeline in Pakistan would make the project more bankable, reduce the financing cost, ensure timely execution and ensure transparent and efficient management of operations, they said, adding that Islamabad has so far not agreed to the proposal.

India wants in-built safeguards in the contract to ensure safe delivery of gas at the India-Pakistan border.