India proposes dates for IPI talks

Breaking a two-year chill in talks over its joining the Iran-Pakistan-India gas pipeline, India has invited Iran for resumption of dialogue on the long discussed project but Tehran is yet to respond.

Updated: May 15, 2010, 20:56 PM IST

New Delhi: Breaking a two-year chill in talks over its joining the Iran-Pakistan-India gas pipeline, India has invited Iran for resumption of dialogue on the long discussed project but Tehran is yet to respond.

India has proposed a meeting of India-Iran Joint Working Group between May 23-28 in New Delhi but Tehran has not yet confirmed the dates, sources in know of the development said.

India has been boycotting project talks since 2008 after its concerns of safe delivery of gas were ignored. It wants Iran to be responsible for safe passage of gas through Pakistan and would pay for the fuel only when it is delivered at the Pakistan-India border.

External Affairs Minister S M Krishna is scheduled to visit Iran for the G-15 summit on May 17, and is likely to discuss the project with his Iranian counterpart on Sunday.

Economic cooperation between members of G-15, a group of 17 developing countries from Asia, Africa and Latin America, and a review of international developments will feature in the high profile summit.

Sources said India had last month proposed dates for JWG and it was unlikely that the meeting can now happen between May 23 and 28 because of paucity of time.

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 of safe passage of gas through Pakistan.

While security concerns and frequent changes in gas prices kept New Delhi away from the project, Iran and Pakistan in March signed Inter-Governmental Framework Declaration to support the gas pipeline. Gas Sale and Purchase Agreement between National Iranian Gas Export Co (NIGEC) and Pakistan Inter-State Gas Co has also been concluded.

Sources said Tehran is insisting on transferring ownership of gas to India at Iran-Pakistan border while New Delhi wants it to be Pakistan-India border thereby making Iran explicitly responsible for safe delivery of gas.

While the 1,100-km pipeline from South Pars gas fields in the Persian Gulf to 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 pipeline in Pakistan would make the project more bankable, reduce the financing cost, ensure timely execution and ensure
transparent and efficient management of the operations, they said, adding that Islamabad has so far not agreed to the proposal.

Sources said New Delhi is also upset with Iran`s frequent changes in gas price.

Iran had originally priced its gas at USD 3.2 per mBtu but later in 2007 revised the rates to USD 4.93 per mBtu at USD 60 a barrel crude oil prices, which was accepted by India.

Last year, it again revised it and according to the new pricing formula, the fuel will cost New Delhi USD 8.3 at USD 60 per barrel

Added to this would be a minimum of USD 1.1-1.2 per mBtu towards transportation cost and transit fee that India would have to pay for wheeling the gas through Pakistan, they said.

Gas from the Panna/Mukta and Tapti fields in Mumbai offshore fetches the maximum USD 5.70 per mBtu, while Reliance Industries` Krishna Godavari basin gas has been priced at USD 4.20 per mBtu if crude oil price was USD 60 or more.

Sources said Iran was not willing to commit to a supply-or-pay regime wherein it would be held accountable for non-delivery of gas at Indian border. It, however, wants New Delhi to commit to a strict take-or-pay clause wherein India would have to pay even if it does not take deliveries.

All it now says is that if Pakistan were to disrupt supplies to India, Iran will make a proportionate cut in the quantities to be delivered to Islamabad.