$7b project: Call to work out fair price

ISLAMABAD — India and Pakistan have urged the Iranian government to help work out some feasible and fair gas price formula for the proposed $7 billion Iran-Pakistan-India (IPI) gas pipeline project.



By From A Correspondent

Published: Wed 23 Aug 2006, 8:53 AM

Last updated: Sat 4 Apr 2015, 2:19 PM

Informed sources said that the gas pipeline project was still in jeopardy due to the consistent opposition by the United States and Iran's "inflexible" attitude towards the pricing issue which according to Islamabad and New Delhi needed to be sorted out as early as possible.

Some of the government officials are also raising questions about shift in policy from bilateral discussions over Iran to Pakistan gas pipeline to appointment of an independent consultant to determine the price of imported gas.

These official said that they had taken up the matter with President General Pervez Musharraf and the ministry of foreign affairs because they felt "a price to be calculated by independent consultant on the basis of international gas market would not be feasible for Pakistan's economy."

They said it was equally imprudent to leave the question of gas pricing to the heads of state instead of negotiation at the official level because it would mean that gas pricing is to be finalised on political grounds instead of its economic considerations.

They said it was strange to note that price of gas which should have been central to discussions and should have been followed by all other aspects, had been kept at the fag end of the process and Iran, India and Pakistan were moving very quickly on procedural issues like framework agreement, security, delivery points for gas and pipeline specifications. "What would you do with these agreements if the price of the product is not agreed to or is found to be economically unviable for Pakistan," questioned an official who remained actively involved in pipeline negotiations with Turkmenistan, Qatar and Iran besides a number of other interested parties in these

projects.

He said Pakistan had finalised a gas price of $1.65 per MMBTU with an upper limit of $2.05 per MMBTU with Turkmenistan in late 1990s. Qasimpur, special envoy to the then Iranian President, had met former foreign minister Sartaj Aziz to discuss the gas price but was referred to the petroleum ministry for price negotiations.

As a result, in his talks with petroleum ministry officials, Qasimpur had finally offered a gas price of $2.05 per MMBTU but further progress on the pipeline projects was slowed down in the initial years of the current government because of some discoveries at home.

Now, Iran has demanded a gas price of $7.2 per MMBTU.

Pakistan and India agreed with Iran early this month in New Delhi to appoint an independent consultant to work out gas price in the light of international standards, which if seen in the context of Europe or Japan market would be unbearable for Pakistan, he said.


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