Indo-Pak talks to finalise IPI gas pipeline

Pakistan and India will soon finalise the bilateral tariff and transit fee for the $7 billion Iran-Pakistan-India (IPI) gas pipeline project. Technical teams from both countries will meet in Islamabad from April 16-18 to firm up recommendations to be discussed by the petroleum ministers of Pakistan and India at their meeting here on April 23.

Both the sides had earlier resolved differences over the transportation fee and will now focus on the issues of tariff and transit fee for Iranian gas to be transported to India via Pakistan, official sources were quoted as saying by The Dawn newspaper.

A petroleum ministry official said India and Pakistan will also discuss issues related to the $6bn, 2,000-km Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline project. "Tapi is a parallel project that India and Pakistan are also discussing simultaneously," he said. The official said that the technical and ministerial-level talks were "very important" for the IPI pipeline project. Following the talks with India, Pakistan will line up further meetings with Iran in May.

"The Iranian side will be briefed about the outcome of talks between Pakistan and India next month," he said, expressing hope that all lingering issues related to the project will be sorted out this month. Sources said senior Pakistani officials had been informed by Iran that it had sorted out 40 to 50 per cent of the "logistic issues" for undertaking work on the IPI pipeline. Pakistan has also been told that Iran had asked India to join the project without caring for the opposition of the US to the pipeline.

Sources said that India had conceded that while it continued to face pressure from the US for not joining the project, it cannot ignore its increasing gas requirements and that it is still interested to "pick up substantial quantities of gas from Iran."

Pakistan has already asked Iran to enhance gas volumes for it by 50 per cent in case India stays away from the venture. Pakistan will also make a formal request soon to the Iranian side to allocate an additional 1.05 BCFD (billion cubic feet of gas per day) to it in case India fails to join the project. Originally, Pakistan was to get 2.1 BCFD from the 2,600-km IPI pipeline and India to receive 3.2 BCFD.

The Asian Development Bank (ADB) is expected to invite officials of all four countries in the third week of April to revive the dormant TAPI project to ease the energy crisis in the region. However, there are still various challenges to the TAPI project. Sources said that the security situation in Afghanistan and relations between Pakistan and India need to be improved, and fuel subsidies will have to be phased out.

The TAPI pipeline also needs at least 30 billion cubic metres (BCM) of gas a year from Turkmenistan to reach Pakistan via Afghanistan. Sources said that in the absence of the Iran and Turkmenistan pipeline projects, the Pakistan government had started work on another project to meet its growing gas requirements. A source said the Sui Northern Gas Pipeline Ltd was developing an LNG terminal in Karachi and a contract is expected to be signed in this regard next month. "Floating storages" are being procured for fast track import of gas from some other countries, including Qatar.