Iran-Pak-India pipeline may see more delay

The $7 billion Iran-Pakistan-India pipeline seems set for another delay, with the date for the meeting between Petroleum Minister Murli Deora and his Pakistani counterpart in Islamabad having been put off "indefinitely" after the July-end date was missed.

Iran had in June invited Prime Minister Manmohan Singh and Pakistan President Pervez Musharraf to Tehran in August for signing the final agreement.

However, with the bilateral meeting in Islamabad having been postponed, "the final agreement is still a long way off," a petroleum ministry official said.

While some officials in the petroleum ministry say that the political situation in Pakistan has resulted in the meeting being put off, some others are of the view that the over 10-year-old pipeline proposal has "again got into the groove from which it has not moved towards a conclusion all these years".

The issue of the transit fee, which India would pay to Pakistan for ensuring security of the gas flowing through the pipeline in Pakistan, was scheduled to be discussed during the meeting between the oil ministers of the two countries.

A secretary-level meeting had resolved the issue of transportation fee for the gas that India would have to pay to Pakistan.

The initial euphoria about the deal finally coming through following the bilateral secretary-level negotiations in New Delhi in June, when the two sides had ironed out differences over the transportation tariff, had died down when the Iran representative joined the talks later.

The three countries could not reach a conclusion as Iran had introduced a clause in the draft agreement asking for price revision every three years, a proposal which India had rejected as it claims that the price of the gas is linked to the price of the Japanese crude cocktail which keeps fluctuating as the market moves up or down.

The India-Pakistan talks in June had ended with an Indian oil ministry official saying the issue of transit fee, "more of a political decision", would be discussed by the ministers of the two countries.

Iran, on its part, is still confident that the deal will work out as it says that "both India and Pakistan have agreed in principle to the price revision clause," Ainollah Souri, Iran's trade and energy counsellor, told Business Standard in an interview recently.

He also said that the meeting between the Indian and Pakistani oil ministers was crucial as the thorny issue of transit fee was likely to be solved then.