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Iran seeks change in pricing agreement

Our Bureau

New Delhi, June 28

The tri-nation Iran-Pakistan-India (IPI) pipeline talks have moved forward on the bilateral front with India and Pakistan agreeing on the principles to calculate a transportation fee for Iranian gas to be supplied via a pipeline.

But no decision was taken on the transit fee that Pakistan will levy on the flow of gas to India. Also, on the trilateral front Iran sought some changes in the pricing agreement.

The transportation tariff relates to the cost involved in transmission of gas. Both India and Pakistan are understood to have put forward their proposals on transit fee.

Indications are that the transit fee issue would be decided when oil ministers of the two countries meet just before the tri-nation ministerial conference in second half of July. Pakistan has been seeking a transportation tariff of 70-75 cents per million British thermal unit (mBtu) while India was willing to pay 55 cents per mBtu.

On transit fee, Islamabad is seeking 49 cents per mBtu while New Delhi has offered 20 cents per mBtu.

During the trilateral talks which started on Thursday and is to continue on Friday, Iran has sought last-minute changes in the agreement on pricing of natural gas that it is to supply India and Pakistan through a $7.4 billion pipeline.

It has sought insertion of a clause for revision in pricing formula every three years based on international fuel prices and energy mix. The two buyers — India and Pakistan — had agreed on the price formula proposed by Iran, according to which gas would be priced at $ 4.93 per mBtu and wanted it to remain the basis of pricing of natural gas for the entire duration of the supply contract.

The Petroleum Secretary, Mr M.S. Srinivasan and his Pakistani counterpart, Mr Ahmad Waqar, led discussions on Wednesday evening and in the pre-lunch session on Thursday on the rates to be paid to Islamabad for allowing the passage of the pipeline, security and other technical parameters. In the post-lunch session, they were joined by Iranian officials to discuss among other things the delivery point, delivery schedules, framework agreement, legal and financial provisions in the contract and safeguards.

The proposed pipeline will initially carry 60 million cubic meters of gas, split equally between India and Pakistan. The delivery point would be at the Iran-Pakistan border.

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