India has sought from Pakistan sovereign payment guarantees before it can sign a contract to export natural gas through a pipeline from Punjab.

State-owned gas utility GAIL India Ltd plans to initially supply 5 million standard cubic metres per day of gas to Pakistan through a 110-km pipeline from Jalandhar to international border near Atari.

But before GAIL enters into a gas supply contract with a Pakistani firm, New Delhi wants Pakistan to provide payment guarantees, sources privy to the negotiations said.

Five rounds of negotiations have been held between the two sides and it has been found technically feasible to export gas from Punjab into Lahore.

Besides sovereign guarantees, India wants sureties for three months payment and advance termination commitments, they said.

GAIL plans to import gas in its liquid form, called liquefied natural gas (LNG), on a port in Gujarat or Maharashtra. After converting this again into gaseous state, it is proposed to transport the gas through cross-country pipeline network to Jalandhar.

From Jalandhar, a 110—km line is proposed to be laid to international border near Atari for delivery to Pakistan.

Pakistan wants to import gas from India to meet its rising energy deficit. Initially, it wants to take 1—1.5 million tonnes of LNG. This can run a power plant of up to 1,200 MW.

Pakistan faces huge power deficits and its electricity generation capacity at about 20,000 MW is less than India’s generation capacity from renewable energy sources like wind.

Sources said pipeline exports to Pakistan are being looked upon as mode for testing viability of an energy pact with the neighbouring nation as a precursor to India importing gas through Turkmenistan—Afghanistan—Pakistan—India pipeline.

If this system of payments and guarantees works, then imports through the TAPI pipeline could be feasible.

Sources said the delivered price of gas will be up to $22.3 per million British thermal unit after including transportation charges and all taxes and duties.

(This article was published on November 2, 2013)
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