India would like the delivered price (landed cost) of Turkmenistan gas to be in the same range for all buyer countries – Afghanistan, Pakistan and India.

Gas pricing is a crucial component for the $7.6-billion Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline project, which would ferry gas from Turkmenistan. “Our endeavour would be that the delivered price of gas remains more or less the same for all countries,” a senior official told Business Line .

The gas price has to be captured in the gas sales and purchase agreement (GSPA), which the member countries have decided to conclude by July 31.

Transit fee

For India, the landed cost of Turkmenistan gas would increase considerably after payment of transit and transportation fees, as it is at the tail end of the proposed pipeline. While a transit fee is payable to the countries through which pipeline passes, the transportation charges will be levied by the consortium operating the pipeline.

“The gas price should be close to what both Afghanistan and Pakistan will get, as they would also be beneficiaries of the gas. India will have to pay transit fee to Afghanistan and Pakistan, as the network will be passing through their areas. The fees levied should not become a bonus for them, and escalate gas price for India,” the official said.

While no numbers have been decided as yet on pricing, India feels that the issue should be dealt with at bilateral levels. However, Pakistan has been favouring common negotiations for pricing. To deliberate on the issue of transit fee, Afghanistan has invited India in May. “The dates have to be finalised,” the official added.

Current price

Currently, in India the delivered price (at the land fall point) of domestic gas is $ 4.2/mBtu, spot LNG is $11-12/mBtu, and long-term LNG contract is close to $7.5/mBtu. “The Turkmenistan gas price should be more attractive than the current long-term contract price,” the official said.

The recently concluded 13th meeting of the Technical Working Group (TWG) discussed various provisions of the GSPA. The steering committee (comprising ministers of the member countries) of the project has given directions to the TWG to finalise the GSPA by June 30 so that it can be signed by July 31.

The project envisages the construction of a 1,700-km-long pipeline, which would originate from Turkmenistan, travel through Afghanistan and Pakistan, before entering India. It would carry 90 mscmd gas of which, 14 mscmd would be for Afghanistan and 38 mscmd each for India and Pakistan.