News
Sunday, May 11, 2008
Pakistan transit fee ‘bottleneck’ for IPI
* Pakistan de-links transit fee from gas price: Indian officials
By Iftikhar Gilani
NEW DELHI: The gas transit fee to be charged by Pakistan remains the bottleneck to finalising the trilateral Iran-Pakistan-India (IPI) gas pipeline project, according to Indian officials. India is asking Pakistan to lower the transit fee, offering to pay 15 cents per million British thermal unit (mmBtu). Pakistan demands 42 cents mmBtu. Sources said that during the recent visit of Indian Petroleum Minister Murli Deora to Islamabad, Pakistan had demanded a transit fee of 42 cents per mmBtu and a flat payment of $200 million a year. A large part of the money will go to providing security and maintenance of the pipeline. India argues that because Pakistan is also using this gas, it should take responsibility for maintaining the pipeline without passing the burden to India. De-link: Indian officials, however, are happy that Pakistan has agreed to de-link the transit fee from the price of gas. Both countries have decided to settle the final tariff after floating international tenders for work contracts. They are confident that both countries would soon be able to conclude an agreement on the transit fee, transportation charges and project structure. “As India had agreed to pay 15 cents, it has asked the Pakistani authorities to further reduce the fee and make it nominal, considering that Pakistan would also be using gas for 80 per cent of the pipeline length,” said an official. India has also renewed its offer to set up a consortium and a role for its state-owned gas transmission company, GAIL, in the construction of the pipeline. “This would not only allow cost effectiveness and enhanced accountability, but would also help as a confidence-building measure and in pipeline security. Pakistani authorities have an open mind on this issue and will respond shortly,” say officials.
Courtesy Daily Times