Clearing the decks for the $7-billion Iran-Pakistan-India (IPI) gas pipeline project, the Pakistan government on Tuesday approved the gas sharing arrangement with New Delhi.

The Economic Coordination Committee of the Cabinet (ECC), chaired by Pakistan Prime Minister Shaukat Aziz, also cleared several other issues related to IPI gas pipeline project, secretary petroleum Ahmad Waqar told a press conference in Islamabad.

Giving details about the IPI project, Waqar said Iran would provide 2.1 billion cubic feet of gas per day which India and Pakistan would share equally. In the second phase, Iran would provide 5.3 billion cubic feet out of which Pakistan would get 2.1 and India 3.2 billion cubic feet of gas per day.

The meeting also approved recommendation of the ministry of petroleum for a segmented approach for the project structure implying that Iran would construct the pipeline up to Pakistan border and Pakistan upto the Indian border. It followed the April 4 talks between Prime Minister Manmohan Singh and Aziz during which the IPI project was discussed.

Construction of the Pakistani portion of the pipeline, which would be in the range of 750 to 1,050 kilometre, would cost around $3 billion, Waqar said without referring to the Indo-Pak differences over the royalty.

Iran wants to sell natural gas to India and Pakistan at $4.93 per million British thermal unit (at $60 per barrel crude oil price). On top of this, Pakistan wants a transit fee of $0.49 per mBtu (10 per cent of the gas price) and a transportation tariff of $1.57 per mBtu, making the delivered price of gas at India-Pakistan border $7 per mBtu.

During the bilateral talks here in February, Pakistan had proposed 57 cents per mBtu as transit fee, whereas India said it cannot be more than 15 cents per mBtu.

According to Indian officials as per Pakistan's calculations the transit fee worked out to $220 million (around 10 per cent of delivery of gas) whereas India believed that it should be around $70 million. India proposed that transit fee is to be determined based on commodity price and it cannot be the delivered price as it amounted to double accounting, they said.