India and Pakistan said on Friday they had reached consensus on basic issues for building a pipeline for procuring gas from Iran and were hopeful that work on the $-7.5 billion project could begin next year.
India's Petroleum Minister Murli Deora and his Pakistani counterpart Khwaja Asif said they had made "significant progress" in bilateral talks on the India-Pakistan-Iran gas pipeline and were determined to go ahead with it despite reported reservations of the US on the project.
They said the two sides had reached a broad agreement on principles for deciding the transportation tariff and transit fee, two key issues that had held up the finalisation of the 2,600-km pipeline.
"We definitely made significant progress (on the basic issues related to the pipeline). Both parties will consult their respective governments and reach an early conclusion of the (bilateral) agreement (for the pipeline)," Asif told a news conference he addressed jointly with Deora in Islamabad.
Describing the discussions on outstanding bilateral issues related to the pipeline as 'very fruitful', Deora said, "We have reached agreement on the principles on which we hope the project can go ahead. India believes that close economic cooperation with its neighbours is not only a necessity, it also builds the stakes and trust that strengthen the overall relationship."
Both the ministers dismissed reports about US reservations on the project as it involves Iran. They said the US had not officially communicated any reservations on the pipeline to their governments.
"We have not been communicated anything by the US government on this issue. So I cannot say whether they have reservations. That's their problem," Deora said. Asif said Pakistan's stand on the project is "dictated by its own economic needs and not pressures from any side, which are non-existent".
akistan's Petroleum Secretary Farrakh Qayyum said all the stakeholders were hopeful of starting work on the pipeline in 2009 and completing it by September 2012. Following tests, gas will flow through the pipeline in December 2012.
Indian Petroleum Secretary M S Srinivasan said the pipeline would carry 2.06 billion cubic feet of gas a day, which would be shared equally by India and Pakistan.
Indian officials told PTI that the two sides had agreed on a 'template' for finalising the transportation tariff, which is linked to the cost of constructing the pipeline. Once Pakistan finalised a contract for building its section of the pipeline, the transportation fee would be worked out according to this template, they said.
The officials also said the two sides had narrowed their differences on the transit fee and had agreed on a broad formula for calculating it. There were indications that the eventual figure would be a compromise between India's earlier offer of a transit fee of 15 cents for one million British thermal units of gas and Pakistan's demand of about 60 cents for every mbtu.
Qayyum said the transit fee was a 'very minor component' of the whole cost of the project and the two sides had 'agreed on a range that is mutually acceptable' and based on international practices.
Deora also said he had 'no information' on the issue of China joining the IPI project.
Both Deora and Asif stressed that further consultations on the pipeline will be completed within "a few weeks" so that an agreement could be concluded speedily. "The fundamentals of the agreement have been agreed upon. Both countries realise the economic, strategic and political need of this project," Asif said.
The two sides also discussed the structure of the company that will execute and manage the project, a joint statement said. Qayyum also said security-related issues were discussed in the talks and the special purpose vehicle that will build and operate the pipeline will ensure its security according to international standards.
The two ministers said the project, which they described as the "pipeline of peace and progress", would add a new dimension to bilateral relations and improve the quality of life of the people of the two countries.
Today's discussions were the first formal contact between India and Pakistan on the IPI pipeline since June last year.
