India proposes dialogue with Iran on gas pipeline
Moneylife Digital Team 31 March 2010

New Delhi’s offer follows Iran and Pakistan signing pacts to implement the project on a bilateral basis

Seeking to revive talks that have been frozen for almost three years, India today proposed dialogue with Iran to discuss impediments in implementation of the Iran-Pakistan-India (IPI) gas pipeline project, reports PTI.

Petroleum minister Murli Deora met Iran’s deputy minister for international affairs H Noghrehkar Shirazi on the sidelines of the 12th International Energy Forum to propose bilateral talks in May.

“We are ready to hold talks and have proposed meeting of a Joint Working Group (of the two countries) on the pipeline project,” Sunil Jain, joint secretary (International Cooperation), said after the meeting.

India has been boycotting formal talks on the project since 2007 over security concerns. “We are waiting for them (Iran) to decide on the dates,” Mr Jain said.

New Delhi’s offer follows Iran and Pakistan signing pacts to implement the long-talked project on a bilateral basis.

India wants Iran to be responsible for safe passage of gas through the 1,035-km pipeline length in Pakistan and would pay for the fuel only when it is delivered at the Pakistan-India border.

Iran, on the other hand, has suggested a trilateral mechanism, meaning contractual provisions between three countries, to ensure safe delivery of gas to India. Under this system, New Delhi pays for its share of gas even if the supplies were to be disrupted in Pakistan, officials said.
Officials said that Tehran has been insisting that ownership of gas would be transferred at the Iran-Pakistan border while New Delhi wants it to be the Pakistan-India border, thereby making Iran explicitly responsible for safe delivery of gas.

India wants in-built safeguards in the contract to ensure safe delivery of gas at the India-Pakistan border.

While the 1,100-km pipeline from the South Pars gas fields in the Persian Gulf to the Iran-Pakistan border would be laid by an Iranian firm, New Delhi wants to take stake in the 1,035-km pipeline section in Pakistan.

India feels that its participation in execution of the pipeline in Pakistan would make the project more bankable, reduce the financing cost, ensure timely execution and ensure transparent and efficient management of the operations, officials said, adding that Islamabad has so far not agreed to the proposal.

The pipeline has been on the drawing board since the mid-1990s, when Iran and India inked preliminary agreements to transport gas through Pakistan. It was dubbed the 'Peace Pipeline' because of hopes that it would lead to a detente between neighbours India and Pakistan.

India says it fears for safety of the pipeline in Pakistan's Baluchistan province, home to a militant separatist movement. Officials added that New Delhi is also upset with Iran's frequent changes in gas prices.

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