TAPI pipeline: Pakistan, Afghanistan and India agree on transit fee

Published: April 18, 2012

Afghanistan demanded a transit fee of 54 cents per mmcfd whereas India offered 45 cents per mmcfd. PHOTO: FILE

ISLAMABAD: Pakistan, India and Afghanistan have agreed on the rate of transit fee on supply of gas from Turkmenistan through a transnational pipeline, popularly known as Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline.

This was the last major stumbling block before reaching a final agreement on the pipeline as Pakistan and India had already negotiated a gas price with Turkmenistan.

Under the proposed arrangement, Pakistan will pay a transit fee of 50 cents per million cubic feet of gas per day (mmcfd) to Afghanistan and the same amount will be paid by India to Pakistan. A final agreement on the fee will be signed after Afghanistan, India and Pakistan get consent from their governments.

During two days of talks that concluded here on Tuesday, Afghanistan demanded a transit fee of 54 cents per mmcfd whereas India offered 45 cents per mmcfd. “In the end, all countries agreed on the fee of 50 cents,” a senior government official said.

Earlier, Afghanistan asked Pakistan and India to pay the fee in the form of gas but Pakistan opposed the proposal.

In early February, Afghan and Pakistani officials had discussed three different proposals for the transit fee which included fee in cash or kind, a fixed fee in dollars on the volume of gas supplied or fee linked with per kilometre length of the pipeline.

Petroleum Secretary Ijaz Chaudhry said Afghanistan and India would now seek the go-ahead from their governments for the fee.

“If the three countries sign an agreement for the fee of 50 cents, India will pay over $600 million per annum to Pakistan, which will make onward payment to Afghanistan,” the official said.

At the beginning of the project, Pakistan and India will receive 1.365 billion cubic feet of gas per day (bcfd) and Afghanistan will be supplied 0.5 bcfd.

The Economic Coordination Committee (ECC) of the cabinet has already allowed the petroleum ministry to sign a gas sale and purchase agreement with Turkmenistan to push ahead with the $7.6 billion gas pipeline. The agreement is expected to be inked next month in Turkmenistan.

However, the two sides will review the gas price every five years. Earlier, Pakistan proposed a price review every three years keeping in view the oil price movements while Turkmenistan wanted it to be fixed for 10 years.

Published in The Express Tribune, April 18th, 2012.

Reader Comments (18)

  • Jiang
    Apr 18, 2012 - 7:52AM

    Pakistan should be building relations with Iran with regard to energy and Russian companies like Gazprom which is to fund the Iran-Pakistan pipeline, Pakistan needs to stay away from trouble making countries like Afghanistan and India both of which claim Pakistani territory.

    There should be some kind of an agreement that Afghanistan and India recognize the right of Pakistan to exist before anything of this magnitude is undertaking. Further if TAPI does happen it should involve Russian companies like Gazprom which are serious and have the capital not charlatan Americans who are all talk.

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  • Nas
    Apr 18, 2012 - 9:51AM

    DAWN says they could’t agree on transit fees while ET says it did. I am puzzled o which version is correct. Can someone verufy please?

    http://dawn.com/2012/04/18/india-afghanistan-fail-to-agree-on-gas-transit-fee/

    Regards

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  • Dr. Kartikay Pandey
    Apr 18, 2012 - 10:50AM

    @Jiang:

    You look more like a mouth piece of Communist China in disguise, rather than anything else.

    If India pulls out, this agreement will fall to pieces.

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  • Senman
    Apr 18, 2012 - 11:09AM

    @Jiang
    Yes I totally agree Pakistan need to isolate itself from India and Afghanistan, oh wait it needs to isolate itself from Russia after chechen , oh wait Pakistan needs to isolate itself from the whole world and pray to God so everything will become good after total isolation.

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  • Khondkar A saleque
    Apr 18, 2012 - 12:02PM

    It is great that this matter has been positively resolved. If implemented TAPI will act as peace pipeline in the region . Both Pakistan and India need the gas through TAPI to partially meet their huge hungry energy market. Afghanistan can siginificant foreign exchange through ROW fees and transit tariff. It can also utilize the gas trrough TAPI to set up several small power plants along the route to meet its power supply requirements.The open access nature of the pipeline will also allow Afghanistn to trasprt its own gas from one part to the other. This pipeline is signed on WIN-Win deal will go a long way in boosting the asgging economy of the region and foster friendship and goodwill.

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  • Anuj Agrawal
    Apr 18, 2012 - 12:40PM

    @Jiang….No one is questioning your existence….Step out of the dellusion..

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  • Vigilant
    Apr 18, 2012 - 12:52PM

    Yeah if talibans allow to implement this project

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  • Nas
    Apr 18, 2012 - 2:40PM

    Dawn says they could not agree. Which version is true? Dawn it ET?

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  • Xsair
    Apr 18, 2012 - 4:32PM

    People v r missing such a freaking huge things or i am not getting it right. It writes.”“If the three countries sign an agreement for the fee of 50 cents, India will pay over $600 million per annum to Pakistan, which will make onward payment to Afghanistan,” the official said.” This means pakistan is being paid nothing by India??????? In terms of transit fee????? How come this is freaking possible man. I mean wheres the catch that i am missing or v sold out our people again?????

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  • unbeliever
    Apr 18, 2012 - 4:39PM

    Afghanistan demanded a transit fee of 54 cents per mmcfd whereas India offered 45 cents per mmcfd. “In the end, all countries agreed on the fee of 50 cents,” a senior government official said.

    it’s exactly the same way in which we bargain in our bazzars. funny, that they even do it at highest level of diplomacy………..
    well, the cultural links seem to be too strong to be broken up by religious differences

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  • Sameer
    Apr 18, 2012 - 5:23PM

    @Xsair: If you were a little aware of the geography of the region, you would have known that the gas would pass through Afghanistan and Pakistan to reach India. Since the gas would be coming out of Turkmenistan, with which Pakistan doesnt share borders, Pakistan would have to pay Afghanistan the transit fee.Recommend

  • Sonya
    Apr 18, 2012 - 6:26PM

    But according to a most respectable analyst of ET (Mr Tariq Fatimi) that the gas that Turkemanistan wants to sell is not their’s, it belongs to Russia? I smell American conspiracy in pushing this too much politically problematic and commercially unviable project?

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  • Hassan
    Apr 18, 2012 - 8:11PM

    @Xsair totally agree with you.

    @Sameer: The transit fee must have account for the kilometers one is using to access the gas.
    How come India can receive the gas on same transit fees as Pakistan is receiving. I mean the gas pipeline is just passing thru Afghanistan (735 km approx) which will be costing 50 cents. And then It will cross Pakistan (Another 800 km approx) which is also 50cents.
    THis means Pakistan will pay 50 cents transit fees for 735 km and India will pay transit fees of 50 cents for 1535 km approx. I do smell something fishy. If Pakistan has agreed on 50 cents, India must give atleast 60 cents to Pakistan and 50 Cents to Afghanistan.

    I think it clarifies.

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  • dar
    Apr 18, 2012 - 9:02PM

    i fail to understand the logic behind ths deal.India pays transit fee to pakistan , pakistan pays same amount to afghanistan, India gets the gas, afghanistan gets transit fee m what pakistan get?

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  • Parvez Amin
    Apr 19, 2012 - 5:50AM

    @Jiang:
    Your suggestion is very sensible. Pakistan does not need anyone to recognize its right to exist. Pakistan already exist and will continue to, recognized or not. In due course of time, people see their benefit and come around. I think that will happen in this case. It is a win win situation for all and therefore has an excellent chance of becoming a reality.Recommend

  • Apr 21, 2012 - 6:24PM

    I read the Tribune very often for updates and commentary of the TAPI Pipeline as it is central in understanding why the West is still in Afghanistan. It’s an absurdity that the Western media suppresses virtually any mention of the pipeline, preferring euphemisms such as “regional development”. The geopolitical realities are never mentioned in the West, not even in newspapers such as The Guardian.

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  • Parvez Amin
    Apr 22, 2012 - 5:09AM

    strong text@Karl Naylor:
    Times have changed. People all over the world are much smarter and can see through ruses to take away thier natural wealth.

    TAPI favors the region – those from accross the seas can also share the favors of the planet, at a mutually accepted price. It is as simple as that, but does not happen – in my opinon, because such an arrangement does not support the arms manufacturers. The arms manufacturers need wars to keep thier factories and research labs going.

    An unworkable solution is to ban sophisticated weapons but allow swords and other similar weapons to provide an outlet for those among us whith more aggression than others. :)

    May you become effective in your own country…

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