Delhi to resume talks with Tehran

After a two-year lull, India has proposed to resume talks with Iran on importing gas through a pipeline passing through Pakistan, but the Persian Gulf state wants the meeting to happen in Tehran says a report by the Press Trust of India.

India in April proposed a meeting of the India-Iran Joint Working Group (JWG) between May 23 and 28 in New Delhi to discuss the Iran-Pakistan-India gas pipeline project, but Tehran has not yet confirmed the dates.

Now Iran has told India that the JWG meeting should happen in Tehran, a source close to the development said. “New Delhi has accepted the condition, but Iran has so far not indicated any dates for the meeting,” the source said.

India has been boycotting project talks since 2008 over concerns on safe delivery of gas and frequent changes in the price of gas. New Delhi wants Iran to stick to the price agreed between them in 2007 and also wants it to be responsible for the safe passage of gas through Pakistan.

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 it would lead to a detente between India and Pakistan.

India fears for the safety of the pipeline in Balochistan, and wants Iran to take responsibility for the safe passage of the gas through Pakistan. It wants to pay for the fuel only when it is delivered at the Pakistan-India border.

New Delhi is also upset with the frequent changes in the gas price. Iran had originally priced the gas at $3.2 per mmBtu, but in 2007 revised the rates to $4.93 per mmBtu at $60 a barrel crude oil prices, which was accepted by India.

Last year, it unilaterally revised the rates again and according to the new pricing formula, the fuel would cost New Delhi $8.3 per mmBtu at $60 per barrel oil price at the Iran-Pakistan border.

Added to this would be $1.1 - 1.2 per mmBtu towards the transportation cost and transit fee that India would have to pay for wheeling the gas through Pakistan, the source said. Tehran, he said, wants to transfer ownership of the gas to India at the Iran-Pakistan border, while New Delhi wants it to be at the Pakistan-India border, thereby making Iran explicitly responsible for the safe delivery of gas.

While the 1,100 km-long 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 the execution of the pipeline in Pakistan would make the project more bankable, reduce the financing cost and ensure not only the timely execution but also a transparent and efficient management of operations, the source said.

Published in The Express Tribune, July 13^th, 2010.