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Iran to Seek Revision of Gas Tariff; IPI Pipeline All Set for Further Delays

2008-09-16 In a move that could lead to further delay in the USD 7.4 billion Iran-Pakistan-India (IPI) pipeline project, Tehran has demanded a revision in the gas tariff and the pricing formula agreed upon earlier. Iran has sought a change in the gas pricing formula and tariff citing a hike in international oil prices, a media report has said.

According to the draft of the Gas Sales Purchase Agreement (GSPA) agreed upon by Islamabad and Tehran, the two sides had decided to link the gas tariff with the Japan Crude Cocktail price. While the Pakistani government claims that a revision in the gas price would be possible only after four years, Iran has conveyed its intentions to revise the formula after three years, the Daily Times newspaper said quoting sources in the Petroleum Ministry.

The project has been marked by delays after India and Pakistan failed to resolve the issue of gas transit fee. A committee formed by the Iranian President to resolve the transit fee issue between Pakistan and India had failed to find a solution, sources said, adding, Pakistan had demanded 60 cents per MMBTU (Million British Thermal Units) transit fee during the talks here on April 25 between the petroleum ministers of the two nations.

They said New Delhi was unwilling to give over 15 cents per MMBTU transit fee to Islamabad on transmission to India. Pakistan and Iran will discuss the gas pricing formula in Tehran later this month during a meeting, which is also likely to discuss issue of transit fee between Pakistan and India.

Earlier, both Pakistan and India wanted a fixed price for the gas imported from Iran, but the caretaker government in Pakistan had agreed to a periodic revision of gas prices.

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