Consultant appointed for pricing; report in one month

New Delhi, Aug 4 (UNI) Iran today said a consultant has been appointed whose recommendations would form the basis for further talks in Tehran next month, for the final take-off of the seven billion dollar Iran-Pakistan-India gas pipeline project plagued by an ''unacceptable'' price formula.

A nine member committee -- three each from Iran, Pakistan and India -- has decided to appoint a consultant who would independently give a judgement over the vexed issue of gas pricing, which has been opposed by both India and Pakistan as being highly ''overpriced''.

''We have already begun construction in Iran on the project,'' Deputy Minister Petroleum, M H Nejad Hossenian said after two-day old Third Secretary level meeting of the three countries.

He said the report of the consultant would mean that the three countries have come closer to the agreement over pricing.

The talks were on the verge of a break-down when Iran stuck to its gas price and said it would not budge by lowering its price for the energy starved countries of India and Pakistan.

The Iranian Minister added that both sides have options since Iran is also mulling over giving it to Europe. ''You have options of taking gas from Qatar, Kazhakstan and Turkmenistan,'' Mr Nejad Hossenian said.

Petroleum Minister Murli Deora said the flexibility factor of the asking price of 2.5 dollars and seven dollars per mmscd, is one of the key factors for the project to take off.

Meanwhile Pakistan, Petroleum Secretary Ahmad Waqar said ''we are looking into our markets and affordability'', and hoped that the consulatnt would come out with an inddependent gas price.

The Pakistani minister said they are also looking into the bi-lateral and tri-lateral relationship for gas procurement.

Mr Deora added that there would be another tri-lateral agreemnt in one month in Teheran which is expected to add momentum to the project.

Petroleum Secretary M S Srinivasan said the meeting in the afternoon will wrap up the minutes of the earlier meeting and today's.

''We have finally come to the core issue of price,'' after the talks today, Mr Srinivasan added.

The third secretary level meeting of the Iran-Pakistan-India Pipeline Project (IPI) last evening had decided to form a committee to narrow down the price margin of the gas Iran proposes to sell to India and Pakistan.

Oil secretaries of the two countries had an informal meeting last evening to devise a common strategy for the third round of tripartite talks on the pipeline. They opposed Iran's proposal, saying Tehran has to offer a price in line with international practices for long-term contract, the sources said.

The last round of talks between oil secretaries of the three nations in Islamabad on May 22-23, had broken down after Iran sought a price linked to international crude oil.

Iran had forwarded a gas pricing formula wherein the gas price is linked to Brent crude oil with a fixed escalating cost component (10 per cent of Brent Crude Oil). The formula translates into a price of 7.2 dollars per million British Thermal Unit (MBTU), with a three per cent annual escalation.

India wants to import 90 million standard cubic meters of gas per day from Iran through the 2,100-km long pipeline while Pakistan has indicated a requirement of up to 60 MMSCMD.

Besides the Brent linkage, the Iranian formula does not prescribe a floor and ceiling for the gas price. ''New Delhi was opposed to both linkage with Brent crude oil and absence of floor and ceiling,'' a government official said.

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