Monday, July 11 2005 16:37 Hrs (IST) - World Time -

New Delhi: India and Pakistan will tomorrow (July 12, 2005) discuss financing of the $4.1-billion Iran-Pakistan- India gas pipeline project, the transit fee that Islamabad will charge for allowing the passage of the pipeline to India and security issues.

Pakistan's Oil Secretary Ahmed Waqar will meet Petroleum Minister Mani Shankar Aiyar at the beginning of the Joint Working Group meeting, which will look at options of financing the project in the backdrop of US sanctions against Iran.

Last week, Pakistan and Iran had signed a Memorandum of Understanding for the implementation of the 2600-km project.

New Delhi will also flag-off the issue of transit fee payable to Pakistan besides the legal framework required for the project, technical parameters, security cover and steps to be taken for safe delivery of gas, a top official said.

Also to figure during the two-day discussions would be the quantity of gas to be imported by India and Pakistan, delivered price of gas, terms of supply and the commercial arrangement, he said adding the two sides may also talk of the indicative gas price through Turkmenistan-Afghanistan-Pakistan pipeline and its possible extension to India.

The technical issues to be discussed include the pipeline route, off-take and landfall points at the Iran-Pakistan and Indo-Pakistan borders.

Technical parameters for safe operation, common standards for the design, construction and operation of the pipeline, certification of gas reserves and statutory approvals required in Pakistan for construction and operation of pipeline will also be discussed at the meeting.

The JWG would also discuss the inter-government guarantee and role of each state - Iran, Pakistan and India - their responsibility and duties.

The official said the Indian side will also re-confirm to Pakistan that beyond the Indo-Pak border, the title and risk of gas will get transferred to Indian firms and no trilateral or bilateral arrangement will be in operation at this stage.

The JWG will also discuss a common term sheet for India and Pakistan for purchase of gas from National Iranian Gas Export Co (NIGEC).

New Delhi wants NIGEC backed by its parent state-run National Iranian Oil Co guarnatee for the project.

The JWG would also deliberate on lead promoter for the gas transport company and the extent of equity participation by Indian and Pakistani firms in this company, the debt/equity options, role of BHP Billiton in the project and devising a strategy for participation by Indian and Pakistani companies in upstream projects under a buy-back contract.

The issue of taxes and duties payable -- during pipeline construction and its subsequent operation -- would also be discussed at the first JWG meet.

Also on the list is risk analysis and prevention, dispute resolution and arbitration including the venue and governing law of arbitration.