All energy routes run through Islamabad/In typical banya mode, India is palying hardball on the Pipeline tariff rates.

IPI Gas aint free. Deal or no Deal. India’s hardball tactics fail

1) Pakistan should call a time-out on negotiations with India and forget about transit fees

2) Sign an agreement with Iran

3) Buy gas from Iran and then sell it to India if she wants gas

Indians want the gas for free. India playing hardball on Transit fees.They want a fixed pirce and want to pay only 30 cents MMBTU. Pakistan should be asking for a transit fee of $1 Billion @2.50 MMBTU. We think 30c adds up to about $200 million which is ridiclous and shoudl not be entertained.

They wanted to dictate the price. For Pakistan this is a business, and commercial interests dictate that Pakistan get about $1 Billion in transit fees which is tied in to the price of gas. Anything else is not worth investing in. The expenses for Pakistan for maintaining the pipeline will be milions of Dollars. Surely the petroleum industry in Pakistan does not want any headaches by giving away the gas free to India without any reciprocal deal.

India also has a way of wrigling out of signed agreements. Case in point the Indus Water agreement which was indeed bad for Pakistan and good for India. Ayub Khan negotiated away two rivers to India hoping that India would keep its part of the bargina and not reduce the waters from the other three rivers. The exact opposite has happened. India is not putting dams on the other rivers also–trying to starve Pakistan.

Now the shoe is ont he other foot. Pakistan is in a strong position to bargain on the price of gas. This strong position cannot and should not be be diluted away.

Perhaps India has realized this about Pipelinistan: All energy routes lead through Islamabad. India is stuck on its untenable position that Pakistan does not deserve any fee becuase the pipeline is also used by Pakistan. Additionally India wanted a pay the paltry sum of about $200 million for the fees forever. These negotiating tactics show the non-seriousness of the negotiators who “want something for nothing”. Obviously Pakistan has choices and India is not the only option. If Paksitan gets only $200 million as transit fees, then providing energy to India may not economically feasible for Pakistan and India should be dropped from the IPI project. China is very interested inthe IPI as well as the TAPI projects. Therefore the IPI can be transformed into the IPC and the TAPI can easly be connected to China as the TIPC project which avoids both India and its clients in Kabul.

When they called it the peace Pipeline, India’s RAW must have felt the blow. Now instead of blowing up pipelines in Pakistan, will RAW will be working to keep it safe?

This means that RAW sponsored the BLA and the BLF just ran out of luck. The day the IPI agreement is signed the BLA becomes the biggest loser, as it is about ready to lose its biggest benefactor–India.

It will be Khalistan in reverse. Pretty soon, the BLA guys will he left hanging out to dry–or hanging from the nearest tree.

Not only the BLA but the Baluch Sardars will also protect the pipeline because it will be profitable for them to keep the gas flowing to India.

India is a participant in the $7 Billion investment and is hungry for gas. It has come a full circle. For years it would not accept a pipeline through Pakistan. It wanted an under water pipeline from Qatar or Saudi Arabia to be constructed to India.

Pakistan has been working for more than a decade for the TAPI Pipeline. Turkmenistan-Afghanistan-Pakistan-India Pipeline.

With oil prices skyrocketing, India’s thirst for cheaper imported gas has acquired a greater urgency than ever before, considering what the Hindustan Times has termed as the growing “supply-demand mismatch” reflected in the recent news that “as against an overall requirement of 77 million standard cubic meters per day (mmscmd) of gas between April 2007 and January 2008, only 37 mmscmd was supplied”

The Indians consider themselves to the best bargainers in the world. This can be seen at every Sabzi Mandi around the planet when the Indians are buying Okra. They pick each and every lady finger and try to break the tail to see if it is fresh. Pakistanis reach in and grab a fist full of Okra.

Indians have made some hard bargains recently–specially with the Russians. On the Aircraft carrier the Russians were able to reverse the low price and add 1.5 Billion Dollars to the original price.

On the IPI pipeline the Indians are trying to reduce the price of the tariff to less than $250 million whereas Pakistan had originally expected $1 Billion. To make the deal work and make the Indians part of the IPI deal Pakistan was ready to agree to a lower price. The Indians playing hardball decided to stay away from some of the meetings. Now they are back to the discussion table and expect to browbeat the Pakistanis on the price.

Iran to mediate to end IPI gas pipeline transit fee deadlock* 4-member committee formed by Iranian president to resolve matter within 45 days
* Pakistan rejects Indian demand of fixed rates By Zafar Bhutta

ISLAMABAD: Iran is to mediate between Pakistan and India to end the deadlock on the issue of transit fees over the billion dollar Iran-Pakistan-India (IPI) gas pipeline deal, sources in the Petroleum Ministry told Daily Times on Tuesday.

The sources said that Iranian President Mahmoud Ahmadinejad has constituted a 4-member committee comprising of respective ministries’ officials to hold talks with Pakistan and India on the transit fee issue, and that the Iranian president has given a 45-day time frame to the committee to settle the issue of gas transit fee between Pakistan and India, and submit a report to him.

They said that Pakistan and Iran were set to sign a gas sales purchase agreement (GSPA) on the IPI gas pipeline deal by May 31, 2008, but Pakistan and Iran would now sign GSPA after the 45-day deadline.

He said that Pakistan and India could also sign the gas transit fee agreement when GSPA would be signed between Iran and Pakistan.

Then Pakistani Petroleum Minister Khawaja Muhammad Asif and Indian Petroleum Minister Murli Durao had announced on April 26 in a joint press conference that the gas transit fee on IPI gas pipeline project would be addressed within next 10 days but no progress on the fee issue has been made as yet.

The sources claimed that India had offered a gas transit fee of 15 cents per million British thermal units (MMBTU) whereas Pakistan had demanded 60 cents per MMBTU as per international standards during bilateral dialogue between Pakistan and India on April 25 over the issue.

They said that India had agreed during the discussion to pay 30 cents per MMBTU as a transit fee.

They said that the Indian delegation had assured the Pakistani authorities to seek approval from its competent authority and convey the decision to Pakistan in a week’s time, but Pakistan has not received a response from the India so far. The committee formed by the Iranian president will resolve the issue now, sources added.

Fix transit fee: The sources said that India also wants Pakistan to charge a fixed transit fee for the project for lifetime. However, Pakistan has turned down the demand, and is of the view that determination of the transit fee mechanism should be based on gas sales price revision, as international standards require.

They also noted that transportation charges would be determined after the finalisation of the feasibility report on the gas pipeline in Pakistan and a company would be set up to implement the project, as well as arrange the security according to the mutually agreed framework. Pakistan and Iran have finalised the draft of GSPA, which contains the revision of gas price, and therefore Pakistan believes that gas transit fee should be based on gas price revision, sources added.