India-Afghan fail to agree on TAPI project transit fee

Islamabad: India and Afghanistan failed to agree on transit fee for gas passing through Afghan territory under the $7.6 bn Turkmenistan-Afghanistan-Pakistan- India (TAPI) pipeline project, officials said today.

Consequently, Islamabad and New Delhi too could not agree on the transit fee for the segment of the pipeline passing through Pakistan, which has linked its fee structure to any India-Afghanistan agreement. Technical teams of Afghanistan, India and Pakistan held talks for two days in Islamabad.

Pakistan`s Petroleum Secretary Ejaz Chaudhry was quoted by The News daily as saying that the parleys had ended inconclusively on Tuesday. However, Indian officials told PTI that the talks were held in a positive atmosphere and there was considerable progress on all major issues.

The three countries were trying to settle their differences on the issue of transit fees, the officials said. Afghanistan will charge Pakistan and India a transit fee for gas passing through the pipeline from Turkmenistan and Pakistan will charge India the same amount as the Afghan side.

Chaudhry said Afghanistan had demanded 54 cents per MMBTU (million British Thermal Unit) as the transit fee but this was rejected by India. Subsequently, the Afghan side made a demand of 50 cents per MMBTU and India responded with an offer of 47 cents, he said.

The difference between the two sides was just three cents per MMBTU and could be settled if there was political support from the Indian and Afghan leadership and a push from the US, which is supporting the project, the Dawn quoted its sources as saying.
The three countries agreed to hold another round of talks and if they again fail to reach an accord, a pipeline steering committee led by the Asian Development Bank will play the role of mediator.

The committee is set to meet in Turkmenistan`s capital Ashgabat on May 6. Pakistan has cleared the formal signing of a gas sales and purchase agreement (GSPA) with Turkmenistan. The pact is expected to be signed by Turkmengaz and Interstate Gas Company in the first week of May.

Under the agreement, Turkmenistan will supply Pakistan 1.3 billion cubic feet of gas a day (bcfd) at a price equivalent to about 70 per cent of the Brent Crude Oil price. India too will get 1.3 bcfd and Afghanistan 0.5 bcfd. The 1,640-km TAPI pipeline is expected to bring gas to energy-starved Pakistan by December 2016 if a credible security apparatus is put in place in war-torn Afghanistan.

Pakistan`s Economic Coordination Committee of the Cabinet constituted a committee last week to analyse the cost of risk sharing for gas transportation through Afghanistan and the overall cost of the project inside Pakistan.

The pricing formula finalised by India, Pakistan and Turkmenistan was based on common principles but the base price for India and Pakistan is different. In view of the security situation in Afghanistan and its reluctance to bear the risks involved, Turkmenistan and Pakistan agreed to share the risk with an upper and lower limit of risk costs.