TAPI: India, Afghanistan Fail to Agree on Transit Fee

• Category: Afghanistan, Turkmenistan
ISLAMABAD (The Hindu) – India and Afghanistan have failed to agree on transit fee for gas passing through Afghan territory under the $7.6-billion 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.
TAPI route map

If TAPI project goes ahead successfully, it could be Afghanistan’s largest development project. Transit revenue could amount to US $300 million per year. That would represent about ⅓ of the domestic revenue ($887 million in 2008/09) budgeted for development efforts. However, last week, official sources in the Afghan government said Pakistan has presented a number of conditions to Kabul and Washington in order to implement the pipeline. The TAPI gas pipeline project is believed to have suffered negative impacts due to political issues between Washington, Iran and Pakistan. Presentation of conditions for TAPI project by Islamabad comes amid recent reports suggesting Iran’s efforts to interfere in TAPI gas pipeline project and pave the way for selling its natural gas to Pakistan and India. Pakistan and India last month purchased gas from Iran without considering the requests by Washington to prevent gas deal with Iran.

Technical teams of Afghanistan, India and Pakistan held talks for two days in Islamabad.

Pakistan’s Petroleum Secretary, Mr Ejaz Chaudhry, was quoted by The News daily as saying that the parleys had ended inconclusively yesterday. 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 fee, 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. Mr Chaudhry said Afghanistan had demanded 54 ¢ 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 ¢ per mmbtu and India responded with an offer of 47 ¢, 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 38.7 million m³ of gas per day at a price equivalent to about 70% of the Brent crude oil price. India too will get 38.7 million m³ and Afghanistan 14.2 million m³ of gas per day.

Pakistan’s Economic Coordination Committee of the Cabinet had 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.