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Zardari to request Ahmadinejad to lower IPI gas price - LahoreEstate - 03-07-2009 10:34 AM
ISLAMABAD: President Zardari will make a special request to his Iranian counterpart, Mahmoud Ahmadinejad, to lower the demanded price of gas from the $7.6billion Iran-Pakistan-India (IPI) pipeline project when he will visit Tehran on March 10, sources told Dawn.
The Iranian authorities have given a March 19 deadline to Pakistan to agree to price of gas. Iran has been demanding 78 per cent of the international crude oil price, which is considered too expensive to be accepted by Pakistan.
Sources in the Ministry of Petroleum said President Zardari, who will be accompanied by Advisor to Prime Minister on Petroleum and Natural Resources Dr Asim Hussain and Foreign Minister Shah Mehmood Queshi, will seek special concessions in the gas purchase agreement which Iran has proposed and so far is strictly pursuing, directly from Ahmadinejad.
They said the president will request his Iranian counterpart to bring down gas price from current levels to 68-70 per cent of the international crude oil price. Sources said the Iranian president will also be told that even at this price Pakistan’s domestic and industrial would not be able to afford this expensive gas.
Pakistan’s share in the IPI project will be around 1.05 billion cubic feet per day which the government plans to use for the generation of 5000 megawatts (MW) of electricity to ease the current energy crisis. Officials of the Ministry of Petroleum believe that despite being costly, the Iranian gas would still remain a cheaper option with Pakistan for power generation keeping in view the high cost of electricity generation through furnace oil.
Presently, officials say, some 48 per cent of Pakistan’s thermal power generation is based on furnace oil of which 62 per cent was imported that cost over $2billion to the national exchequer only during the last financial year (2007-08).
Compared to imported furnace oil, imported gas is still a better and cheaper option available with Pakistan.
Officials of the Ministry of Petroleum said that imported natural gas, even at Iran’s latest price offer, remained economically the most feasible option as compared to other imported fuel such as furnace oil, liquefied natural gas (LNG) and coal.
Perhaps, this was the sole reason that on January 15 this year, a steering committee of Pakistan gave a new lease of life to the endangered project by deciding to pursue a fresh round of negotiation with Iran to resolve differences over gas price.
It was believed that the project would be shelved that month as differences over the sale purchase agreement formula of gas from the project had aggravated between Iran and Pakistan.
On Jan 26, the Senate Standing Committee on Petroleum had asked Tehran to show flexibility and resolve the deadlock over the price formula.
http://www.dawn.com/wps/wcm/connect/Dawn%20Content%20Library/dawn/news/business/zardari-to-request-ahmadinejad-to-lower-ipi-gas-price--il