Islamabad is yet to approve a proposal of the Iranian government regarding issuance of letter of comfort (LoC) for transit of its gas to any third country including India, sources in the Petroleum Ministry told Business Recorder.
Pakistan has already welcomed Chinese interest in the project and letter of comfort to a third country was primarily aimed at facilitating China to join the multi-billion dollar Iran-Pakistan-India project. India has not participated in the project negotiations since June 2007, however, it is continuously showing interest while Iran desires that doors for New Delhi to join the project at a later stage may be kept open, the sources added. The source said, Pakistan and Iran would sign the Inter-Government Framework Declaration (IGFD) after the Cabinet approves.
They said that IGFD would be signed by President Pervez Musharraf and his Iranian counterpart Mahmoud Ahmadinejad or their nominated representatives in the presence of both the heads of states at an appropriate time. The joint working group of both countries had consented upon the major terms and conditions of the project including gas pricing, Gas Sale and Purchase Agreement (GSPA), project structure, pipeline route, delivery points in the Iranian borders, transit issues if Indian gas passes through Pak territory and IGFD.
The Economic Co-ordination Committee of the Cabinet in its meeting in April 2007 had approved gas price formula in principle and also decided to constitute a sub-committee/steering committee to oversee day-to-day progress on the project for its speedy implementation. The joint working group and the petroleum ministry, under the guidance of the sub-committee of the ECC concluded and initialled GSPA, IGFD and letter of comfort of GoP on transit of Iranian gas.
The GSPA being a commercial agreement between commercial entities on both sides would be signed between Inter-State Gas Systems (ISGS) from Pakistan and National Iranian Oil Company (NIOC) as the ECC has already cleared the document. However, IGFD and letter of comfort require prior clearance of the Cabinet being the supreme body.
Regarding IGFD, the sources said Pakistan considers gas import from Iran a transitional transaction. It, therefore, should have full support and backing of both the governments by signing an IGFD.
An agreed draft of the IGFD which manifests full backing of governments towards implementation of the GSPA was being placed before the Cabinet in its meeting on Saturday, February 16, the sources said, adding that the proposed draft has already been approved by the ministries of foreign affairs and law.
The sources said GoP''s draft letter of comfort on transit of Iranian gas has been prepared by a legal counsel of international repute and was reviewed by the ministry of law and foreign affairs as well.