One indication of how the project has helped improve relations between India and Pakistan is the manner in which the two countries have been bargaining for a better price with Iran.

SHAMIM AHMED RIZVI, Bureau Chief, Islamabad
May 21 - 27, 2007

To the pleasant surprise of all concerned, the World Bank has termed Iran-Pakistan-India (IPI) gas pipeline project as feasible and indicated its willingness to finance the $ 7.2 billion project. This was revealed by no less a person than the Vice President of the World Bank, while talking informally to a group of journalists in Islamabad last week. This appeared to be a dramatic development specially in view of the public announcement by the US Charge d'Affairs in Islamabad a week earlier that US government was opposed to and would continue its opposition to IPI gas pipeline project. The US official based in Islamabad, Peter W. Bodde, made this unsolicited announcement while speaking at the 4th annual Fulbright Alumni Conference at Quaid-e-Azam University on April 28. He stressed that Pakistan, instead of focusing on the gas pipeline from Iran, should try to develop alternate sources of energy.

He said: "We would continue IPI pipeline's opposition and Pakistan should lay more focus on finding means for alternate energy resources such as from coal or wind or solar energy". He said with these alternate energy resources, Pakistan can conserve energy by 20 percent and increase energy production. The US would continue its cooperation with Pakistan in this regard.

Talking to newsmen in Islamabad Vice President World Bank Pareful Patel said that although the bank has not been approached by any country in this regard, the World Bank is ready to fund the proposed $ 7.2 billion Iran-Pakistan-India (IPI) gas pipeline project. He said the IPI gas pipeline project is good and quite feasible and would help cater to the energy needs of Pakistan and India. He said the bank also supports the Turkmenistan-Afghanistan-Pakistan (TAP) gas pipeline project.

"If Pakistan would come to ask for funding for any of the pipelines, the World Bank would seriously consider extending the funding," he said, adding that in case of materialization of IPI gas pipeline, Pakistan would also get the transit fee annually from India, which would play a pivotal role in strengthening its economy. Patel said that IPI gas pipeline line project is a win-win situation for Pakistan and India.

During his meeting with Iranian President Ahmed Nejad in Tehran in March in connection with his Middle East peace initiative, President General Musharraf availed the opportunity to discuss the IPI project. Both the leaders agreed that, after having reached an agreement on pricing formula, work should start on the proposed project on top priority basis.

After protected negotiations, an understanding was reached at the experts-level on the gas-pricing formula for the purchase of Iranian gas by Pakistan and India in the tripartite talks, which concluded in Tehran last month. The three sides also agreed to give response within a month to the price formula, indicating the urgency with which they want to move ahead in this regard.

The understanding on price is a major breakthrough towards finalizing the gas pipeline project for which talks were initiated as far back as in 1994. Once the formal agreement on pricing formula is reached, Pakistan and India are expected to work out the transit fee for a pipeline passing through Balochistan and Multan into India. This will yield substantial earnings for Islamabad, apart from meeting the rising energy needs of the two South Asian countries.

The proposed Iran-Pakistan-India (IPI) gas pipeline will have a length of 2,700 kilometers and is expected to transport 150 million cubic meters of gas per day for 25 years from Iran's southern Paras fields to India from 2009-10 onwards. Pakistan would receive 60 million standard cubic meters of gas a day from the same source. Termed as a peace pipeline, the IPI project aims at helping the two energy-starved South Asian countries meet their growing energy needs. Pakistan will also earn up to $ 700 million a year in transit fees from India.

The IPI project was originally estimated to cost seven billion dollars which were to be shared in terms of business and employment by the three countries. The chances of launching the project further brightened by the interest shown by the Russians in this giant enterprise. Russia, which is politically close to both India and Iran, is the world's largest producer of gas on which the Europeans are significantly dependent for their needs. Whatever the form of Russian participation which has not been spelt out yet, it would attract global financiers and gas companies.

For Pakistan, which is already using natural gas as a major source of energy, the fact that its reserves are now depleting makes it important to look for alternate sources. In this regard, the fact that no significant natural gas discovery has been made in the past couple of years points to the need to come up with some external solutions, one of which is the import of gas from Iran through the IPI pipeline. Pakistan will also earn a transit fee from India as part of this pipeline project. For India, the pipeline will bring energy to the industry-rich states of Punjab, Gugrat and Rajasthan, where there is a growing demand for power and fuel. The IPI pipeline will also play the part of strengthening relations between India and Pakistan, as the safety of the pipeline will be in the interest of both the countries. One indication of how the project has helped improve relations between India and Pakistan is the manner in which the two countries have been bargaining for a better price with Iran. The joint strategy seems to have finally paid dividend.

Prime Minister Shaukat Aziz, who visited India, last month also held discussion with his Indian counterpart Manmohan Singh, and both of them resolved to expedite the work on the IPI project.

After these meetings at the highest level in Tehran and New Delhi, the Secretary Ministry of Petroleum told newsmen in Islamabad last month that Iran-Pakistan-India gas pipeline would be operational by 2012. All these developments, specially the World Bank's offer, are rereassuring that the project will eventually see the light of the day.