Ahead of President Asif Ali Zardari’s visit to Iran, a two-day long bilateral talk on the import of Liquefied Petroleum Gas (LPG) from Iran to Pakistan and construction of oil refinery at Gwadar is scheduled to start Monday (today).

High-ups from both sides of the petroleum ministries will participate in the said important talks scheduled to kick off Monday with an aim to step forward to finalise strategically important deals which in result would reduce energy woes in energy-starved Pakistan, a senior official of Pakistan’s petroleum ministry said on Sunday.

He said last week Iran had offered Pakistan to sell LPG at a discount of 30 dollars per ton during the visit of Iranian Petroleum Minister Rostam Ghasemi to Pakistan. Rostam Ghasemi during his visit called off President, Prime Minister of Pakistan and Adviser to Prime Minister on petroleum & natural resources Dr Asim Hussain.Initially, both sides agreed that at first stage Iran would provide 10,000 tonnes each day LPG to Pakistan at a rate of $30 per ton while the quantity will go up with the passage of time. Iranian LPG will be imported to Pakistan via road, the official added.

A Pakistani delegation, comprising official of petroleum ministry led by DG Gas Sher Khan, has already reached Tehran to materialise the deal and it is also likely that a Memorandum of Understanding (MoU) would be signed on February 27 during the expected visit of President of Pakistan Asif Ali Zardari to Iran. “Different MoUs including installation of oil refinery at Gwadar having refining capacity of 4-lac barrel per day, import of LPG and furnace oil etc are expected to be signed during Zardari’s Iran visit”, official sources said, adding, “Talks on Peace Pipeline (Iran-Pakistan (IP) gas pipeline project) are near to bore fruits.”

So far both sides withstood tremendous pressure from US but did not get deterred to back off from their stance. The two sides finally agreed to sign what many duly believe is a monumental agreement. The agreement between both brethren states would be functional for 20 years and there would be a five-year extension. Tadbir Energy has already shown its agreement to construct pipeline inside Pakistan. The IP gasline project that will be completed by December 2014 will first bring 750 million cubic feet gas per day through 781-kilometre-long pipeline with a diameter of 42 inches, and later on, the gas flow will increase to 1 billion cubic feet per day.

It merits mentioning here that two states (Iran-Pakistan) are determined to make the pipe dream a reality as both have expressed their affirmation with regard to bringing Iranian gas to Pakistan despite persistent US pressure to stop the project. Both sides have already settled all technical issues while price of Iranian gas including few other legal points of the agreement pertaining laying of 781 km long gasline on Pakistani side are yet to be resolved. However, both Iran and Pakistan are so far determined to proceed with the implementation of a pipeline project carrying Iranian gas to Pakistan by December 2014 and a break through is possible during President Asif Ali Zardari’s visit to Iran.

Earlier, crucial talks between Iranian Tadbir Energy and Pakistan Inter State Gas System (ISGS) on $1.5 billion IP gasline was deferred due to Pakistan’s demand to reduce gas price for Iran-Pakistan gas pipeline to bring it at par with the rates finalised in Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline project. Besides, the Inter-State Gas Systems and the Iranian firm had already reached on a unanimous consensus that state-owned SSGCL and SNGPL would initiate mechanical works while the FWO, a subsidiary of the armed forces, would carry out civil works of the project while laying the pipeline from Gabd to Nawabshah inside Pakistan.

Cost of installing gas pipeline on a single kilometre and the interest rate have already been settled on fourth day of last week’s talks. The cost would stand at Rs190 milion and the interest rate 3 per cent on $500 million loan. Iran had demanded four per cent interest rate on $500 million loan and Pakistan had bargained for three per cent interest rate over the committed loan.