ISLAMABAD, Aug 21: Pakistan, Iran and India are expected to start trilateral negotiations for the proposed $7.2 billion Iran-Pakistan-India (IPI) gas pipeline by October-November this year.

Informed sources told Dawn that the three countries had agreed to enter into trilateral discussions on the project to minimize negotiation time so that work on the project could start by April 2006.

The sources said India had earlier suggested three sets of bilateral negotiations but this was not considered viable.

Pakistan has already offered transit facility for Iranian piped gas to India subject to a negotiable fee. This is the only issue where Pakistan has made an ‘unbundled offer’ for negotiations without linking it to the progress on the issue of Jammu and Kashmir.

Pakistan, the sources said, had conveyed to Iran and India that it was ready to enter into trilateral negotiations by October this year, although a final decision on a gas import option would be taken by December.

However, India has told Iran that it could start trilateral discussions on the project by November. By that time, India expects a report from its consultants on transaction structure, related risks and risk mitigation measures, the sources said.

On the basis of the report, India would take a final decision whether to join the multi-billion dollar project, although it had already indicated its willingness to take part in any of the three proposed pipelines — from Iran, Qatar and Turkmenistan.

The sources said India’s priority was to be only a gas buyer without sharing any responsibility of the project execution, but it was also ready to encourage Indian companies to become part of the project consortium if such an option promised any economic benefit.

Pakistan, the sources said, had also agreed to allow Iran to keep the overall proprietorship of the project except of the land in its territory that would be used for laying the pipeline for taking Iranian gas to India.

The three countries have yet to decide whether to firm up separate consortiums for the 2,670-km pipeline in their respective territories or a joint consortium.

The estimated $7.2 billion pipeline is to run about 1115 km in Iran, 705 km in Pakistan and 850 km in India.

In Pakistan, the Interstate Gas Company Limited (IGCL) which has been assigned the task of gas import pipelines is well placed to raise about $2 billion from the surplus liquidity available with the local banking sector against government guarantees.

India, the sources said, was now convinced that it needed a gas import plan for its western regions like Haryana, Delhi and up to Uttar Pradesh because transportation of liquefied natural gas from Qatar and Iran through its southern regions would not be economically feasible.

The sources said that while Pakistan would start facing real gas shortages by 2010, India was already facing the problem in its western region. Its total shortage is being estimated to increase to up to three TCF in the coming years.