NEW DELHI, June 27: India and Pakistan on Wednesday began a final round of discussions to resolve differences on the $7.4 billion Iran-Pakistan-India gas pipeline before the three nations sign a deal next month.

Pakistan has been demanding a transit fee for the whole stretch of the pipeline from Iran to the Indian border. But India feels that since Pakistan will also use the pipeline, it should only pay for the extension of the project to its border.

Petroleum Secretary M.S. Srinivasan and his Pakistani counterpart Ahmad Waqar led discussions on the rates to be paid to Islamabad. They will be joined by Iranian special envoy Hojjatollah Ghanimifard on Thursday to finalise details that would pave the way for a tri-nation ministerial-level meeting in the second half of July.

The proposed pipeline will initially carry 60 million cubic metres of gas, split equally between Pakistan and India. The delivery point will be at the Iran-Pakistan border but India is yet to finalise the contract for the transportation costs and the transit fee with Pakistan.

Press Trust of India said Pakistan was seeking a transportation tariff of 0.70-0.75 dollars per million British thermal unit (mBtu) while New Delhi was willing to pay no more than 0.55 per mBtu (220 million dollars annually). On transit fee, Islamabad is seeking 0.493 dollars per mBtu while New Delhi has offered 0.20 dollars per mBtu.

The trilateral talks on Thursday would focus on changes sought by Iran in the gas pricing. Tehran wanted the price formula for the gas revised every three years, instead of the previously agreed periodicity of seven years, PTI said. New Delhi and Islamabad have agreed to Iranian formula of selling natural gas at 4.93 dollars per mBtu.

The negotiations on the pipeline are significant for India as the United States has sought to link up its landmark civil nuclear deal with New Delhi’s position on the Iranian nuclear programme. Washington has opposed the pipeline project, fearing the income from it may be used by Tehran to fund its alleged nuclear weapons programme.

The 2,300km long project, also called the ‘peace pipeline’, will lean on Iran’s resources which has the world’s second-largest gas reserves after Russia.