ISLAMABAD, Jan 7: Pakistan and Iran will sign a gas sales and purchase agreement (GSPA) for their cross-border pipeline project next week, following a clearance by the Economic Coordination Committee (ECC) on Tuesday, the caretaker minister for petroleum and natural resources, Ahsanullah Khan, said at a news conference on Monday.

He said the gas price finalised for the project, on the basis of the Japan Crude Cocktail (JCC), would be 40 per cent less than the current furnace oil prices and cut the oil import bill by about one billion dollars.

He said three options for pipeline diameter were currently under consideration — 36 inches, 42 inches and 56 inches — and would depend on India’s decision to join the project or otherwise.

Mr Ahsanullah said Pakistan would welcome Indian participation in the project at any stage, but clarified that New Delhi had not given “clear response” so far.

In reply to a question, Mr Ahsanullah said the implementation agreement for the project would be an inter-governmental sort of agreement and would be signed soon by the heads of states.

A statement distributed to the media said one of the “undesirable” dimensions of the recent energy crisis, particularly regarding gas, had surfaced due to signing of contracts by Wapda with rental power stations for gas supply on a round-the-year basis without any authorisation, although gas allocation was available for nine months only.

Mr Ahsanullah said after gas disconnection, these power plants had to be shut down, aggravating the power crisis.

He said the overall gap between supply and demand stood around 25 per cent, or about one billion cubic feet, against a production of 3.90 BCF. The domestic gas consumption had increased by 60 per cent this year.

The overall loss to the oil and gas sector due to three days of violence was to the tune of Rs 1 billion, the minister said.

Mr Ahsanullah said given supply constraints, gas companies had been signing contracts with industrial consumers on a nine-month basis while gas for “captive power producers” was provided on the basis of availability.

He said the gas supply to these consumers remained disconnected during winter and hence all such consumers had to make alternative arrangements.

He said gas companies had made a number of measures, outside their contractual obligations, to ease electricity shortages that also included diversion of additional gas quantities.

The petroleum secretary said that most of the exploration and production companies operating in Pakistan, almost 70 per cent of whom hailed from China, had been affected by the law and order situation.