ISLAMABAD, April 28: Pakistan and Iran on Monday cleared way for the signing of the $7.5 billion Iran-Pakistan-India (IPI) gas pipeline agreement after removing the hitches that had stalled the accord.

The progress was achieved at a meeting between President Pervez Musharraf and his Iranian counterpart Dr Mahmoud Ahmadinejad who made a brief stopover here on way to Sri Lanka on the first leg of his South Asian trip that will also take him to India.

This was President Ahmadinejad’s first visit to Pakistan. He was also the first head of a foreign state to visit Pakistan after the formation of the new government.

“Both the presidents decided that the agreement over Iran-Pakistan-India gas pipeline project that was termed friendship pipeline will be signed soon,” the Foreign Office said in a statement.

Diplomatic observers, however, said several contentious issues remained to be addressed.

The foreign ministers of the two countries will decide a date for the signing of the agreement after a meeting between their petroleum ministers.

The agreement will be one of three accords to be signed in connection with the project.

Talks on the pipeline proposed by Iran in the early 1990s remained inconclusive all these years because of differences between the three countries over tariff, transit fee and security issues.

Last week, a major breakthrough was achieved when India returned to the talks after about a year and sorted out its differences with Pakistan on transit fee.

Pakistan and Iran stressed that the project would help promote peace and friendship between the two countries.

Dr Ahmadinejad supported Pakistan’s initiative for including China in the project, saying it would be beneficial for all the countries and promote regional cooperation.

Officials described the hour-long meeting between the two presidents useful. They said the talks also covered subjects other than the project, including regional and global issues of mutual interest.

President Musharraf and President Ahmadinejad had half an hour of one-to-one talks and were later joined by aides.

The Iranian president agreed to provide more electricity to Pakistan to meet its energy deficit that has grown to 3,000 megawatts a day. Iran would supply 1,100 MW daily to Pakistan.

A power supply accord will be worked out by power ministers of the two countries and the Iranian energy minister will soon visit Pakistan.

“The two presidents agreed on creation of an enabling environment to counter terrorism more effectively,” the Foreign Office said.

The two leaders agreed that peace and security in Afghanistan was vital for the progress and prosperity of the region.

They said trilateral talks among the foreign ministers of Pakistan, Afghanistan and Iran were extremely useful for regional peace.

It was agreed that the mechanism of the Joint Investment Company and the Preferential Trade Agreement between the two countries should be fully utilised for achieving the $1 billion target for bilateral trade.

President Musharraf assured Iran of Pakistan’s support to its right to have nuclear technology for peaceful purposes.

Later, Prime Minister Yusuf Raza Gilani hosted a lunch in honour of the Iranian president.

Talking to President Ahmadinejad, Mr Gilani called for strengthening economic and trade ties between the two countries.

He said the pipeline agreement would add a new dynamic to cooperation between Pakistan and Iran in the energy sector.

The prime minister sought Iran’s support for his efforts to meet the food security challenge.

President Ahmadinejad invited President Musharraf and Prime Minister Gilani to visit Iran.