More on the IPI pipeline

In yet another setback to India’s participation in the IPI ‘peace’ pipeline, Islamabad has conveyed to Iran that it won’t cough up any penalty in the event of a disruption in supply of gas to India. The penalty clause had been weaved into the deal between Iran and Pakistan by Tehran to ensure India’s participation in the project by addressing its concerns over security issues. Official sources said that New Delhi was all along aware of what Pakistan has intimated to Iran only now and that this was one of the concerns which prevented India from joining the $7.6 billion pipeline. India had earlier conveyed its reservations to Tehran about the likely Pakistani stand in the event of a war or any other act of hostility after which Iran took up the issue with Islamabad. While Islamabad has agreed to provide security for the 2,700-km pipeline, it has said that it won’t shoulder the responsibility of ensuring uninterrupted supply to India. Apart from the differences over the pricing issue, New Delhi has also insisted that the delivery point for India should be as close to the Indo-Pak border as possible. Pakistan media recently quoted official sources to say that Pakistan cannot pay for any disruption of supply to India as Pakistan’s own security was threatened by India itself. In the past, Pakistan leaders have openly exhorted China to join the peace pipeline in the event of India withdrawing. ‘‘India has insisted on a contractual arrangement with Iran which would ensure that it pays only for the amount of gas which it receives. In case, there is any disruption in supply to India on Pakistan territory, Iran is also going to suffer. So, it was natural for Iran to have asked Pakistan to include the penalty clause for the pipeline to India,’’ said an official. With India failing to join in, Iran and Pakistan decided to go ahead with the project on their own but left a window open for India. Iran itself had wanted changes in the Gas Sales and Purchase Agreement (GSPA) to save itself the trouble of having to pay penalty in case of non-supply of natural gas due to armed conflict. India, however, has maintained that Iran must make alternative arrangements for supply of LNG to make up for any disruption.