India seeks payment guarantee from Pakistan to sign gas pact

GAIL plans to initially supply 5 mscmd gas to Pakistan, through a 110km pipeline from Jalandhar to the international border near Atari

India has sought from Pakistan sovereign payment guarantees, before it can sign a contract to export natural gas through a pipeline from Punjab.

State-owned gas utility GAIL India Ltd plans to initially supply gas at 5 million standard cubic metres per day to Pakistan through a 110-km pipeline from Jalandhar to the international border near Attari.

But before GAIL enters into a gas supply contract with a Pakistani firm, New Delhi wants Pakistan to provide payment guarantees, sources privy to the negotiations said.

Five rounds of negotiations have been held between the two sides and it has been found technically feasible to export gas from Punjab into Lahore.

Besides sovereign guarantees, India wants sureties for three months payment and advance termination commitments, they said.

GAIL plans to import gas in its liquid form, called liquefied natural gas (LNG), at a port in Gujarat or Maharashtra.

After converting this again into gaseous state, it is proposed to transport the gas through cross-country pipeline network to Jalandhar, from where it would be transported across the border.

Pakistan wants to import gas from India to meet its rising energy deficit. Initially, it wants to take 1-1.5 million tonnes of LNG (5 mmscmd).

This can run a power plant of up to 1,200 MW.

Pakistan faces huge power deficits and its electricity generation capacity at about 20,000 MW is less than India's generation capacity from renewable energy sources like wind.

Sources said pipeline exports to Pakistan are being looked upon as a mode for testing viability of an energy pact with the neighbouring nation, as a precursor to India importing gas through Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline.

If this system of payments and guarantees works, then imports through the TAPI pipeline could be feasible.

Sources said the delivered price of gas will be up to $22.3 per million British thermal unit, after including transportation charges and all taxes and duties.

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