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In an effort to boost bilateral ties, India and Iran have inked an MoU for cooperation in the field of railways and start work on the India-Iran-Russia railway line. The agreement apart from initiating the work on the proposed rail line involving India, Iran and Russia will also promote a joint effort to increase cooperation with International Union of Railways.

Iran also sought India’s partnership and cooperation for a new track which will connect the Free Trade Zone of south eastern Chabahar and the city of Fahrej situated in central part of the country, Tehran Times said, adding the agreement will incorporate investment plans for the track. Iran is also keen to cooperate with Indian Railways in its port connectivity plan and will accept the offer after examining the financial viability of the proposed projects in Iran, it said.

The MoU was signed by Indian Railway Board Chairman K C Jena and Hassan Ziari, the managing director of Iran’s Railway Company on 13th April, 2008. The agreement also deals with issues of technical training of the personnel, railroad signaling projects, supplying locomotives and spare parts, as well as setting up a joint working group between the two countries.

China has told Pakistan it is ready to join a gas pipeline project to import Iranian gas if India decides not to be part of the multi-billion dollar venture. Pakistan and Iran have finalised a gas purchase agreement while India is yet to complete modalities for joining the project mainly due to differences with Pakistan over the transit fee to be paid for the gas transported through Pakistani territory.

Iran had been asked by Pakistan earlier this month to finalise the Iran-Pakistan-India pipeline project by April because of its rising gas requirements. Iran said it was holding final talks with India to persuade it to join the project. Iran had also told Pakistan that if India continued to show its reluctance to join the project “under US pressure“, Tehran would invite Beijing to join the venture, the influential Dawn newspaper reported.

“The Chinese have told us that they are ready to join it,” a source in the petroleum and natural resources ministry told Dawn. Pakistan has asked Iran to enhance the volume of gas to be supplied by 50 per cent if India opts out of the project. In such a scenario, Pakistan will make a formal request to Iran to allocate an additional volume of 1.05 billion cubic feet of gas per day (BCFD). Under the original plan, Pakistan was to get 2.1 BCFD of gas from the IPI project and India 3.2 BCFD. If India stays away, the length get will increase to about 3.2 BCFD.

However, there were still challenges to the project, the sources said. The security situation in Afghanistan and relations between Pakistan and India need to be improved and fuel subsidies in the countries will have to be phased out. The long-term competitive advantage of TAP over the option of liquefied natural gas also has to be determined. The TAP pipeline with a 56-inch diameter needs at least 30 billion cubic metres of gas a year from Turkmenistan to reach Pakistan via Afghanistan.