Pakistan will challenge in the international court of arbitration a decision by a UN climate agency to grant carbon credits to India on a hydropower project without clearance of its trans-boundary environmental impact, a media report said today.

An inquiry by the Water and Power Ministry concluded that India secured carbon credits for the 45 MW Nimoo-Bazgo hydropower project from the UN Framework Convention on Climate Change without mandatory clearance from Pakistan, the Dawn newspaper quoted its sources as saying.

Pakistani officials have alleged that India secured the carbon credits even though Pakistani authorities had not seen or cleared the cross-boundary environmental impact assessment report for the project on river Indus.

Islamabad has now decided to challenge the UNFCC's decision in the international court of arbitration "because legal requirements were allegedly not fulfilled by the UN agency", the report said.

Officials alleged the Indian government "misled the UN agency through fake and fictitious documents that might have shown Pakistan's consent to the project because there was no such record available in Pakistan".

"It is still not established how India was able to get carbon credit benefits for the Nimoo-Bazgo project, which is located on trans-boundary water, and for which ratification of the parties concerned should have been procured before hand by it under clause 37(b) of UNFCC," an unnamed official was quoted as saying.

"Although it is too difficult to get carbon credits on a trans-boundary project such as Nimoo-Bazgo, due to lack of contest by the Permanent Commissioner for Indus Waters (PCIW), India was able to get carbon credits on this project," the official said.