Pak-Iran gas pipeline: Russia wants contract without bidding

Published: February 18, 2012

Also offers to finance the cost of pipeline construction.

ISLAMABAD: 

Amid pressure from the United States to shelve the much-needed Iran-Pakistan gas pipeline project, Russia has asked Pakistan to award a $1.2 billion pipeline-laying contract to its energy giant Gazprom without going into bidding process.

“If Pakistan accepts the demand of Russia and awards the contract to Gazprom, the largest explorer of natural gas in the world, Moscow will also provide financing for the project,” an official told The Express Tribune.

Moscow floated the proposal during a four-day trip of Foreign Minister Hina Rabbani Khar to Russia earlier this month.

“However, Pakistan has not shown any willingness to grant the contract without inviting bids from competing parties, which will violate its Public Procurement Regulatory Authority (PPRA) rules,” the official said.

An official of the petroleum ministry told The Express Tribune that Russia expressed interest in the Iran pipeline project, but he did not confirm whether Moscow sought the contract for Gazprom without bidding. Petroleum secretary could not be reached for comment.

Sources said the US opposition to Iranian gas supply to Pakistan also came up for discussion during Khar’s visit. The US has imposed sanctions on Iran due to suspicions over its nuclear programme while Tehran insists that its programme is peaceful and meant for energy supply.

Though Russian authorities expressed worry over the US pressure, they supported Iran and Pakistan in pushing ahead with the project, sources said.

Pakistan has already formally invited the Russian giant Gazprom to participate in two multi-billion-dollar gas pipeline projects – Iran-Pakistan and Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipelines.

In a meeting of the Pak-Russia Inter-Governmental Commission held on September 22, 2010 in Russia, Pakistan invited Gazprom to lay the Iran-Pakistan gas pipeline. Earlier during deliberations in August 2010 in Russia, Russian President Dmitry Medvedev and Pakistan President Asif Ali Zardari also discussed the option of involving Gazprom in the pipeline project.

Gazprom has also expressed interest in building energy storages in Pakistan.

At present, Pakistan is facing mounting pressure from the US to shelve the Iran pipeline project. Besides, there are financing problems as well. Country’s largest explorer Oil and Gas Development Company (OGDC) and National Bank of Pakistan (NBP) have already refused to finance the project.

OGDC management fears that its foreign shareholders will withdraw investment from the company if it entered the Iranian project while NBP is worried that its foreign branches may come under US sanctions and may be closed.

Pakistan and Iran have already signed a sovereign-guarantee agreement on the project. They have also inked a gas sale and purchase agreement for import of 750 million cubic feet of gas per day (mmcfd) with a provision to increase the volume to 1 billion cubic feet per day.

Under the guarantee agreement, Pakistan is bound to start first flow of gas in 2014 and will have to pay a penalty equal to the cost of 750 mmcfd of gas which amounts to $8 million per day if it fails to receive gas by the stipulated time.

The government has awarded consultancy services contract to German firm ILF Engineering Services at a cost of $55 million which is working in collaboration with the National Engineering Services of Pakistan (Nespak).

Published in The Express Tribune, February 18th, 2012.

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Reader Comments (13)

  • Harry Stone
    Feb 18, 2012 - 3:21AM

    Your new friend is ready to help. Take the deal PAK. If the Russians are going to pay for the contruction because no one else will.

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  • A2Z
    Feb 18, 2012 - 4:44AM

    when they are asking you will not respond, but later you will pester them and they will become indiffeent.
    have shame, don’t let the opportunity at hand to go.

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  • Sunny
    Feb 18, 2012 - 9:08AM

    Especially when we have caused much loss to the Russians by facilitating USA and Saudi Arabia’s Jehad in Afghanistan. PPRA rules are not followed in strategic deals . We have sold PTCL to Dubai based company, Neelum Jhelum project to Chinese contractors etc etc all by giving preferential treatments.

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  • Indian muslim
    Feb 18, 2012 - 10:49AM

    This is good for the new nexus “pakistan-iran-russia-china” against “amricaa-indiiaa-juueww” …

    Recommend

  • Asim
    Feb 18, 2012 - 11:03AM

    No 2nd thought to it ….. No more nos to Russia …..

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  • ahmed
    Feb 18, 2012 - 11:52AM

    India is quietly making investment in balochistan through Russia… people do not understand the secret russia-india relations…

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  • Feb 18, 2012 - 11:59AM

    Obama was caught weeping alone in his room after hearing this :p

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  • Qasim
    Feb 18, 2012 - 12:04PM

    It will still be cheaper than the bidding process marred by underhand deals, which will only add more to the coffers of the looters and plunders.

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  • Hassan
    Feb 18, 2012 - 12:06PM

    @ Ahmed

    So you think one day India will appear from the back of curtain and say ohhh Baluchistan is mine i have invested alot here….come out of these conspiracy Theories brother and There should be Big yes to this..

    Recommend

  • Chilli
    Feb 18, 2012 - 12:12PM

    Let Russia in …US will be kept at bay automatically.

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  • Harry Stone
    Feb 18, 2012 - 10:50PM

    @Chilli:

    A good choice Russia instead of the US. This makes sense for PAK. For everyone else the choice is always the US over Russia…. Enjoy your new friends the Russians.

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  • greenpeper
    Feb 19, 2012 - 11:25AM

    The BID should be given to Russia. Those who think there might be conspiracy. That could be checked and monitored. The Russian engineers should not be in contact with local politicians or local government body unless declared in the contract.

    And secondly, we made a deal with Iran that if we are not able to complete our side of task and not able to receive the gas by 2012, there will be penalty.. So, if US is pressuring PK, to stop this project, then who is going to pay the losses? No one in the world.

    So, this is the time, to look for your own interest

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  • KASHIF
    Feb 19, 2012 - 11:01PM

    Come on Pakistan accept this offer and welcome to new true friend..

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