IP gas pipeline: Russia agrees to financial and technical assistance

Published: April 7, 2012

Due to US pressure, Pakistan may accept technical assistance only. DESIGN: ALI DARAB

ISLAMABAD: 

While refusing to succumb to pressure from the United States (US), Russia has agreed in-principle to extend financial and technical aid to Pakistan for the $1.5 billion Iran-Pakistan (IP) gas pipeline project.

However, Pakistan has not yet received a response from a Chinese bank that was to sign a contract as the IP gas pipeline project’s financial advisor.

Sources told The Express Tribune that a sub-committee of the Economic Coordination Committee (ECC) – which met on Friday to review the progress of IP gas pipeline project – was informed that Russia had agreed to extend financial and technical support for the project. Talks between the two countries were recently held in Moscow, and Russia will respond formally to Pakistan within a fortnight.

During the meeting, the body also finalised proposals that would be sent to the ECC for formal approval. The ECC will be recommended to refuse financing from Russia, and accept only technical assistance due to resistance from Washington.

“Pakistan can generate funds through [the] Gas Infrastructure Development Cess (GIDC) imposed on natural gas to finance the project, and only technical assistance may be sought from Russia,” a government official said.

Secretary Petroleum Ijaz Chaudhry told The Express Tribune that a Pakistani delegation had given a presentation to Russian authorities in Moscow over the length of the pipeline, gas volume and financing required for project.

Pakistan had decided to explore the possibility of Russia backing the project after a Chinese bank hinted at staying away from the project amid pressure from the US. The decision to negotiate a deal with Russia was also taken by the sub-committee formed by the ECC.

“We have just given [a] presentation and Russia will convey its response soon,” Chaudhry said; adding that the sub-committee decided that Pakistan will go ahead with the project even if Russia and China do not provide funds.

He said that no final decision has been taken as yet; the sub-committee had been tasked with examining different proposals from Russia, China and Iran, and progress reports in this regard were examined in the meeting. “We are still negotiating with [the] Chinese bank, which has given no final response regarding [the] role of financial advisor on [the] IP gas pipeline project,” he said.

Earlier, Russia had offered Pakistan full financing for the pipeline during a four-day visit of Foreign Minister Hina Rabbani Khar to Moscow in February. The condition was that Russian energy giant Gazprom be awarded the contract without bidding.

In order to give its assent to the offer, the government will first have to waive the Public Procurement Regulatory Authority (PPRA) rules, which were designed to ensure transparency in government dealings.

Under the project, an 800-kilometre-long pipeline will be laid from the Iran-Pakistan border to Nawabshah. The project has entered its implementation phase, and work on front-end engineering and design, feasibility, and a detailed route survey is already underway. A joint venture between Germany’s ILF and Pakistan’s Nespak has been tasked with the engineering work and survey, which is scheduled to be completed by June this year.

Tender documents have been issued to pipeline suppliers, while tender details are being finalised for engineering, construction and procurement (ECP) contractors and compressor station suppliers. These will be issued in the next couple of months. These contracts are expected to be executed in the second and third quarter this year.

Published in The Express Tribune, April 7th, 2012.

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Reader Comments (21)

  • Harry Stone
    Apr 7, 2012 - 8:27AM

    If this is in the best long term interest of PAK then this is what they should do.

    Recommend

  • bilal
    Apr 7, 2012 - 12:08PM

    Actually its in the short, medium as well as long term best interest of Pakistan and it must do this…

    By the way its EPC contract = Engineering, procurement and construction. I wonder what other commercial banks are participating.

    Recommend

  • ashok
    Apr 7, 2012 - 12:33PM

    Whatever happened to higher than Himalaya and deeper than Indian ocean friendship?

    I guess every thing is acceptable in war and illicit love.

    Is it the time for Russia to take revenge of its breakup of 1990?

    Recommend

  • Uzair Javaid
    Apr 7, 2012 - 12:56PM

    Pakistan should definitely take this opportunity to come closer to Russia. They certainly would prove to be better than US.

    Recommend

  • 3akr
    Apr 7, 2012 - 1:47PM

    One positive devolpement by Pak gov ……

    Recommend

  • 3akr
    Apr 7, 2012 - 1:50PM

    I was really looking forward to it. Its a great news and good step for the prosperity of the region.

    Recommend

  • Yash
    Apr 7, 2012 - 1:58PM

    @Uzair Javaid:

    is it engraved so deep in pakistani people that they always want to side with some1 or the other??….

    be independent….make world come to u…develop ur country man…

    Recommend

  • Shaad
    Apr 7, 2012 - 2:18PM

    Wait till Russian’s come to know they have to bid for the pipeline project. Lest we forget the Supreme Court struck down an LNG terminal project because it was given without due bidding process to a French company and has taken up Kohala hydropower because it was given to Chinese without bidding not thinking for once that these awarding had strategic advantages for the country.

    Recommend

  • fahad
    Apr 7, 2012 - 2:21PM

    @ashok:
    i smell hatred from your comments.

    Recommend

  • Ashvinn
    Apr 7, 2012 - 4:08PM

    @fahad:
    Dude u got conspiratorial nose

    Recommend

  • Imran Mohammad
    Apr 7, 2012 - 4:48PM

    @ashok, “Whatever happened to higher than Himalaya and deeper than Indian ocean friendship?”

    We Pakistanis do get too emotional sometime, I agree. We go overboard with Chinese friendship sometimes. This was quite a slap by Chinese. Pakistan should be little careful in hyperbolic statement about friendship with Chinese.Recommend

  • Cautious
    Apr 7, 2012 - 5:08PM

    Fat Chance. In case anyone hasn’t been reading the newspapers lately – the SC made it clear that if your avoid/waive procedures that make the transaction transparent – you make the contract illegal and void. Who is going to give you money knowing that the “deal” they make will be voided by the SC? Similar to all the Thar Coal financing articles – you only read about it in Pakistan newspapers which is a clear indication that the article and deal are bogus and something generated by the govt to try and bolster image.

    Recommend

  • Farhan
    Apr 7, 2012 - 5:08PM

    Russia should be given some more space to enter Pakistani oil and gas industry. They have expertise and will to come and play important part in this strategic land.

    I good to see Government of Pakistan is going on right track.

    Recommend

  • its (still) the economy stupid
    Apr 7, 2012 - 7:25PM

    Devil is in the detail. Gazprom does not deliver goods on six months deferral payment basis as that is what Pakistan is accustomed to due to lack of cash. If you do not believe me ask Ukraine, Poland, Germany and Turkey they all had to kneel down in front of Russian oil mafia. End of the day it is going to be SHOW ME THE MONEY

    Recommend

  • ashok
    Apr 7, 2012 - 7:50PM

    @fahad:

    I notice e-Talib bones hidden in your posts.

    Recommend

  • Apr 7, 2012 - 9:28PM

    @its (still) the economy stupid:

    I am glad you wrote about Gazprom. Not to mention the muscle flexing with Gazprom wants some entity bought in Pakistan… Yeah! that will be fun! Have fun with the “no-bid” contract!

    Recommend

  • Ho
    Apr 7, 2012 - 10:33PM

    Pakistan is open to good gestures. If it means future prosperity then so be it. . . .Any one that wants to be friends of Pakistan are most welcome and any country that wants to help Pakistan sincerely is most welcome. It is a new era and new world of friendships and well- wishers. Pakistan is a more matured country now than it used to be. It has suffered tremendously and has also learned tremendously and knows better! All the good luck to Pakistan and its real friends!

    Recommend

  • zeeshan shah
    Apr 7, 2012 - 11:13PM

    This is a great opportunity to endorse the BRICKS participation , with Iran Russia and China already onto Pakistan with their support. Pakistan should let go of US assistance in any project financing , that has to deal with the Gas Pipeline.Recommend

  • realist
    Apr 7, 2012 - 11:36PM

    I cant find this news on any other site except on websites linked to pak, iran.

    Recommend

  • WeAreBest
    Apr 8, 2012 - 1:17AM

    India can finance this project.

    Ask us!

    Recommend

  • gp65
    Apr 8, 2012 - 4:31AM

    @zeeshan shah: The ‘I’ in BRICS is India not Iran…just fyi.

    Recommend

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