Once again, Pakistan asks China to finance IP gas pipeline

United Energy Group expresses interest in the project.

ISLAMABAD:

Pakistan has once again asked China to finance the Iran-Pakistan (IP) gas pipeline project, as Beijing appears to be least interested in the face of pressure from the United States.

“No Chinese government official gave assurance about participation in the project,” a participant of a meeting of the Pak-China Joint Energy Working Group told The Express Tribune.

The final round of the working group, which concluded here on Tuesday, was held under the chairmanship of Water and Power Minister Naveed Qamar and Chinese delegation head Wu Guihi, which reviewed financial and other aspects of energy projects and cooperation between the two sides.

In the meeting, private oil and gas exploration company United Energy Group (UEG), however, expressed interest in participating in the IP gas pipeline project. A representative of UEG, which has recently acquired assets of British Petroleum (BP) in Pakistan, said the company was willing to participate in the project.

Sometime ago, the Industrial and Commercial Bank of China (ICBC) had been given the role of financial adviser for the project, but it backed out apparently due to US pressure.

In remarks made at the conclusion of the meeting, the head of Chinese delegation said the energy crisis in Pakistan could be resolved through cooperation between the two sides.

Discussing concerns of Chinese enterprises, he stressed the need for infrastructure development for ongoing and forthcoming energy projects for easy transportation of machinery and equipment to the project site.

It was proposed to set up an infrastructure fund to finance power projects. “Banks may contribute to this fund from where investors will be able to get financing,” Naveed Qamar told the media after the meeting.

Qamar said China was also willing to contribute equity to the Diamer-Bhasha dam and power project. Private parties of China could assist in setting up power houses, he said.

In the past, Chinese wanted contracts for projects like Guddu and Uch power plants. “But now these companies have agreed to participate in the bidding process in line with Public Procurement Regulatory Authority (PPRA) rules,” he added.

Qamar stressed that matters relating to Nandipur power project had been resolved six months ago. “Now, there is an issue of demurrages and the government is mulling over to waive them,” but the penalty issue would be resolved through dialogue.

Later, a signing ceremony was held for three wind energy projects. These included signing a letter of intent (LoI) for 150MW project between United Energy Pakistan and China Development Bank Cooperation and inking a memorandum of association for 350MW project between Three Gorges and Pakistan. A document was also signed between Dawood Power and Hydro China Engineering Company for a 50MW project.

Published in The Express Tribune, May 9^th, 2012.