Once again, Pakistan asks China to finance IP gas pipeline

Published: May 9, 2012

WIND ENERGY: 550 megawatts is the combined capacity of three plants for which agreements were signed.

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 9th, 2012.

Reader Comments (15)

  • May 9, 2012 - 4:23AM

    How can Pakistan expect China to risk US sanctions when Pakistani banks are staying clear of the IP pipeline project? Pakistan’s best interest is not in defying Saudis and Americans to buy expensive Iranian gas and end up with crippling sanctions which could be much worse than its current energy crisis. Its best interests will be served by developing its own cheap domestic shale gas on an accelerated schedule with Saudi investment and US tech know-how. If the Americans and the Saudis refuse to help, then Pakistan will have a stronger case to go with the Iran gas option.

    http://www.riazhaq.com/2012/04/affordable-fuel-shortage-hurts-power.html

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  • Arijit Sharma
    May 9, 2012 - 10:21AM

    If you keep insisting, you will lose the only “friend” you have.

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  • Ravish
    May 9, 2012 - 10:36AM

    @Riaz Haq: Stop promoting your website in every other article, its getting sickening now.

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  • Rajendra Kalkhande
    May 9, 2012 - 2:08PM

    If one goes by recent incident of Chinese blind dissident, China hardly has the guts to face Americans. Take another example of oil imports from Iran. China reduced oil import from Iran even faster than India. At least India has the guts to to tell US openly in front of Hilary Clinton and host the Iranian trade delegation simultaneously. Nothing will happen in Pakistan till she controls terrorism and hardliners.

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  • Hedgefunder
    May 9, 2012 - 2:46PM

    Keep asking, but the all weather friend does know as to which side is their bread buttered on !
    Anymore friends left to turn to for help????

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  • gp65
    May 9, 2012 - 3:43PM

    @Riaz Haq:
    1.You constantly provide your own blog as a source. It is annoying.
    2. You have been restating your opinion that Pak should ask US government to provide shale technology as a comment in multiple news items. You have never explained what leverage Pakistan has to be able to demand this. There would be little credibility for the suggestion that this can be proposed as a trade off for not going ahead with the IP pipeline. The question is who believes the pipeline is getting built anytime soon when there is no way to secure funding for it.

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  • ayesha_khan
    May 9, 2012 - 3:48PM

    @Riaz Haq
    Kindly explain if going ahead with IP pipeline and incurring crippling sanctions is NOT in Pakistani interests today, how will it suddenly become in Pakistani interest when US refuses to hand over shale technology?

    If you have been following the news, you are probably aware that the US has called Pakistani bluff a couple of times lately. So what are the chances that you can bluff about building an IP pipeline if US refuses to comply with your deadlines?

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  • May 9, 2012 - 8:04PM

    @ ayesha_khan: “how will it suddenly become in Pakistani interest when US refuses to hand over shale technology”

    Pakistan’s vital interest is to secure its energy supply for its economic future, not in pleasing or angering any particular nation. If the US refuses to help, Pakistan has to look at other alternatives. US is smart enough to know what is in its own best interest.

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  • WhatisThetruth
    May 9, 2012 - 8:30PM

    The problem is that the Pk government has been an unreliable partner. After the OBL attack, the Chinese made the famous statement about an attack on Pakistan being an attack on China. But our pathetic leadership did not take that up. The Chinese offered a series of alternatives to the F16′s, but our pathetic leadership did not take it up. More fundamentally, the Chinese have been looking for a deep seaport, but what did our pathetic leadership do…give the contract to a Singaporian firm who have just sat on it. So why should the Chinese take up our offer. If the people of Pk do not trust their leadership, how on earth are the Chinese going to?

    And for this rubbish about US placing sanctions on PK, our own leadership, through the energy crisis, has destroyed our manufacturing base? What further effect are sanctions going to have?

    The Russians have been interested in the IP pipeline because it helps support Iran, so why is it not possible to get a Sino-Soviet agreement on this? Why Not? Our pathetic leadership!!!

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  • Whats in the Name
    May 9, 2012 - 8:32PM

    I am at a loss for words to describe my thoughts after reading the headline and the article. Its a clear snub by the Chinese, yet Pakistanis are stubborn here. Is int there some thing called self respect…. Does that not have any meaning here.
    Rgds
    P

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  • WhatisThetruth
    May 9, 2012 - 8:50PM

    @ayesha_khan your statement “…you are probably aware that the US has called Pakistani bluff a couple of times lately…”
    Why do we define our policy based on US calling our bluff? Have we not sold our complete foreign policy based on the US bluff. AND these bluff’s have been lies! We were told that we cannot close our NATO lines, but when we did, what has the US done? We were told that the US will bomb us back to the stone ages…but Richard Armitage himself said he did not say this! How many nations has the US unilaterally bombed because they refused to agree to US demands? During the second Gulf War, did theTurks not refuse the second line of attack on Iraq. Did the US bomb them as well? And our armed forces are comparable, if not better then the Turkish. Do you really believe all that our rulers say?

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  • Faisal
    May 9, 2012 - 9:00PM

    We pakistanis want to live a life with absolutely no contact with out side world. We see india as our enemy, see Afghanistan as our enemy, see Iran as our enemy, see US as our enemy and now by blocking NATO supply routes which is composed of 48 developled nations, we r going to be absolutely cut off from out side world. Is there any leader who can help us out of this mess!!!!! China will not fund our project coz he want to live and work with the rest of the world. We want to live with our religious fanaticism………. That will not gonna work, we r doomed.

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  • gp65
    May 10, 2012 - 3:28AM

    @Riaz Haq: ” If the US refuses to help, Pakistan has to look at other alternatives. US is smart enough to know what is in its own best interest”.

    You are implying that succunbing to Pak blackmail is in US ‘ best interest. My qyestion was when the inherent threat has no credibility, why would US succumb? In other words the bluff ” If you don’t give us shale technology, we will go for IP pipeline” is likely to elicit a loud yawn. That pipeline is n’t getting made and US knows that.

    So the question is the benefit for Pakistan to build the pipeline greater han the adverse fallout off building it? The answer can either be Yes or No. You implied that the answer was No when you said “Pakistan’s best interest is not in defying Saudis and Americans to buy expensive Iranian gas and end up with crippling sanctions which could be much worse than its current energy crisis.”. In that case why do you propose that as an alternative that Pakistan could potentialy exercise if share technology wasn’t handed over?

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  • ayesha_khan
    May 10, 2012 - 3:34AM

    @WhatisThetruth: “Do you really believe all that our rulers say?”

    Like you, I don’t trust Pakistani rulers . I should clarify I am Indian and do not much care for Indian leaders (don’t call them rulers) either. Many of them are dishonest and corrupt. I think the only area I trust my political leadership is when it comes to foreign policy. None of them will commit to anything that is against India’s national interest.

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  • academic_economist
    May 10, 2012 - 3:34AM

    I do not understand why Pakistan cant substitute funding i.e. they pay for the pipeline themselves and have China or whoever fund other projects.
    This puts China off the political juggle with the US and we get the pipeline.
    Bottom line is that this pipeline needs to be built as it will provide cheap electricity and energy for the country. We should stand above politics for our economic progress and go forward for our betterment since the US or any other country would go ahead without any care for others’ concerns.
    This pipeline can really help Baluchistan also and progress there is very necessary for the long-run stability of the country.

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