ECNEC approves $2b Gwadar-Nawabshah LNG terminal

In total, six projects costing Rs281b were approved

ISLAMABAD: Pakistan on Friday approved the strategically important Gwadar-Nawabshah LNG terminal and pipeline project at a cost of $2 billion that will eventually link the country’s gas network with the Iranian system.

The Executive Committee of the National Economic Council (ECNEC) - the country’s highest project approval authority - sanctioned the mega scheme along with five other projects. In total, the ECNEC approved six projects costing Rs281 billion. Some of the projects cost were revised upward, indicating flaws in planning and execution.



The pipeline project

The ECNEC approval for pipeline project was necessary to negotiate the terms of $1.4 billion loan that Islamabad is keen to get from Chinese Export-Import (Exim) Bank. The terms of the loans carries implication for the cost of the project, which is currently estimated at $2 billion or Rs203.3 billion, according to officials of the Ministry of Planning and Development.

Pakistan has hoped that the Chinese Exim Bank will provide 85% of the financing under government-to-government mode. The Engineering Procurement and Construction (EPC) contract will be given to a Chinese company.

In phase-I, the pipeline will follow the coastal pipeline corridor, which was formally established for the Iran-Pakistan gas pipeline. In phase-II, a 90-kilometre patch will be constructed from Gwadar to Pakistan-Iran border to tie the national network with Iranian system, according to the project documents.

The financial analysis of the project shows that the project will be viable, if it operates at its full designed capacity of 1,500 mmcfd. The project is expected to be completed in two years (2016-2018), according to a handout of the Finance Ministry. It said the key objective of this project is to overcome the shortage of natural gas supply by importing LNG at Gwadar. The Economic Affairs Division has agreed to discuss the financing arrangements for this project with EXIM Bank China, said the Finance Ministry.



Electric locomotives

The ECNEC also jacked up the cost of procurement of 58 Diesel Electric Locomotives to Rs16.3 billion. The procurement will be completed by December 2016. The proposed locos will replace 50 over-aged locomotives and will be used to haul freight and passenger services along with High Capacity Wagons fitted with air brakes and roller bearing. With the completion of the project the capacity of Pakistan Railways will improve many times, the meeting was informed.

The ECNEC approved phase three of the 100 small dams in Balochistan project at a cost of Rs7.8 billion. The project will complete in three years’ time and help in managing flood flows.

The highest project approval authority also cleared Southern Punjab Poverty Alleviation Project at a revised cost of Rs4.7 billion including Rs4.1 billion foreign loan. The project will help improve the standard of life in four less developed districts of Punjab -Bahawalpur, Bahawalnagar, Muzaffar­garh and Rajanpur.

The International fund for Agriculture Development has helped in the financing of the project through a soft loan of $40.13 million. The project will help reducing poverty in the areas of southern Punjab with assistance in income generation, increasing agricultural productivity, improved livelihood opportunities, providing vocational training specially to women and building physical infrastructure to improve the quality of life. The project is expected to be completed next year.

Other projects

The ECNEC also approved the Golen Gol Hydropower project, having 106MW generation capacity, at a revised cost of Rs29.1 billion. The project is being constructed in the district of Chitral, Khyber-Pakhtunkhwa. The government is borrowing Rs10.7 billion from foreign lenders to finance the project.



The project will be connected with the national grid with a 198 km transmission line which include 132kv transmission line from Golan Gol to Timurgarha passing over Lowari pass (145km) and 132 kv single circuit line from Taimurgarh to Chakdara (53 km).

The ECNEC also allowed the Peshawar Electric Supply Company to construct 7th Secondary Transmission Line and Grid Stations at a cost of Rs20 billion. The project will be completed in five years.

Published in The Express Tribune, October 1^st, 2016.

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