ISLAMABAD: While extending support to Frontier Works Organisation (FWO), the government of Khyber-Pakhtunkhwa (K-P) has opposed the laying of an oil pipeline from Machike to Taru Jabba (Nowshera) by Inter State Gas Systems (ISGS), a federal government entity.
FWO and ISGS have emerged as potential competitors to build the vital oil pipeline.
A public hearing was conducted by the Oil and Gas Regulatory Authority (Ogra) in Peshawar for the grant of licence for constructing the oil pipeline that was estimated to cost $370 million.
During the hearing, a K-P representative said the province fully supported the route proposed by FWO and the project would prove to be a game changer for meeting strategic needs of the country.
An FWO representative stated that the project would cater for growing fuel demand of K-P. “It will not only help in curbing carbon emissions and improving the environment, but will also make better the economic condition of general public by creating thousands of job opportunities,” he said.
The representative assured the regulator that the project would be completed in a record time of two years.
In a statement, K-P Oil and Gas Company Limited Chief Executive Officer Raziuddin said he participated in the public hearing on behalf of the provincial government.
He said the project would help meet strategic defence needs of Pakistan and the route proposed by FWO was economically viable and would ease the burden on end-consumers.
He recalled that the project was proposed by Attock Refinery in 2001, but it could not be implemented because of various reasons.
“The project is the need of the hour and no further time should be wasted,” he emphasised and asked the regulator to grant licence to FWO immediately so that the project could be completed well before time.
Raziuddin also talked about the performance of ISGS, which was also interested in acquiring the licence for building the oil pipeline.
He was of the view that none of the mega pipeline projects including Iran-Pakistan gas pipeline, Turkmenistan-Afghanistan-Pakistan-India (Tapi) gas pipeline and North-South pipeline had been completed by ISGS.
All the projects had been delayed with no commercial operation dates, he argued, adding the pipeline route proposed by ISGS was not only long, but would also put a heavy burden on end-consumers by pushing up petroleum prices.
However, ISGS has received an encouraging response in its tender floated for building another oil pipeline as 150 companies have bought tender documents to participate in the bidding process.
Companies from China, Turkey and Russia have acquired bid documents. Officials call it a good sign that multinational companies are also participating in bidding, which sparks hopes for healthy competition.
ISGS has planned to award the contract on a build-operate-transfer (BOT) basis and healthy competition will help in securing low tariff for oil supply through the pipeline.
The pipeline, costing Rs56 billion and expected to be completed in two years, will be laid from Sheikhupura to Peshawar with the intention of curbing oil theft and ending monopoly of oil tanker owners who have been threatening to stop oil supplies. Feasibility study of the project has already been conducted.
At present, oil tankers transport petroleum products across the country, but supply disruptions from time to time have forced authorities to reconsider the model.
According to estimates, furnace oil worth $200 million is stolen every year during transportation. In this situation, oil pipelines are a safer mode for petroleum supply, say experts.
Published in The Express Tribune, April 12th, 2018.