Amidst a deadlock over the gas price review, Pakistan and Turkmenistan have pledged to finalise a “host government agreement” on a multibillion-dollar transnational gas pipeline project in October this year.
Over a decade has passed but Pakistan and Turkmenistan have failed to strike the host government agreement that will set transit fee for countries that are part of the project.
According to officials, Islamabad is expected to receive $250 million in transit fee per annum on gas supply through its territory under the Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline project.
On the other hand, Pakistan will pay the same amount to Afghanistan in transit fee that it will receive from India.
The project has faced delays during tenures of different governments. A gas sale-purchase agreement was signed during the tenure of Pakistan Peoples Party (PPP) administration over a decade ago.
However, the agreement could not be adopted owing to varying challenges including the security situation in Afghanistan.
However, the Taliban administration, which is now in power in Afghanistan, has good relations with Turkmenistan. The Turkmenistan government has already taken Afghan Taliban on board, who have given assurances to Ashgabat that the gas pipeline will not be sabotaged.
During the Pakistan Tehreek-e-Insaf (PTI) government too, the project faced bottlenecks when former adviser to the prime minister on petroleum took up the matter of revising the gas price.
Under the project deal, Turkmenistan is bound to reduce the gas price if Pakistan is able to bring energy from alternative sources. At that time, Pakistan got an opportunity to buy cheaper liquefied natural gas (LNG) compared to the TAPI gas cost.
However, Turkmenistan refused to cut the price, fearing other countries participating in the project, which included India and Afghanistan, would also press for slashing the price.
Owing to the price controversy, Pakistan and Turkmenistan could not be able to ink the host government agreement to fix transit fee for gas transportation through the territories of participating countries.
In June this year, a high-level Turkmen delegation, led by State Minister and Turkmengas Chairman Maksat Babayev, visited Islamabad where it held meetings with a Pakistani delegation, led by the then minister of state for petroleum Musaddik Malik.
The delegation also met the then energy minister Khurram Dastgir. Pakistani side reiterated its demand for a revision in gas tariff and project cost. To break the deadlock, both sides agreed to appoint a high-level Pakistani official to resolve the outstanding issues.
They also agreed that the technical working group on TAPI would hold extensive deliberations to find a way forward.
On Thursday, Turkmenistan Ambassador Atadjan Movlamov called on interim Federal Minister of Energy Muhammad Ali. Both sides agreed to speed up the TAPI project.
Published in The Express Tribune, August 25th, 2023.
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