Wielding soft power: US offers to finance TAPI gas pipeline

Asian Development Bank becomes a transaction adviser for the initiative.

Zafar Bhutta December 19, 2011


The US has made a generous offer to finance the multibillion-dollar Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline, an implicit gesture to lure Pakistan away from the Iran-Pakistan (IP) gas pipeline deal.

Addressing students of Lahore University of Management Sciences (LUMS) on November 25, US ambassador to Pakistan Cameron Munter had termed Pakistan-Iran gas pipeline deal unfeasible. A viable alternative, in his view, was the Turkmenistan-Afghanistan- Pakistan-India (TAPI) pipeline project via Afghanistan.

In the $7.5 billion TAPI gas pipeline project, Pakistan’s share will be 1.35 billion cubic feet per day (bcfd) out of a total of 3.2 bcfd gas exports from Turkmenistan.

Asian Development Bank (ADB) has also become a transaction adviser for TAPI gas pipeline project, raising funds for it by forming a consortium of leading lenders.

Although Pakistan and Turkmenistan have signed the Gas Sales Purchase Agreement (GSPA) on TAPI project, the two countries are yet to take a final decision on it.

Sources inform The Express Tribune that the Export-Import Bank (EIB) of the United States as well as the Overseas Private Investment Corporation (OPIC), an “independent” US agency, have offered Pakistan financing for TAPI. “As Pakistan has welcomed the offer, Pakistani and US authorities were scheduled to discuss it on the sidelines of the Bonn conference,” sources asserted, adding that the discussions could not take place due to the subsequent boycott of the moot by Islamabad.

Petroleum Secretary Ijaz Chaudhry, however, asserted that he had no knowledge of any financing offer by the US for the TAPI gas pipeline project.

“After finalising gas price, the approval of Economic Coordination Committee (ECC) would be sought to sign the final GSPA with Turkmenistan,” he added.

Pakistan is yet to finalise transit fees with neighbouring Afghanistan and India.

According to sources, the Minister for Petroleum and Natural Resources is expected to leave for New Delhi next month to hold talks with his Indian counterpart after transit fee is finalised with Afghanistan.

Three options are under consideration for transit fee on gas imports.

The first deals with fixing it on transmission of gas from Turkmenistan. The second one includes linking it with the length of gas pipeline. The third option may involve taking into account the volume of gas to be consumed by each country.

Published in The Express Tribune, December 19th, 2011.


Ali | 12 years ago | Reply

A pipeline from Iran, right next door, is infeasible but one through Afghanistan, which has been in a state of civil war since Alexander the great is the preferable option.

Usual lies America tells us. They will pay for the first half of it, then Congress will vote the funding down and we'll have a pipeline half way to no where.

Ex | 12 years ago | Reply

Lol finance ? More like charge high I treat rates The us should build it and pay for everything . This an American project do they should pay for it

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