TAPI gas pipeline: Pakistan, Turkmenistan yet to sort out pricing review

Published: February 11, 2012
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Islamabad wants the option of a review after three years, instead of ten.
 DESIGN: FAIZAN DAWOOD

Islamabad wants the option of a review after three years, instead of ten. DESIGN: FAIZAN DAWOOD

ISLAMABAD: Pakistan and Turkmenistan are scheduled to meet in Dubai on February 23 to try and end the deadlock on the gas pricing review under the $7.6 billion TAPI gas pipeline project.

“Afghanistan and India will also attend the meeting to finalise a transit fee with Pakistan under the TAPI gas pipeline project as Pakistan wants a uniform transit fee,” sources told The Express Tribune.

Sources maintained that Pakistan wants the option of a gas price review after three years in view of price trends in the markets of Pakistan, Turkmenistan, Afghanistan and India. “But Turkmenistan wants to review gas prices after ten years in line with pricing trends in the international market like Brent crude,” sources added.

The Gas Sales Purchase Agreement (GSPA) will be signed only after Pakistan and Turkmenistan agree on the modalities of the gas price review.

In a recent meeting held between Pakistani and Afghan authorities in Islamabad Pakistan had come up with a proposal to implement uniform transit fee for the project.

Sources said that Pakistan had also asked the Afghan team to finalise GSPA with Turkmenistan first before finalising a transit fee on gas import from Turkmenistan.

“Pakistan, Afghanistan and India will now hold a joint meeting in Dubai on February 23 to finalise a uniform transit fee,” sources said adding that under the transit fee plan, Pakistan wants to receive transit fee from India to pay it to Afghanistan.

Three options relating to the transit fee have been under consideration. As one option, it is being proposed that there should be a fixed transit fee on transmission of gas from Turkmenistan. The second option is to link transit fee with the per kilometre length of gas pipeline. The third option is to linking transit fee with volume of gas to be consumed by each country.

Pakistan and India are expected to ask Turkmenistan to develop the gas field which is to be used as the source for this project.

According to senior official of the Petroleum Ministry, Asian Development Bank (ADB) had already said that Turkmenistan was not capable of developing this gas field.

Pakistani public sector gas exploration companies like Oil and Gas Development Company Limited (OGDCL) may enter into joint venture with Indian gas companies to develop gas field in Turkmenistan.

Published in The Express Tribune, February 11th, 2012.

�<ia�o� �، iddle’>“No decision has yet been taken on the release of funds for the project,” said an official on condition of anonymity. In addition to raising financing issues, Mubarakmand presented six options to the finance adviser to achieve better use of the coal reserves, he said.

 

Mubarakmand said the country could produce diesel, car fuel, fertiliser, kitchen gas, electricity and plastic by using the huge coal reserves. Each option had a price tag and it was up to the government which option it picked, the official said.

A highly constrained and unpredictable energy supply has become a longstanding problem. According to the International Monetary Fund, while many reform plans have been prepared, implementation has not been sustained. There are widespread outages, averaging eight hours a day, which have become a large constraint on growth causing an estimated 2 per cent loss in the national output every year.

An official said the country could produce coal-powered electricity at Rs4 to Rs5 per unit against power generated at Rs12-13 per unit by using expensive furnace oil. Similarly, the cost of fertiliser production can also be brought down with the help of gas to be produced through the underground gasification technique.

The government is expected to call a meeting of the Thar Coal and Energy Board, headed by Sindh chief minister, to find a way out.

Published in The Express Tribune, February 11th, 2012.

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