Putin coming in Sept: Pakistan, Russia likely to strike deals for energy projects

Published: July 25, 2012
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During Putin’s trip, the
two countries are expected to
sign a memorandum of understanding
to push ahead
with assistance for the power
and gas supply projects. PHOTO: REUTERS

During Putin’s trip, the two countries are expected to sign a memorandum of understanding to push ahead with assistance for the power and gas supply projects. PHOTO: REUTERS

ISLAMABAD: 

Pakistan and Russia are likely to strike deals for financial and technical assistance for electricity and gas supply projects as well as expansion of steel mill during the visit of Russian President Vladimir Putin to Pakistan in September this year.

The visit of the Russian head of state is a follow-up to the Pak-Russia joint working group meeting held in the last week of June in Islamabad.

During Putin’s trip, the two countries are expected to sign a memorandum of understanding to push ahead with assistance for the power and gas supply projects. Representatives of Russian companies are also likely to accompany the president, who may announce investment in oil, gas and mineral exploration in Pakistan, officials say.

Under the energy cooperation programme, Pakistan has shown willingness to award a contract without bidding for the multi-billion-dollar Iran-Pakistan gas pipeline. Russia has also offered financing for the transnational Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline project.

The government desires to strike gas project contracts on government-to-government basis only, with no role for private Russian firms. The cabinet may be asked to waive public procurement rules for the award of pipeline contracts to Russia.

The government has already floated tenders, inviting bids for construction and procurement of pipeline for the IP project, costing $1.5 billion. According to the tender terms, the firms that promise financing will get additional points.

“Russian energy giant Gazprom may also participate in the bidding with a pledge of financing,” a government official said.

At present, Pakistan is negotiating the construction of IP gas pipeline with three countries – Iran, China and Russia.

“We will award IP contract to the country which first extends financing for constructing the pipeline, staving off pressure from the United States,” the official said.

Iran has also come up with a plan to lay Pakistan’s portion of the pipeline based on a mechanism called ‘supplier’s credit’. According to the plan, Tehran will provide the pipeline and compressors on credit to Pakistan, which will make payments after two years.

Iran is also willing to provide $250 million on government-to-government basis and can extend a major part of financing from its commercial banks. Pakistan needs around $500 million to finance the pipeline.

Power, steel mill projects

“Moscow has also agreed to finance rehabilitation of Guddu and Muzaffargarh power plants and a deal may be reached in this connection during the Russian president’s visit,” an official of the Ministry of Water and Power said.

In addition to this, the two countries may enter into a deal for expansion of financially troubled Pakistan Steel Mills. During the working group meeting held late last month, they had discussed ways of enhancing the capacity of the steel mill with promise of Russian support.

Under the programme, the mill’s production capacity will be enhanced to 1.5 million tons per annum from existing 1.1 million tons. Initial cost of the project is estimated at Rs30.45 billion, though actual cost will be determined after a technical audit of the plant by a Russian company.

Russia has linked provision of financing for the project with award of contract to its state-owned firm VO Tyazhpromexport.

In the working group meeting, the Russian authorities offered $500 million for the Central Asia South Asia (CASA) electricity import project, which would bring electricity from Central Asian states.

Under the project floated in 2006, 1,000 to 1,300 megawatts of surplus electricity will be imported from Tajikistan and Kyrgyzstan. “US, World Bank and Islamic Development Bank (IDB) have also backed the project,” an official said.

Published in The Express Tribune, July 25th, 2012.

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Reader Comments (16)

  • anonymous
    Jul 25, 2012 - 1:31AM

    Thats a hilarious picture! xD

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  • AnisAqeel
    Jul 25, 2012 - 6:59AM

    The picture shows how Pakistan can be chocked by Russia! When are we going to do these things ourselves my dear A-Power?

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  • Jul 25, 2012 - 7:09AM

    It’s encouraging to hear about the Russians to join the Chinese in making significant energy sector investments in Pakistan. There is light as Pakistanis approach the end of the tunnel. It’ll boost economic growth to help lift more people out of poverty.

    http://www.riazhaq.com/2009/03/china-signs-power-plant-deals-with.html

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  • Vikas
    Jul 25, 2012 - 8:01AM

    Bad news for India.

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  • Hassan
    Jul 25, 2012 - 11:59AM

    All these Russian Blessings? comes with a price …of killing or apprehending Muslim Chechnyans who come to Pakistan….the relations of our two great countries skyrocketed after the mascare of armless innocent Muslim Chechnyans in Akhrottabad by our valiant great armed forces…….i am disgusted..

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  • Jul 25, 2012 - 12:45PM

    Looks like new bloc is forming. The Anglo American empire is financially bankrupt and nearing its end. Siding with Russia is a great step. Last time Liaquat Ali Khan tried but was shot.

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  • jism
    Jul 25, 2012 - 2:24PM

    everyones knows that endgame is nearing,and even the Russians want to have a say in the endgame…not that they all of a sudden found a great deal in Pakistan, only that, they very well know they cannot control Afghanistan with Pakistan being on opposite side…

    on the contrary to what many believe,Afghanistan is offering huge investment opportunities compared to Pakistan, in exploiting natural resources…sure Pakistan has many resources,but when compared to what many central Asian nations and Russia has to offer,Pakistan’s resource falls way short..ohh, how can we forget Africa…the great race to Africa has already begun,with china leading the way,followed by India along with other playersRecommend

  • Cobra Commander
    Jul 25, 2012 - 2:27PM

    @moise. I believe it was Liaqat Ali Khan who famously rejected Soviets offer to visit USSR and instead went to US. I dont know which history books you are reading. Liaqat Ali Khan was an anti communists and was the first one to initiate action against them in Pakistan. Ask any old comrade and he will elaborate more on it.

    We must not go all excited over Putin’s visit to Pakistan. There is one thing in signing MOU’s and another thing asking Russians to visit Pakistan or Karachi where a dozen people get slaughtered every day. We must not befriend Russian just to antagonize US instead we must try to convince both countries to invest In Pakistan. We should have an policy where investment should be encouraged from any country which wishes to do so.

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  • ouch
    Jul 25, 2012 - 4:22PM

    It depends on what Soviets are offering. If we will get energy investments deals similar to what late BB got in early 90s by IPPs, we’ll be screwed up again for a decade at least.
    Refresher: 90s IPP deals came at a very costly tariff and restricted Govt. of Pakistan to establish more power plants..

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  • realist
    Jul 25, 2012 - 5:07PM

    TOI had reported months ago that Putin would be visiting Pakistan on Sep 26 2012.

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  • ali
    Jul 25, 2012 - 11:49PM

    Russians are our neighbors but the problem is that our elite’s is tilted towards the west. The politicians and generals need the dollars to buy properties overseas.

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  • Jul 26, 2012 - 12:11PM

    @Cobra Commander:
    Liaquat Ali Khan was non-aligned. Even if he wasn’t Communists were bank rolled by same people who bank roll both sides.

    He was killed because he couldn’t do more. If you can’t be a puppet you ll have a very public death (JFK, BB, Gaddhafi, etc).

    As for current Russia, it is Christian Orthodox country and not Communists like it was before. Lot has change.

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  • Shaukat Ursani
    Aug 24, 2012 - 10:30PM

    Since OBAMA provoked Zardari in Chicago it is obvious Zardari-Gilani will make friends with Russian Putin, Islamic socialism and communism goes hand in hand, look all the Caliphs, they quit after death. If Zardari kicks out America and side with Putin like Iran or Syria, He and Putin will be ruling their country for next 40 years. But if he misses this opportunity he will be blown -up by American CIA, like Zia-ul-Haq, Saddam Hussein, Col. Qaddafi and next in CIA hit list Saudi king Jordan King Bashar Assad of Syria and the list goes on. CIA is after you ZARDARI you better run and take cover. let KGB in and AMERICA & CIA out!!!!The biggest looser in this Game India? sorry India American Friendship will be costly to YOU!Recommend

  • Ammar B
    Aug 29, 2012 - 6:02AM

    @ hassan comes with a price …of killing or apprehending Muslim” Chechnyans. Why are we always fighting Muslim causes all over. While we ourselves our on the verge of collapse. While everyday a drone comes and kills you own fellow Muslim brothers, While in your city every day Shia and Sunni people are murdered. Its a shame yet we worry about gallant Chechnyans lol

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  • usman butt
    Sep 3, 2012 - 9:31PM

    Its about time Pakistan is doing something good for the people of Pakistan. Deceased Liaquat Ali made a mistake going to Washington instead of Moscow, well der aaed durust aaed, we should salute Zardari for making such a great step. Russia is our neighbor just like China we need each other in economic cooperation like gas pipeline,electric power,steel industry where Russia supersedes the world. the great harm was given to Pakistan by gen ZIA for fighting usa war against ussr. in return CIA killed him and doing drone attacks all over Pakistan, With friends like these who needs enemies;;;;;; bye bye USA you are no longer needed and welcome Russia/China. Zardari should be made president for life if he steer the boat of Pakistan away from west and bring it towards the east, as sun rise from east not west. Western economy is collapsing like sunset.
    Khole ankh, Zameen dekh, falak dekh, fiza dekh;
    Mashriq SE nikalte hue suraj KO Zara dekh;..’IQBAL’

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  • Sep 4, 2012 - 9:59PM

    Very timely step to make stratigic relation between Pak and Russia. Both can also negotiate with afghan taliban for peace and withdrawl of NATO-India nexus. Russia must not worry by Mujahideens becz Mujahideens are wise to tackle future diplomacy.Recommend

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