IP gas project: Who will finance Pakistan’s side of pipeline?

Published: August 25, 2012
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The project is expected to facilitate the import of 700 million cubic feet of gas every day through the 2,100-kilometre pipeline. PHOTO: FILE

The project is expected to facilitate the import of 700 million cubic feet of gas every day through the 2,100-kilometre pipeline. PHOTO: FILE

ISLAMABAD: 

As Russia and China have not given confirmed financing the IP gas pipeline project, Pakistan and Iran will resume talks in the first week of September to finalise the arrangement of finance to lay Pakistan’s side of the pipeline.

Russia and China are conducting due diligence of the project although there has been no response so far, said an official.

Pakistan will also urge the Iranian team to double its pledged amount to $500 million during the upcoming meeting of the working group on IP gas pipeline project. “Iran has already committed to raise $250 million financing for the gas pipeline project through its commercial banks,” sources said.

The project is expected to facilitate the import of 700 million cubic feet of gas every day through the 2,100 kilometre pipeline which will ease the current energy crisis in Pakistan.

Iran-Pakistan gas pipeline is expected to reach the zero border point in the first half of next Iranian calendar year beginning 20 March 2013. National Iranian Gas Company (NIGC) Managing Director, Javad Oji in a recent statement, said that work on the 56-inch Seventh Iran’s Gas Trunkline from Iranshahr, southeast of Iran to Pakistan border and Zahedan city is complete and it is expected to come on stream in September 2013.

Coordination committee to meet on Monday

In another group meeting, a special Iranian team will participate in the two-day coordination committee meeting on the IP gas pipeline project scheduled to meet in Islamabad on Monday to review progress of the project.

Pakistan and Iran had formed the joint working body to finalise a deal with the latter to lay Pakistan’s portion of the pipeline during a meeting held in Islamabad on July 17 and 18.

The Joint Working Group comprised experts from technical, legal, financial and commercial sectors to work out details with respect to implementation of the Iran-Pakistan gas pipeline project.

“This group will also examine the impact of US sanctions against Iran on IP gas pipeline project,” sources added. State-owned National Bank of Pakistan (NBP) and Oil and Gas Development Company Limited (OGDC) walked away from the project last year fearing US sanctions. In March this year, the world’s largest bank Industrial and Commercial Bank of China Limited (ICBC) after agreeing to finance Pakistan’s side of the pipeline also shied away.

“If the two countries reach an agreement, Iran would also provide material for the pipeline,” source added.

German based firm ILF has completed detailed engineering design of IP gas pipeline project and according to the interim feasibility report, the cost of the project is between $1.2 and $1.5 billion.

“If the project is materialised with the participation of local companies, the cost of the project fall while the cost would go up if foreign companies complete the project. Sources also hinted that local and Iranian companies could wrap up the project.

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

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Reader Comments (12)

  • Aug 25, 2012 - 1:52AM

    umm.. so what exactly is Pakistan bringing on the table… ?

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  • atifraja19
    Aug 25, 2012 - 3:07AM

    In current regime of PPP it’s difficult to bring this pipeline inside Pakistan, As they have a clear agenda do not work against the policies of USA. afterwards i can’t say.

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  • just_someone
    Aug 25, 2012 - 3:21AM

    how bad a condition are teh finances of this government that they cant even lay down a bunch of pipes and some regulators for the gas. i mean, are they stealing soooo much that we have no money left in the kitty at all?

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  • Singh
    Aug 25, 2012 - 5:04AM

    If Pakistan don’t have money to build then how they will pay for gas?

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  • Concern Paki
    Aug 25, 2012 - 7:23AM

    Every household that uses gas will pay their share of the bill. In current environment, if everyone pays their bill load shedding would come down to less time, that includes the civilian, Politician, General, Judges, Civil Servant, Landlord, and even the Government.Recommend

  • IM
    Aug 25, 2012 - 9:48AM

    (Singh) We have more money than you expect us to have..

    Keeping in view the Global Political and Economic scenario.. China already messed with Dollars in the Foriegn Reserves… It will be troulesome for them to finance the Pakistan Side of the Project..

    Lets see.. “All is well that Ends well”.. Hope for the best

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  • Aug 25, 2012 - 12:26PM

    ^ Ah but it’s actually worse than that. The GOP has imposed a tax on domestic gas consumption that is aimed at raising money for the IP pipeline construction. Only God knows where that money has gone! If they were honest they would have no need to beg Iran for money to build the pipeline.

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  • Humble_pie
    Aug 25, 2012 - 1:14PM

    why don’t someone in the present govt suggest to form a local company listed
    on the stock exchange to generate funds locally for this pipeline project so vital for the future of Pakistan. Also please listen to suggestions of Mr Shahid Siddique, our economist, ways to reduce the cost of project by 40% if not more by getting first point of delivery in nearby point
    (Gawadar) instead of taking it all the way to Nawabshah. !! It will not only save cost but speed up deliveries so badly needed for producing electricity/fertilizer plants.

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  • Raj - USA
    Aug 25, 2012 - 9:23PM

    @IM:
    “(Singh) We have more money than you expect us to have..
    Keeping in view the Global Political and Economic scenario.. China already messed with Dollars in the Foriegn Reserves… It will be troulesome for them to finance the Pakistan Side of the Project..”
    So Amreka is bankrupt, India is poorest country living in slums, Europe is broke and now even China is bankrupt.

    Only Pakistan is the richest country in the planet. Reminds me of what my Afghan friend jokingly told. He said Afghanistan is the richest country in the world as it has no borrowings or debts to be repaid, either domestic debts or foreign debts.

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  • M.Ahmer Ali
    Aug 26, 2012 - 9:47AM

    @atifraja19:
    I strongly agree with you here on with your this stance but if/provided that PPP’s leaders strongly and openly oppose/reject US’ policies regarding over coming Pakistan’s energy crisis regarding gas pipeline project with Iran sincerely,honestly,truly and practically without any fear of US and its sanctions then China and Russia are much the best,most authentic,credible and trustworthy options/countries to invest on Pakistan’s side gas pipeline….

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  • Singh
    Aug 26, 2012 - 9:59AM

    @IM:
    If GOP have so much money why they keep begging to IMF/WB/USA or FOP(Friend of Pakistan). Paying back 350Million to IMF is big news in Pakistan.
    Your claim tickle me.

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  • realist
    Aug 27, 2012 - 12:34AM

    @Concern Paki:
    “Every household that uses gas will pay their share of the bill. In current environment, if everyone pays their bill load shedding would come down to less time, that includes the civilian, Politician, General, Judges, Civil Servant, Landlord, and even the Government.”

    Finally only the civilian will pay!

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