Gas pipeline: Pakistan, Iran to sign construction contract today

Pipeline will cost Rs190m per km, markup on loan is 3%.

According to Hussain, the Iranian company will complete the process of constructing the pipeline in 15 months. ILLUSTRATION: JAMAL KHURSHID


The critical Iran-Pakistan gas pipeline project is entering the implementation phase as Pakistan’s state-owned firm Inter-State Gas Systems and Tadbir Energy Costar Iranian Co will sign a construction contract for laying the pipeline in Pakistan today (Friday).

Adviser to Prime Minister on Petroleum and Natural Resources Dr Asim Hussain told this to the National Assembly Standing Committee on Petroleum and Natural Resources in a meeting here on Thursday. Engineer Tariq Khattak chaired the meeting.

Pakistan and Iran are forging ahead with the project despite opposition from the US, which has imposed sanctions on Tehran for its alleged nuclear programme.

According to Hussain, the Iranian company will complete the process of constructing the pipeline in 15 months.

Frontier Works Organisation (FWO), Sui Southern Gas Company (SSGC) and Sui Northern Gas Pipelines Limited (SNGPL) will also take part in the construction work.

Sources said Pakistan and Iran had finalised per kilometre cost of laying the pipeline, which will be of 42 inches and spread over 781 km, as well as markup on loan being provided by Tehran.

The per kilometre cost will be Rs190 million and markup on $500 million loan will be 3% per annum. “Iran had demanded 4% interest on loan,” a source said.

The financing will be for 20 years with a five-year grace period.

SNGPL on verge of default

Briefing the parliamentary panel, Hussain said the prime minister had directed the implementation of parliamentarians’ gas development schemes, but the gas companies were not capable of completing the work.

He disclosed that Sui Northern Gas Pipelines Limited (SNGPL) was on the verge of financial default and had no money to pay salaries to its employees. “We have asked the prime minister to pay subsidy to the company, which will help it to continue operation,” he said.

Hussain held the Oil and Gas Regulatory Authority (Ogra) – the oil and gas sector’s regulator – for the sorry state of affairs at SNGPL, which he feared would not be able to function after June. “Gas theft is going on, but Ogra is not playing any role in restricting the practice,” he added.

The regulator was working according to rules and was performing its functions, retorted Ogra Chairman Saeed Khan. Rather, he blamed the gas companies for doing nothing to stop the gas theft.

He pointed out that Ogra had set a benchmark, allowing gas companies to recover some of the losses on account of gas theft from registered consumers. But at the same time, he said, gas companies could not reduce the distribution losses and gas theft.

“If the petroleum adviser wants to shut down Ogra, do it,” he remarked, but reminded the panel that foreign countries were taking steps to strengthen the regulators, but no such case at home.

During the meeting, the parliamentarians asked the Ogra chairman to allow 69 compressed natural gas (CNG) stations, which had applied for relocation, to operate as they had invested a huge amount in their business.

In response, the Ogra chief told them the CNG stations had been barred after the National Accountability Bureau (NAB) took action over their relocation.

Panel member Rana Afzal presented report of a subcommittee about loss of billions of rupees because of procurement of defective portable drills. The panel recommended strict action against the culprits involved.

Published in The Express Tribune, February 15th, 2013.

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gp65 | 10 years ago | Reply

@antanu g: Not Us pressure. India opted out well before that due to not reaching an agreement with Pakistan on the terms.

gp65 | 10 years ago | Reply

@non political: India opted out in 2010 . At that time there was no US pressure. The reason was the high transit fee being quoted by Pakistan and unwillingness to provide security for the billion plus dollars of investment that India would have to make.

Incidentally NBP has actually opted out due to Us pressure. The project still has not reached financial closure. Pakistan does not have a source of fundi g other than the Iranian loan which does not cover the whole project.

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