Gas pipeline: Pakistan, Iran to meet to finalise construction contract

Iranian team will arrive for talks to be held on April 15 and 16.

ISLAMABAD:

Pakistan and Iran are set to resume talks in mid-April to finalise the award of a multi-million-dollar contract to an Iranian firm for laying a gas pipeline inside Pakistani territory, a process that has already been delayed because of some bottlenecks.

“An Iranian team will arrive in Islamabad on April 15 and 16 to finalise the award of contract to Tadbir Energy of Iran,” a source said.

The contract would have been awarded by the previous government, which completed its tenure on March 16, had the finance ministry approved the term sheet of contract, submitted by Tadbir Energy, and grant of sovereign guarantees on time, sources said.

The ministry gave the approval to the term sheet and sovereign guarantees quite late on March 15.

Pakistan was set to award the construction contract to Tadbir Energy at the time of the official launch of work on the project on the Pak-Iran border, which was inaugurated by President Asif Ali Zardari and Iranian President Mahmoud Ahmadinejad on March 11. However, no agreement was signed.



Earlier, Pakistani officials had held several rounds of negotiations with Tadbir Energy, the firm designated by Iran, for the construction of the pipeline and financing of $500 million offered by Tehran.

The two sides had agreed that the finance ministry would issue sovereign guarantees to Tadbir Energy to cover the construction contract and financing, which was one of the conditions for the engineering, procurement and construction contract.

The cabinet committee gave the go-ahead to the issuance of sovereign guarantees.

“In the final round of negotiations with Tadbir Energy on March 16 and 17 in Tehran, a Pakistani team told the Iranians that the finance ministry had finally approved the term sheet, paving the way for the award of contract,” an official said.

Initial agreement has already been reached with Tadbir Energy, but final accord is awaited. The cabinet has waived Public Procurement Regulatory Authority (PPRA) rules to award the contract directly to the Iranian firm.

Pakistani public sector firm Interstate Gas Systems (ISGS) and Tadbir Energy inked the initial contract in Tehran. Though western governments have imposed sanctions on Iran, Tadbir Energy does not fall within their ambit. It is controlled by the Imam Khomeini Foundation, one of Iran’s largest charitable groups.

Tadbir Energy will undertake all engineering, procurement and construction work on the first phase of the pipeline, starting from the Pak-Iran border, costing around $250 million.

In the second phase, the financing facility will be increased by up to $250 million, depending on discussions regarding the involvement of Tadbir Energy in gas distribution in Pakistan. It will act as the lead contractor along with local subcontractors.

Under the project, Iran will start supplying 750 million cubic feet of gas per day by the end of December 2014, which will be consumed by power plants to generate 4,000 megawatts of electricity.

The engineering and project management consultant, appointed in April 2011, has completed work on bankable feasibility study, interim front-end engineering design and route reconnaissance survey.

Published in The Express Tribune, April 4^th, 2013.

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