Meeting in Ashgabat: ADB to generate $7.5b for financing TAPI gas pipeline

Bank is expected to be appointed as transaction adviser.

ISLAMABAD:

Turkmenistan, Afghanistan, Pakistan and India are likely to sign a transaction advisory deal with the Asian Development Bank (ADB) in the first week of July in an effort to generate over $7.5 billion from leading investors for financing a US-backed gas pipeline to meet growing energy needs.

According to sources, this development is expected to take place in meetings of the steering committee and the working group on the gas pipeline project in Ashgabat, Turkmenistan on July 2-3. Petroleum Minister Shahid Khaqan Abbasi will attend the meetings.

Earlier, the deliberations were scheduled to be held on June 17-19, but were put off in the wake of transition of power to a new government in Pakistan.



Washington has been pushing Islamabad to go ahead with the Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline and shelve the Iran-Pakistan (IP) pipeline project due to a standoff with Tehran.

However, the new government of Pakistan Muslim League-Nawaz (PML-N) has staved off the pressure and assured Iran that work on the IP project will go on according to the schedule, dealing a big blow to the US campaign.

In 2008, the ADB had warned that the cost of TAPI gas pipeline could escalate to $9 billion following delay in finalising necessary issues compared to initial cost estimate of $7.6 billion based on a pre-feasibility study.

“The countries participating in the TAPI project are now set to sign a deal with the ADB that will act as a transaction adviser to raise funds for the project,” an official said. All countries had agreed to hire the ADB as the transaction adviser, he said.

Turkmenistan’s ministry of oil and gas industry and natural resources, in a recent letter, praised ADB’s fruitful cooperation to promote the TAPI project.

However, Turkmenistan expressed concern over delay in resolving some of the issues that were impeding the progress on the project. With a view to boosting project activities, it proposed back-to-back meetings of the technical working group and the steering committee in Ashgabat in mid-June.

Under the original project plan, Pakistan will get 1.365 billion cubic feet of gas per day (bcfd) from Turkmenistan, India will also receive the same 1.365 bcfd and Afghanistan will get 0.5 bcfd.

Turkmenistan will export up to 33 billion cubic metres of natural gas per year through a 1,800km pipeline that will start from Turkmenistan and reach India after passing through Afghanistan and Pakistan.

Pakistan and India have already signed gas sale-purchase agreements and efforts are under way to attract potential investors for financing the project.

Road shows

Representatives of the ADB, Turkmenistan, Afghanistan, Pakistan and India took part in road shows organised by the bank in September last year in major financial hubs of Singapore, New York and London to look for potential project sponsors.

According to the Ministry of Petroleum and Natural Resources, in the Singapore road show, renowned companies and financial institutions such as Petronas, Temasek and the State Bank of India participated.

They were given a comprehensive presentation on the overall structure of the project, supply source and market demand in Afghanistan, Pakistan and India. They were also updated on the current status and the way forward.

The New York event was attended by leading international oil companies such as Chevron and ExxonMobil and leading financial institutions like Citigroup and the US Export-Import Bank. All participants expressed keen interest in the project.

In the London road show, TAPI project representatives met with officials of British Petroleum, Shell, British Gas and Morgan Stanley.

Published in The Express Tribune, June 21^st, 2013.

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