Gas pipeline: Delay may take TAPI project cost to $10b, says ADB

Officials of four countries discuss finalising the consortium leader.

ISLAMABAD:

The Asian Development Bank (ADB) has warned that the cost of the Turkmenistan, Afghanistan, Pakistan and India (Tapi) gas pipeline project would go up to $10 billion due to the delay in implementation.

Earlier estimates had put the cost at $7.5 billion, which will now go up by $2.5 billion. However, officials said that the total cost also included the development cost of gas fields.

Sources said that top functionaries from the four countries (Pakistan, Afghanistan, India and Turkmenistan) met in Islamabad on Wednesday to finalise the award of a multi-billion-dollar contract to French energy giant Total.

The company would also develop gas fields in Turkmenistan – the source of gas supply to Pakistan, Afghanistan and India.

Officials added that Turkmenistan had agreed to award the contract to Total as the four nations gathered to discuss the service contract agreement to be signed with the French company, which would function as a consortium leader.



Under the contract, Turkmenistan will pay a service fee to Total for development of the fields and the French entity will bear the costs associated with laying the pipeline.

“Pakistan would not pay any cost, it would be the responsibility of the consortium leader,” said an official familiar with the development, adding that gas companies in Pakistan and India were also likely to become part of the consortium.

Project’s importance

According to a statement, Prime Minister Nawaz Sharif chaired a meeting on the Tapi gas pipeline project.

Turkmen State Agency for Management and Use of Hydrocarbon Resources Director Yagshgeldi Kakayev, Afghan Minister of Mines and Petroleum Daoudshah Saba, Indian Minister of State for Petroleum and Natural Gas Dharmendra Pradhan, ADB Director General Klaus Gerhaeusser and other senior officials were present in the meeting.

The prime minster said that this project is extremely important for all countries of the region and Pakistan is keen that work on it is expedited. He emphasised the need of playing a ‘positive role’ in this regard.

Nawaz Sharif said “we are facing a shortage of gas, and this project will immensely help in meeting the deficit. Everyone should take responsibility so that we can fulfil our obligation to the nation.”

He emphasised that concerned states should take all the necessary steps to start the project as soon as possible as its cost would continue to increase as the time passes.

“We have pinned a lot of hopes on this project and want it completed as soon as possible,” he said.

The visiting ministers of the member countries shared the views of Pakistan on the project for the region and called this a win-win situation for all the countries involved. The meeting agreed that a consortium leader would soon be finalised.

The prime minister was informed that an Intergovernmental Agreement was signed in 2010 by the head of states of all the Tapi members.

The gas pipeline will be 1,680km long and has a designed capacity to supply 3.2 billion cubic feet of natural gas per annum from Turkmenistan to the other three countries.

Published in The Express Tribune, February 12^th,  2015.

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