Editorial

Deal with Russia

The objective of the deal is to transport the LNG imported in the country to terminals in Lahore

Editorial October 25, 2015

Petroleum Minister Shahid Khaqan Abbasiand Russian Energy Minister Alexander Novak sign the agreement for a gas pipeline project in Islamabad. PHOTO: PID

Pakistan has been pursuing energy pacts on many fronts with the $46-billion China-Pakistan Economic Corridor featuring several power projects as the PML-N government looks to pay heed to one of its main promises — wiping out power cuts that has crippled economic growth. The latest deal, which will see a pipeline being laid to transport gas from Karachi to Lahore, follows the development in December last year where Pakistan and Russia had agreed to pursue the project. The objective of the deal is to transport the LNG imported in the country to terminals in Lahore as the PML-N looks to help its political stronghold combat power outages. One of the features of the $2 billion deal is that Pakistan will award the contract to a Russian firm without going into the bidding process.

This comes as good news for the energy-starved business community and the people in general, as they look for signs of the government delivering on its promises. After being unable to stitch together a meaningful government-to-government deal with Qatar over LNG supplies — an issue which is still pending — Pakistan was desperately looking at an avenue to not only import the fuel, but be able to transport it to Punjab. The improving relationship with Russia — where talks on not just the energy front, but defence equipment have been held as well — augurs well for the government that had seen several of its projects halted or cancelled altogether.

While Pakistan would welcome the development, it needs to be understood that Russia needs this as much as we do. Russia is not only looking to diversify its export markets, it is also trying to make its presence felt in Pakistan in a bid to benefit its own companies. While the authorities here may very well hail the development as a success, the common mistake our governments tend to make often is to leave projects hanging. LNG was being hailed as the fuel of the future, but many pending issues have left this area facing the same fate. This time Pakistan needs to power the project through bureaucratic hurdles, security concerns and regulatory burdens.

Published in The Express Tribune, October 26^th, 2015.

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COMMENTS (7)

cautious | 8 years ago | Reply Not sure I understand why the Editor is promoting a "no bid" deal with the Russians - no bid deals (whether it's Russia, China, or anybody else) are bad for Pakistan, bad for the taxpayers, bad for the ratepayers. Does the Editor really think that overpaying Russia for projects is the best way of establishing a relationship?

curious2 | 8 years ago | Reply Pakistan energy shortage is due to Pakistan not having the financial resources to acquire energy which is plentiful and reasonably cheap .... your near bankrupt because you like to do major deals without doing economic analysis and think "no bid" deals are acceptable. Doing a "no bid" deal with Russia is part of the problem --- not part of the solution.