Prime Minister Nawaz Sharif on Thursday invited Russia’s President Vladimir Putin to inaugurate the North-South gas pipeline as Islamabad cleared the decks for closer economic ties between two countries.
He extended the invitation while meeting a delegation led by Victor P Ivanov, co-chairman of the Russia-Pakistan Inter-Governmental Commission (IGC) on Economic, Trade and Scientific Cooperation, at the Prime Minister House.
The invitation was also announced by Finance Minister Ishaq Dar – who heads the IGC alongside Ivanov – at the first-ever Pakistan-Russia Investment Forum organised by Pakistan’s Board of Investment (BoI) and Russia’s Business Council for Cooperation with Pakistan on the fourth session of the IGC.
Earlier, Pakistan agreed to return $93.5 million to Russia to settle a trade claims dispute as well as increase the prospects of Putin’s first visit to the country. Islamabad and Moscow signed an agreement last month on financing the pipeline, which will be laid down between Karachi and Lahore for a cost of about $2 billion. Islamabad wants Putin to inaugurate the project as it moves away from its traditionally West-centric policy.
The project is to be implemented under the ‘build, own, operate and transfer’ model. Once laid down, the pipeline will be owned and operated for 25 years by the company awarded the project contract before being handed over to the Pakistan government.
Already Pakistan and Russia have signed a government-to-government deal which allows Islamabad to award the contract to a state-owned Russian firm without bidding.
While discussing modalities for the project over the three-day IGC meeting, Russian authorities urged their Pakistani counterparts to expedite the materialisation of the contract for the pipeline, officials familiar with the development said. The government is planning to sign the commercial agreement over the next couple of months, they added. According to officials, Russia’s move to finance the pipeline is a prelude to the sale of LNG to Pakistan. “LNG supply from Russia was also discussed [during the IGC meeting],” one official said. “The Russian participants informed us that they could export LNG [to Pakistan] in the next two years.”
Trade claims row settled
Pakistan and Russia agreed to settle a dispute over $117 million worth of Russian deposits, BoI Chairman Dr Miftah Ismail announced. A framework agreement will be signed today (Friday), he said.
The deposits had been withheld under court directions after two exporters moved the court, seeking compensation for trade claims dating back to the Soviet Union era. The issue became a major stumbling block in advancement of bilateral economic ties between Pakistan and Russia after Moscow argued that the deposits, being sovereign funds, could not be withheld to settle trade related payments.
Under the agreement, Pakistan will return $93.5 million out of the $117 million deposits, said Ismail who led negotiations with Russian authorities. “The remainder will be disbursed among affected exporters.”
Dar urges Russia to invest more
Speaking at the Pakistan-Russia Investment Forum on Thursday, Finance Minister Dar urged Russia to invest more in Pakistan, terming the existing investment volume of $270 million a ‘little disappointing’. In particular, he sought Russian investment to upgrade Pakistan Steel Mills.
Victor P Ivanov, who is the director of Russia’s Drug Control Services in addition to being the co-chairman of the Russia-Pakistan IGC, agreed with Dar in that the existing volume of trade and investment between Pakistan and Russia “is not commensurate with the available potential in both the countries.”
He stressed establishing more air links between the two countries, saying it would be a stepping stone to set up direct contacts between the their business and investors’ communities.
Published in The Express Tribune, November 20th, 2015.