ISLAMABAD: The Ministry of Foreign Affairs (MoFA) has proposed to the Petroleum Division to move forward on Iran Pakistan (IP) gas pipeline project without further delay as this is a very important energy project, well informed sources told Business Recorder.
MoFA’s advice to Petroleum Division on IP pipeline project pre-date recent remarks of US Assistant Secretary of State for South and Central Asia Donald Lu against the IP project.
At an inter-minister meeting held in MoFA, the representative of Petroleum Division stated that the Federal Cabinet as well as Cabinet Committee on Energy (CCoE) approved the recommendations of Ministerial Oversight Committee (MOC) established on the directive of the Prime Minister.
IP gas pipeline project: CCoE decides to start work on first phase
As per cost estimates for the construction of the pipeline, $158 million (equivalent to Rs45 billion) would be utilised from Gas Infrastructure Development Cess (GIDC) funds, and up to Rs2.5 billion can be provided during FY 2023-24. The requirement of remaining funds amounting to Rs42.5 billion may be considered during FY 2024-25 on approval of the GIDC Board.
The government will utilise Rs45 billion under the GIDC on the construction of the pipeline. The government fears that in case of any further delay, Pakistan may have to pay a contractual liability of $ 18 billion.
The MOC has recommended to initiate construction of gas pipeline from Gabd Remdan to Gwadar (80 Km) by utilizing GIDC funds. The filing of the waiver application with US authorities is deferred due to current geo-political situation, the sources added.
MOC has further recommended that High-Level Committee and Pakistan Coordination Committee (PCC) will discuss and resolve all outstanding issues with Iran including Iran’s Material Breach notice and contract extension under French Civil Code. Meanwhile, Pakistan ill continue engagement with Russia, China, Turkmenistan and Azerbaijan regarding gas swap arrangements in relation to the project.
Petroleum Division representative apprised that the project works have been initiated by engaging the consultant for revalidation of the pipeline route and engineering design to be completed by September 2024. The land acquisition activity will be initiated in parallel while the engineering procurement and construction tenders will be awarded after engineering design validation.
The project will be completed by September 2025. He further apprised that a pipeline of 250+ Km on Iranian side is yet to be completed. The pipeline construction timeline is 18-24 months, subject to approval of funds ($ 160 million). The contract period to supply gas is 25 years.
The Chair/ Secretary Foreign Affairs, proposed that IP being an important energy project, Petroleum Division should move forward and start construction of the pipeline without further delay.
The sources said, US Ambassador to Pakistan Donald Blome, recently met with Petroleum Minister, Musadik Malik and among other issues he also conveyed Washington’s message on IP pipeline as the US takes the project very seriously.
US Assistant Secretary of State for South and Central Asia Donald Lu, recently told US Congressional Committee that Pakistan’s decision to build pipeline will lead to US sanctions.
Copyright Business Recorder, 2024
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