$2 billion North-South Gas Pipeline Project: Credentials of Eagle Kingdom Technologies to be examined

Ministry of Energy (Petroleum Division) is to check the credentials of Eagle Kingdom Technologies (EKT), a new entity nominated by the Russian Government to execute a $2 billion North-South Gas Pipeline Project (NSGPP) on Government to Government (G to G) basis, official sources told Business Recorder.

Petroleum Division had submitted a summary to the Cabinet Committee on Energy (CCoE) held on April 2, 2020 with Asad Umar, Minister for Planning, Development and Special Initiatives in the chair for consideration but then withdrew it.

However, when CCoE minutes of April 2, 2020, were presented for ratification, questions were raised on withdrawal of summary by the Petroleum Division.

During the discussion, it was enquired as to why the case titled 'North-South Gas Pipeline Project' was deferred. It was highlighted that it was a project of national importance being executed on G2G basis with Russian government.

Petroleum Division informed that the credentials of the company now nominated by Russian government needed to be checked.

The Cabinet directed that due diligence should be carried out and the complete transparency in execution of this mega project be ensured.

Last month, there were reports that the Attorney General of Pakistan has okayed two structures for the long-delayed project, putting the Petroleum Division in a more difficult and confused position.

The sources said, Prime Minister Imran intends to visit Russia next month and Moscow has conveyed to Islamabad to finalize commercial agreement for new structure i.e. new company. However, apparently it looks impossible that Prime Minister will now undertake visit to Russia due to Coronavirus spread globally.

There are also reports that the Russian embassy in Islamabad has also conveyed to the Petroleum Division that Russian Government does not support the previous company (structure). Islamabad does not know if the newly nominated company EKT is under US sanctions/restrictions or not and is now trying to get information.

Under the proposed plan, a gas pipeline would be built from Karachi to Lahore and Russia would provide 85 per cent financing for the project.

Earlier, Russia nominated an entity - PAO TMK - whose ultimate beneficiary owner (UBO) Dmitry Pumpyansky is on the watch list of US sanctions.

Russia was insisting to make a deal with the company but Pakistan refused, saying that its ultimate beneficiary was on the watch list of US sanctions.

In the protocol execution on July 17, 2019, Pakistan and Russia proposed two options underlying the need that they were not sanctioned nor on the sanctions' watch list, including their shareholders directly or indirectly, and had pipeline building experience.

In light of the international sanctions on the nominated entity, Pakistan had requested the Russian side to explore the possibility of introducing sanction-free Russian entity with pipeline building experience to move forward with the project.

According to the Petroleum Division, the existing gas infrastructure of the country lacks capacity to transport additional large volume of gas supplies from southern to northern regions. Therefore, keeping in view the expected additional gas supplies in near future, Ministry of Energy (Petroleum Division) plans to undertake the laying of a gas pipeline from Karachi to Lahore.

The ECC in its meeting held in January 2015 approved the NSGPP under G 2 G arrangement.