ISLAMABAD: The Cabinet Committee on Energy (CCoE) has directed the Petroleum Division to utilize GIDC as per directions of the Supreme Court of Pakistan, official sources told Business Recorder.

On October 15, 2020, the Petroleum Division noted that the Supreme Court of Pakistan in its judgment of August 13, 2020 on the Gas Infrastructure Development Cess (GIDC) had directed that the federal government take all steps to commence work on the laying of the North South Gas Pipeline (NSGP) within six months.

The Inter Governmental Agreement (IGA) on NSGP was signed with the Russian Federation in 2015 under BOOT arrangement. On ground progress on the project remained debilitated as both sides could not agree on a sanction free and commercially viable Russian project implementing agency. In view of the GIDC decision, the pipeline may be self-financed. However consultations of Power Division with stakeholders unequivocally point out that the project is demonstrative of strategic engagement with the Russian Federation.

Ministry of Foreign Affairs reiterated the importance of the project and personal interest of President Putin to initiate the project in the earliest timeframe. On September 7, 2020 Minister for Energy wrote to the Minister for Energy, Russian Federation informing him of the GIDC decision and that the IGA requires amendment to reflect changes in the capital structure necessitated by the Supreme Court's order.

The Russian side was invited for talks to effectuate the amendment to the IGA and agree on next steps including establishment of a Russia Pakistan Special Purpose Vehicle, majority of the shareholding of which could be provided as equity through GIDC. A video conference was held with the new Deputy Minister of the Russian Federation to explain the changes needed in capital structure. "We are awaiting their formal response and nomination of a technical team." sources added.

Petroleum Division submitted the following activities with respect to NSGF for information of the CCoE: (i) land acquisition activity for the route of NSGP measuring 850 kms from Nawabshah to Lahore has been initiated; (ii) the process for obtaining land route clearance from the Ministry of Defence for the 230 kms corridor of NSGP from Nawabshah to Port Qasim has been initiated. This was not part of the original design; (iii) Sui Northern .Gas Pipelines Limited (SNGPL) and Sui Southern Gas Company Limited (SSGCL) have been engaged to assist in acquiring the right of way and land acquisition for the entire route of NSGP project; (iv) keeping in view the domestic and industrial requirement of the country and the need for two new terminals plus the proposed expansion of the existing terminals, the designed transmission capacity of NSGP has been enhanced frorn1,2.to 1.6 BCFD for project FEED; (v) request has been made to GIDC Board for allocation of funds for the project; and (vi) project account opening activity has been initiated.

After detailed discussion, the CCoE directed Petroleum Division to ensure that the timelines for the project are strictly followed, with a view to utilize the GIDC funding for the project, in accordance with the directions of the Supreme Court of Pakistan with regard to utilization of GIDC.

Copyright Business Recorder, 2020