The Prime Minister''s Advisor on Pet-roleum and Natural Re-sources, Dr Asim Hussain has left Islama-bad for Iran to discuss the financing of Iran-Pakistan (IP) gas pipeline project with Iranian authorities, the Petroleum Ministry officials said. According to the Petroleum Ministry sources, Iran has in principle agreed to provide $250 million to Pakistan for the construction of the pipeline on Pakistani side, while Pakistan is requesting Iran for $500 million.
Sources said work on the IP project has reached an advanced stage as Pakistan has already completed Interim Front End Engineering Design (FEED) of the proposed IP project, while progress on TAPI is at an initial stage. The government has already invited bids for constructing 785 kilometers of the pipeline project from pre-qualified parties. Iran has constructed 900 kilometers of the 1,100 kms pipeline within its borders while 785 kms stretch of pipeline in Pakistan awaits construction.
The pipeline is likely to cost the energy-deficient country $1.25 billion, and will initially bring around 750 mmcfd of gas, which will be gradually increased to over 1.5 BCFD. "The government has imposed Gas Infrastructure Development Cess (GIDC) as per the GIDC Act on all category of gas consumers to finance the construction of imported gas projects such as IP, Liquefied Natural Gas (LNG), Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline projects and other energy projects or for price equalisation of other imported alternative fuels including Liquefied Natural Gas (LNG)", the official added.
The government has so far collected around Rs 45 billion from Gas Infrastructure Development Cess, which would be utilised for construction of Iran Pakistan (IP) gas pipeline and/or other energy projects. Officials told Business Recorder leading Russian gas exploration Company Gazprom is the favourite to build and develop Iran-Pakistan Gas Pipeline (IP) project and has already submitted Expression of Interest in response to Inter Sate Gas Company''s invitation last year.
As per draft agreement Pakistan is bound to complete the project by the end of 2014 otherwise it will have to pay a daily penalty of $1 million to Iran. As per draft agreement of the project the contractor will have to complete the project within two years, ie, 2012-14. The government of Pakistan is expected to allow exemptions in duties and taxes on the import of certain materials required for gas import projects. EPC contractors'' are also expected to be exempted from sales tax for services provided on such projects.