Russia expresses concern over reports of alternate gas pipeline by Pakistan
Islamabad : Russia has expressed its concerns over reports that Pakistan is considering working out an alternate plan to construct the USD 2.5 billion Pakistan- Stream Gas Pipeline (PSGP) project from Port Qasim to Kasur, formerly known as North-South Gas Pipeline.
The information was disclosed by the sources close to the Special Assistant to Prime Minister (SAPM) on Power and Petroleum told Business Recorder.
It can jeopardise Pakistan's ties with Russia. Pakistan and the Russian Federation had signed the amended Inter-Governmental Agreement (IGA) on May 28 in Moscow on Pakistan Stream Gas Pipeline Project (PSGP), now both the countries have to sign the share-holders Agreement (SHA) within 60 days from the signing of the protocol scheduled for July 27.
Ministry of Foreign Affairs has conveyed Moscow's concerns to Petroleum Division, prior to the visit of a 12-member delegation headed by AA Tolparov, Deputy Director of the Department of Foreign Economic Cooperation and Fuel Market Development. The delegation held four-day parleys with Pakistan that started from Monday, reported Business Recorder.
Moscow sent a letter to Islamabad on June 7, informing that a Russian delegation wants to visit Pakistan from June 22 for talks on the Heads of Terms and Shareholders Agreement with the participation of nominated entities ISGS and "PAKSTREAM" and competent authorities from the Pakistani side.
Petroleum Division, which earlier agreed to a 56 diameters pipeline with Russia, is now considering using 42 diameter, which is more expensive.
Meanwhile, US Charge d' Affaires, Angela Aggeler, also met the SAPM on Power and Petroleum a couple of days ago and sought an update on the gas pipeline project.
Some stakeholders fear that the meetings of Americans before talks with Russians could be aimed at creating confusion, which will not be liked at the highest level, reported Business Recorder.
The problems began soon after the signing of the amended IGA. As many as 27 days after the agreement was signed, CCOE (Cabinet Committee on Energy) that met on June 24 asked the Petroleum Division to finalize an alternate gas pipeline project by mid-July 2021, arguing there are massive negative consequences of the delay in the implementation of PSGP and the deadline set by the Supreme Court has already been missed.
The Petroleum Division carved out an alternate plan under which the Petroleum Division wants to build the LNG-III pipeline under the consortium of Sui Southern, Sui Northern and PAPCO - the company of PARCO.
The Petroleum Division favours the alternate project in case talks with Russia fail on the PSGP/also known as North-South Gas Pipeline. The Petroleum Division's proposal is based on Economic Coordination Committee (ECC) decision, of January 5, 2018, under which financing was approved for the 1.2 billion cubic feet per day gas (BCFD) capacity RLNG-III pipeline of 1,150 km from Karachi to Lahore through a 42-inch diameter pipeline.
Later, the CCOE decision, the Petroleum Division responded to the Russian letter and informed them of Pakistan's readiness to negotiate the shareholder's agreement.
Meantime, the Special Assistant to Prime Minister Tabish Gauhar has already favoured the Sui Southern and Sui Northern to develop the LNG-III pipeline from Karachi to Lahore in place of PSGP, advocating that the country should not rely on external assistance as it would escalate the cost of the project, reported The News International.
The shareholder's agreement and deal on heads of terms with Russia may take more than one and a half years before any groundwork can get underway on the project. Besides, the Petroleum Division has made up its mind not to extend the guaranteed rate of returns to the Russian side against its 26 per cent shares in Pakistan Stream Gas Pipeline.
According to Tabish Gauhar, it has been decided that the government will not provide any sovereign guarantee for profit on any foreign investment in Pakistan in all sectors of the economy, whether it is in the power and refining sectors.
The Russian Federation is negotiating this project with Pakistan since 2015 and has witnessed many upheavals lead to the delay. Reviewing the process since 2015 from the change of structures, change inequities up to amendments in IGA, the authorities in Pakistan are found at fault for the delay and not the Russian Federation, The News International reported. (ANI)