NEW DELHI: Saudi Arabia-based Islamic Development Bank has agreed to provide a $500 million loan to part-finance the $15 billion Turkmenistan-Afghanistan- Pakistan-India (TAPI) natural gas pipeline project. "A loan agreement was signed last month," an official said here.
Also, the TAPI Pipeline Co is in talks to rope in Saudi Fund for Development and the Japanese government as partners in the 1,814km project that will transport gas from Turkmenistan's Galkynysh fields to Fazilka in India through Pakistan. The IDB expressed interest in financing the project not just on Turkmenistan's territory but also in Afghanistan and Pakistan, he said.
The long-delayed transnational pipeline was formally inaugurated on December 13, 2015. Turkmenistan's national oil company Turkmengaz is the leader of the consortium of national oil companies of the four nations. It has 85 per cent equity in TAPI Pipeline Co (TPCL), the state-owned gas utility GAIL IndiaBSE 0.76pc, ISGS of Pakistan and Afghan Gas Enterprise (AGE) 5pc stake each. The TAPI pipeline will have a capacity to carry 90 million standard cubic metres a day (mmscmd) gas for 30 years, with 38 mmscmd going to India and Pakistan each. The remaining gas is to feed Afghanistan.
The project, to which the ADB was appointed the transaction advisor in November 2013, had been planned to become operational in 2018, but it is unlikely to see the light before 2022. The TAPI project has been on the drawing board for years as the four countries could not get an international firm to head a consortium which will lay and operate the pipeline. French giant Total SA had initially shown interest in leading the consortium. However, it backed off after Turkmenistan refused to accept its condition of a stake in the gas field that will feed the pipeline.
The official said the estimated cost of the project was $15 billion, according to an ADB-commissioned report. The project is to be funded in 60:40 debt-equity ratio. The four nations had signed an investment agreement in Ashgabad in April.
The official said the TPCL would appoint a project monitoring consultant (PMC) to conduct pre-FID activities including mine clearance in Afghanistan, detailed route survey, front-end engineering design (FEED) and environment and social impact assessment. The technical study of the TAPI project, done by the Penspen, estimated that it would take over six years to complete from the start of the FEED process, he said.
The TAPI project was first announced in May 2002. India joined the consortium in 2008. In 2014, the pipeline consortium, TPCL, was incorporated. The pipeline will carry gas from Galkynysh, better known by its previous name South Yoiotan Osman that holds gas reserves of 16 trillion cubic feet. From the field, the pipeline will run to Herat and Kandahar before entering Pakistan. In Pakistan, it will reach Multan via Quetta before ending at Fazilka (Punjab) in India.