North-South Gas Pipeline: Pakistan accepts latest structure headed by ETK

ISLAMABAD: In a major development, Pakistan has finally accepted the latest structure headed by the ETK earlier extended by the Russian government paving way for starting work on construction of the much-touted North-South Gas Pipeline Project (NSGPP).

The project will pave way for increased Pak-Russia strategic partnership in more sectors of economy. “All the stakeholders of the State of Pakistan including the ‘powerful circles’ have given go-ahead to the new structure, which is why the Petroleum Division has vigorously started working on the project,” a senior official of the Energy Ministry told The News.

The government wants to increase the scope of capacity and design of the project to transport 1.6 billion cubic feet gas per day (bcfd) as earlier it was proposed with the capacity to transport 1.2bcfd.

In the years to come such project with capacity to transport 1.2 bcfd RLNG will not be enough to cater to future gas demands which is why the authorities concerned are mulling over increasing the capacity of the proposed 11,00 kilometers North-South Gas Pipeline Project to transport 1.6 bcfd RLNG.

Though Pakistan took over four and a half years in finalizing the structure, it has ensured that the companies involved in the structure are not blacklisted and have the requisite experience of laying down such a mega pipeline.

More importantly, the Russian Energy Ministry has its state-owned company in the new structure, as the project will be executed under the government-to-government agreement. The ETK company has the experience to lay down 4,000-kilometer pipelines and rich expertise in supplying the related equipment. To a question, he said Russia was the only country in the world, which had the biggest network of pipelines.

“We have carried out strict and detailed due diligence of the latest structure independently and after getting satisfied we have approved the new structure and now Pakistan and Russia will initiate talks in September for monitoring and implementation of the project,’’ the official said.

‘’We want to initiate the project as soon as possible particularly keeping in view the recent judgment of the Supreme Court on Gas Infrastructure Development Cess (GIDC) on August 13.’’

As per the proceedings of the Apex Court on GIDC, the Finance Division had given an undertaking that Rs295 billion amount in the head of GIDC was lying with it and in case of cash call from the Petroleum Division, it will release the said amount and over Rs417 billion is to be collected from various sector of economy in 24 installments. The Petroleum Division has geared up its efforts to collect the said amount. Under the new scenario, the government feels itself in a comfort zone with regard to the availability of liquidity on account of undertaking given by the Finance Division in the Supreme Court.

“Now we have the option to increase the volume of Pakistan’s equity in the proposed North-South Gas Pipeline to reduce returns to Russian companies and currently many options are under review on how to advance on the project with Russian counterparts. Before the SC judgment on GIDC, Russian companies were not only supposed to provide financing, but also the technical assistance, pipeline and compressors. Now with the liquidity and the scene has changed.”

The senior official said the Petroleum Division had proposed 7th meeting of Pakistan Russian Joint Coordination Committee for implementation of the project in the last week of September to finalize a way forward on how to advance on the project along with the commercial agreement. Spokesman for the Petroleum Division, however, skipped the question if Pakistan had accepted the latest structure but responded saying that in view of the Supreme Court judgment on GIDC, the Petroleum Division intends maximum utilization of GIDC for the North South gas pipeline.

The Petroleum Division looks forward to technical cooperation with the Russian government on building the pipeline. Therefore, it has proposed to the Russian Ministry of Energy for a meeting in September to discuss the project structure and informed that project implementation is required to be done at the earliest. The project currently envisages supply of 1.2 bcfd over 1100km from Karachi to Lahore.