$3b PSGP Project: Pakistan, Russia to hold three-day technical talks

ISLAMABAD: Pakistan and Russia are scheduled to hold three-day talks on crucial technical issues regarding their flagship project ‘Pakistan Stream Gas Pipeline’ (PSGP), of $3 billion on August 24-26, both sides will discuss the project implementation and set out the 1040 pipeline’s specification.

Reports said, a 13-member Russian technical team to participate in the talks, as a six-member team from Moscow would arrive Islamabad on Tuesday morning, while the remaining members would take part in the talks through video from Moscow. While the Pakistan-side, a team of technical experts from Inter-State Gas System (ISGS), Sui Northern Gas Private Limited (SNGPL), Sui Southern Gas Company Limited (SSGCL), and National Engineering Services Pakistan (NESPAK) to participate in the talks and would be headed by Secretary Petroleum Dr Arshad Mehmood.

“We will deliberate the pipeline specifications, diameter, pre-feasibility options and hydraulic specifications, keeping in view the demand growth of gas in the future. However, both sides will be having the option to also hold parleys on commercial and legal issues on the sidelines of the technical talks,” a senior official privy to the development told ‘The News’. They said after the talks, both sides would be able to set out with the direction of the mega project and once the technical specifications of the project would be finalised, then its cost could be determined and then work on project financing would be initiated. Both sides would also deliberate the diameter of the pipeline along with the number of compressors to be installed, which would also help finalise the cost of the project.

Both sides have already finalised the Heads of Terms (HoTs), as Russian would have 26 percent and Pakistan to have 74 percent shareholding in the project. The pipeline would be laid down from Karachi to Kasur (Punjab). The HoTs broadly covered the corporate, governance, financing and contractual structure of the project and according to the HoTs, the Special Purpose Company (SPC) is to be incorporated in Islamabad and the Russian nominated entity, PAKSTREAM LLC would be having not less than 26 percent shares. However, Pakistani nominated entity, Inter-State Gas Systems (Pvt) Ltd., would have maximum share up to 74 percent shares.

The board representation would be according to shareholding of each party and transportation tariff to be approved by the OGRA, funding arrangements would be ensured through local currency component and the lead role would be ISGS, which would explore finances from the Finance Division of Pakistan, local commercial banks, etc. The Russian nominated company PAKSTREAM LLC would arrange the foreign currency component and to explore financing options, including bilateral financing arrangements, IFIs, foreign banks. The government would also give sovereign guarantee to the lenders, if required. Talking about the way forward, the parties after technical specifications would be finalised, will also engage to execute necessary agreements such as shareholders agreement and facilitation agreement that included i) incorporation of the project company in Islamabad, ii) funding arrangements, iii) completion of technical studies and regulatory approvals.