Russia agrees to finance IP gas pipeline project

* Also agrees to finance other gas and power import projects

By Zeeshan Javaid

ISLAMABAD: Russia on Wednesday agreed to finance the billion-dollar Iran-Pakistan (IP) gas pipeline as well as other gas and power import projects, while Pakistani authority would submit draft agreement for financial and construction assistance for IP within the next 15 days.

The high profile meeting of Pak-Russia Joint Working Group (JWG) was held here at the Ministerial Secretariat, where a detailed negotiation over gas import as well as a number of energy projects took place between Pakistani and Russian authorities. Russian Deputy Minister for Energy YP Sentyurin led a 15-member delegation and assured of financial and technical assistance for IP gas pipeline project costing $1.5 billion.

Sources in the Ministry of Petroleum and Natural Resources informed this scribe that Russian authorities agreed to provide assistance for IP gas pipeline and also expressed their consent to be a part of $7.6 billion Turkmenistan, Afghanistan, Pakistan and India (TAPI) gas pipeline project.

He said that petroleum managers would prepare draft agreement of financial and technical assistance for IP gas pipeline project and submit it within 15 days, however Russian deputy minister didn’t pledge any physical assistance for the said project. Pakistani authorities expressed their consent to award contract to Russian companies without bidding as Russia agreed to finance gas and power import projects.

In a preliminary meeting held in Islamabad on Tuesday, Russian authorities offered to extend cooperation in gas import through pipelines and Central Asia South Asia (CASA) electricity import project, which would bring electricity from Central Asian states.

Tehran is also willing to provide financing of $250 million on government-to-government basis and can also extend a major part of financing from its commercial banks. Pakistan needs around $500 million to finance the pipeline.

Russia also expressed its willingness to extend cooperation in Tetra-partner power import project under head of Central Asia-South Asia (CASA-1000), while other leading financial institutions including World Bank (WB) and Islamic Development Bank (IDB) made commitment of financial support for 1,000 megawatts (MW) power import project of Pakistan via Central Asian states.

A cross-border transmission line project has been proposed for the construction of a dedicated link essentially aimed at supplying 1,300 MW of surplus hydropower available during the summer months from the Kyrgyz Republic and Tajikistan to Pakistan. Sources further informed that in the first phase this link would provide 1,000 MW power to Pakistan, but in the subsequent phases 5,000 MW to 6,000 MW power could be tapped from Central Asian countries to Pakistan, while Uzbekistan and Turkmenistan also offered Pakistan their intent to export surplus power to Pakistan. Under the CASA project floated in 2006, 1,000 MW to 1,300 MW of surplus electricity will be imported from Tajikistan and Kyrgyzstan, while United States, WB and IDB have also backed the project. Pakistan is also seeking China’s help to press ahead with the $1.5 billion IP gas pipeline.

In a recent visit to Beijing, President Asif Ali Zardari and Adviser to PM on Petroleum Dr Asim Hussain succeeded in convincing the Chinese leadership to take part in bidding for the construction of the pipeline. Besides Russia and China, Iran has also come up with a plan to lay Pakistan’s portion of the pipeline based on a mechanism called ‘supplier’s credit’. Third meeting of Pak-Russia JWG would be held in Moscow in 2013.

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