Shahid Khaqan Abbasi, the Minister for Petroleum and Natural Resources of Pakistan is to visit Iran on October 10 to discuss issues relating to Iran-Pakistan (IP) gas pipeline project, Business Recorder reported.
A senior Petroleum Ministry official told to Business Recorder here on Saturday stated that the Pakistani delegation will also deliberate with Iranian authorities on the possibility of fully financing the project.
The Ministry of Petroleum is also set to take the Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline project to the Economic Co-Ordination Committee (EEC) of the cabinet upon the return of Prime Minister Nawaz Sharif from US.
If Iran's relation with America improve, it would benefit entire region, and help Pakistan get international support for overseeing and financing the project, the official said.
The $1.5 billion IP project has been lingering since 1995, when Iran-Pakistan signed a memorandum of understating (MoU) to lay the pipeline. Under the accord, signed in June 2010, Iran will provide about 750 million cubic feet per day (MMCFD) to Pakistan for 25 years. The deal can be extended by five years and the volume may go up to 1 Billion Cubic Feet per Day (BCFD).
"We are going to Iran to renegotiate financing of Iran-Pakistan (IP) gas pipeline project and will also request Iranian authorities to extend the deadline of IP gas project from December 2014 to a mutually agreed time frame," Petroleum Ministry officials said.
"Our main concern is US sanctions against Iran, due to which Pakistan has so far failed to initiate the project. Once US sanctions against Iran are lifted or relaxed the laying of pipeline will be carried out within a year as all other important tasks relating to the project have been completed," the official said.
An official of National Engineering Services Pakistan (Nespak) said "Nespak has designed the pipeline corridor that would enable laying an extra pipeline for any other country showing an interest in becoming a partner. Within the next few months, Nespak along with its partner German company ILF would begin supervising the construction of the pipeline once it receives the go-ahead from the government," he added.
German-based consultant firm ILF, National Engineering Services Pakistan (NESPAK) and Iranian construction company Tadbir are set to complete the project, which would cost $1.5 billion. The government of Iran has assured Pakistan of $500 million for the construction of pipeline.
Sources while quoting the penalty clause of the agreement of the IP project said that both Pakistan and Iran are bound to complete the project by the end of 2014, and if any of the two delay the project due to any reason that country will have to pay a daily penalty of $ 1 million , which is extendable to $3 million per day.
Sources said that work on the IP project has reached an advanced stage as Pakistan has already completed Interim Front End Engineering Design (FEED) of the proposed IP project, while progress on TAPI is in an initial stage.
The government has imposed Gas Infrastructure Development surcharge (GIDS) on all gas consumers to finance the construction of imported gas projects like IP, Liqefied Natural Gas (LNG), Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline projects and other energy projects. The government has so far collected over Rs Rs 50 billion from GIDS, which would be utilised on construction of Iran-Pakistan (IP) gas pipeline and/or other energy projects.
According to the GIDS Act, the collected Cess would be utilised for or in connection with infrastructure development of Iran-Pakistan (IP) project, Turkmenistan-Afghanistan-Pakistan-India (TAPI) Pipeline Project, Liquefied Natural Gas (LNG) and other projects, or for price equalisation of other imported alternative fuels including Liquefied Petroleum Gas (LPG).