$10bn TAPI project: Law ministry’s opinion sought after Turkmenistan’s demand

ISLAMABAD: The fate of Turkmenistan’s demand seeking legislative cover of Foreign Investment Promotion and Protection Act (FIPPA), 2022 for its investment to be made in Pakistan’s territory, under the trans-nation $10 billion TAPI gas pipeline project, depends upon the legal opinion from the Law Division.

The gas pipeline from Turkmenistan has to pass through Afghanistan, Pakistan and India. Turkmenistan will be having 85 percent shares in the project while Afghanistan, Pakistan and India would each have 5 percent shares of $200 million.

“The Petroleum Division has sought the opinion from the Law Division and waiting its response on Turkmenistan’s demand and then it will be in a position to firm up its recommendations to be submitted in Special Investment Facilitation Council,” a senior official of the Energy Ministry told The News.

“Earlier, the demand from Turkmenistan was raised in the SIFC, which decided to seek inputs from all the stakeholders and formulate recommendations for the apex committee of SIFC.”

The government in 2022 extended the special treatment to protect foreign investment in the Reko Diq project for which it approved the Foreign Investment Promotion and Protection Act (FIPPA), 2022, through the parliament to provide a legal cover for the Reko Diq project, a copper and gold mine in Balochistan province being developed by a consortium of foreign companies.

The official said the legislative cover that was extended to foreign investment in the Reko Diq case is a special treatment which cannot be extended to every investor. “If Afghanistan and India, which are also part of the TAPI gasline project, extend the same legislative cover to Turkmenistan investment in the pipeline, then Pakistan may have no objections.”

Pakistan has already assured the protection of Turkmen investment with a sovereign guarantee under the Host Government Agreement (HGA).

The official said that the FIPPA, 2022, may help Turkmenistan increase the credibility of Turkmen gas companies before banks for bankable feasibility and loans as well. The gas pipeline project worth $10 billion would be built and commissioned at a 30:70 percent equity and loan business plan. Out of 30 percent equity, Turkmenistan has an 85 percent share, and Afghanistan, Pakistan, and India each have a five percent share. Pakistan’s equity stands at $200 million.

The remaining 70 percent of the funding would be based on loans that the TAPI consortium will arrange from international financial institutions. The project has been delayed about seven years, mainly because of failure in financial closures and, in the latest scenario since the Taliban took power in Afghanistan, the Asian Development Bank (ADB) halted due diligence and processing activities about the TAPI project until the Taliban regime is legitimized by the United Nations and big economies of the world.

However, Turkmenistan and Pakistan, on June 9, 2023, signed a Joint Implementation Plan (JIP) to accelerate work on the TAPI project in Islamabad. Pakistan has suggested Turkmenistan lay down some portion of the gas line up to Herat in Afghanistan to ensure the ownership from the Taliban, which will also help move the project forward.