ISLAMABAD: The government has decided to extend the Foreign Investment Promotion and Protection Act (FIPPA), a special legislative cover, to the investment of Turkmenistan in the TAPI gas pipeline project, a senior energy ministry official said on Tuesday.
The move is aimed at increasing the bankability of the project in the eyes of the international lenders, which is estimated to cost $10 billion and will transport natural gas from Turkmenistan to Pakistan through Afghanistan and India.
Turkmenistan will have an 85 percent stake in the project, while Afghanistan, Pakistan and India will each have a 5 percent share.
The FIPPA law, which was previously passed to exclusively protect foreign investment in the Reko Diq copper and gold mine in Baluchistan, will provide guarantees to the Turkmen investment in the TAPI project, the official told The News.
"The law division has no objection to extending the FIPPA cover to the TAPI project." Pakistan has already assured the protection of Turkmen investment with a sovereign guarantee under the Host Government Agreement (HGA), which was signed in 2016 along with the Gas Pipeline Framework Agreement (GPFA).
The commercial and legal experts have been engaged to evaluate the alignment of existing commitments under the GPFA and HGA with the incentives package under FIPPA, and the process will be concluded by December 31, 2023.
"The SIFC (Special Investment Facilitation Council) Apex Committee will approve the recommendations in its next meeting for the final approval by the federal cabinet," the official said.
Turkmenistan’s demand was earlier raised by the petroleum authorities in the high-level meeting of SIFC, which decided to seek inputs from all the stakeholders and formulate recommendations for the apex committee of SIFC.
The petroleum division had also sought the opinion of the law division on giving the protection under FIPPA cover. Pakistan has already assured the protection of Turkmen investment with a sovereign guarantee under the Host Government Agreement (HGA). However, the FIPPA, 2022, would serve as a one-window for incentives and guarantees to the Turkmen investment in the project.
The gas pipeline project 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 for about seven years, mainly because of the 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 for the TAPI project until the Taliban regime is legitimized by the United Nations and the 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 Gas Pipeline project in Islamabad. Pakistan has suggested to Turkmenistan to 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.
The TAPI gas pipeline project aims to bring natural gas from the Galkynysh gas field in Turkmenistan to Pakistan through Afghanistan via a 56-inch diameter pipeline. The Galkynysh gas field is located in the eastern region of Turkmenistan.
The proposed route of the supply source is Herat, Kandahar, Chaman, Zhob, DG Khan, Multan, and Fazilika, with a pipeline length of 1,849 kilometers. It will transport up to 33 billion cubic meters (bcm) (average 3.2 BCFD) of natural gas per year over a 30-year period, where Pakistan’s off-take will be 1.35 BCFD.
This image shows an advertisement stall of BankIslami. — Facebook/BankIslami Pakistan LimitedKARACHI: BankIslami...
A woman picks a gold earring at a jewellery shop on May 24, 2023. — ReutersKARACHI: Gold prices increased by Rs2,700...
Stacked containers are shown as ships unload their cargo at the Port of Los Angeles in Los Angeles, California, US...
A graph seen on a screen.— Reuters/file LAHORE: The current economic scenario in Pakistan presents a paradox: while...
An image from the Tech Week Singapore.— X@techweeksg/file KARACHI: Pakistani companies exporting IT and IT-enabled...
Space X CEO, electric car manufacturer Tesla and social media platform X owner Elon Musk gestures as he attends the...