Gwadar-Nawabshah LNG pipeline fails to get status of CPEC project

ISLAMABAD: The government has failed to get Gwadar-Nawabshah LNG pipeline included in CPEC projects’ lists as China refused to accommodate it under CPEC umbrella arguing that the authorities in Pakistan had taken the initiative very late, top official sources told The News.

Though the Executive Committee of the National Economic Council (Ecnec) on September 30, 2016 approved the 700km Gwadar-Nawabshah LNG pipeline with investment ratio of 85;15 percent, the government failed to get the project included in the priority list of the CPEC project owing to which the pipeline project would be deprived of the facilities of soft loan, exemption of duties and the special security that are available to each CPEC project.

Minister for Petroleum and Natural Resources Shahid Khaqan Abbasi, when contacted, confirmed saying that the government tried from pillar to post to get the project included in the CPEC projects’ list, but it failed as Ecnec took 6 months to approve it. He said that his ministry had presented the project in Planning Commission to get this project under CPEC’s priority projects’ list, but the commission failed to do so.

The project isd of paramount importance as it will not only transport the 600mmcfd re-gasified LNG in the system, but also will import the 750mmcfd gas from Iran as the same pipeline will later be extended by 81 kilometers backward from Gwadar to Iranian border whenever the sanctions on Iran, specifically imposed on the pipeline on account of Iranian nuclear ambitions, will be lifted by both the UN and US.

However, the minister said that Finance Minister Senator Ishaq Dar had assured the ministry that the government would extend the facilities of exemption of duties and security as are being extended to CPEC project.

The minister said if the exemption of duties was extended to the project, the cost of the project would be at lower side. However, the loan facility which CPEC projects were enjoying would not be available to Gwadar-Nawabshah pipeline project. The minister said that the project would be initiated and completed now on commercial loan based on EPC-F (engineering procurement contract-financing) model.

The price negotiating committee has finalised the cost of the project at $1.353 billion. As far as the LNG terminal at Gwadar is concerned, the Chinese company that is to build the pipeline will also construct the LNG terminal.

The said Chinese company has extended concession of $40-50 million to Pakistan in the cost of the LNG terminal, but Pakistan wants more concession. However, the price negotiating committee for LNG terminal has not so far finalised the terminal cost. The minister said if the LNG terminal cost at $250 million was finalised, the total cost of LNG terminal and 700kms LNG pipeline to be laid down from Gwadar to Nawabshah would be at $1.6 billion. And this cost has been worked out if the exemptions in duties are extended to the project as promised by finance minister.

The top officials’ privy to the development said that in addition to 700 kilometers of the LNG pipeline, another 12 kilometers pipeline would also be constructed from the main pipeline to the LNG terminal.

They said that price negotiating committee (PNC) had already met for many times with Chinese counterparts to reach the price of the pipeline acceptable to both the parties. The LNG terminal would be built on BOOT (build, own, operate and transfer) basis.