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January 25, 2020

Pipeline project

Editorial

 
January 25, 2020

In a long-delayed meeting between Pakistani officials and a visiting Russian delegation on January 21, some progress was made. The Russian delegation headed by Russia’s deputy energy minister met with Pakistan’s minister for energy and the PM’s special assistant on petroleum. Both sides expressed a desire to make the North-South Gas Pipeline (NSGP) project transparent, financially viable, and to the mutual benefit of both Pakistan and Russia. This project has the potential to become a flagship project of cooperation between the two countries. The impact it will have on commercial and energy sectors will be phenomenal. Certainly this project may once again launch a new phase towards greater cooperation between Pakistan and Russia. Especially in the changing geopolitics of this region, mutual understanding between Pakistan and Russia will herald a new beginning that may contribute positively to Pakistan’s economy.

It is unfortunate that relations between Pakistan and Russia have not developed much during the past few decades. Though the erstwhile Soviet Union contributed a lot by building one of the world’s largest steel mills in Karachi, the Soviet gesture has largely remained underappreciated in Pakistan. Despite Pakistan’s involvement in the Afghan war against the former USSR in the 1980s, the financial and technical help to complete the steel mills had continued. Sadly, we have brought that steel mills to a sorry state now with its production grinding to a complete halt. After a hiatus of almost 20 years, the PML-N government had tried to reignite warm relations with Russia. The initial understanding to build NSGP was reached with Russia in 2015 when Shahid Khaqan Abbasi was petroleum minister. After that in April 2018, some more progress was made on this project when Abbasi was prime minister. Since then no major development took place in this matter.

There were two major reasons for this lack of progress: one, the new PTI government was a bit slow in dealing with this project; and two, the American sanctions imposed on some Russian companies and persons involved with this project hampered the pace. Luckily, now the Russian government has come up with some sanctions-free arrangements so that the project can move forward. It stipulates the construction of 1120km long pipeline connecting the LNG terminal in Karachi with Punjab. It will have 42cm diameter pipes that will carry over 12 billion cubic feet gas. Now the transit tariffs need to be negotiated and the details of 200 billion dollars investment have to be ironed out. Hopefully, things will move at a greater pace now.