Thursday April 25, 2024

$10 bn TAPI gas pipeline project fails to achieve financial closure

By Khalid Mustafa
June 22, 2020

ISLAMABAD: The Turkmen Gas Company on the much touted trans-nations (Turkmenistan-Afghanistan-Pakistan-India) TAPI gas pipeline project of worth $10 billion even after the lapse of 4 years has so far failed to achieve financial closure as earlier it was scheduled to be attained in December 2016.

Now the authorities concerned in Pakistan are saying that Turkmenistan Gas Company is now tasked to complete the financial closure in next year 2021 which is why the project will come on stream in 2023 which was earlier due to be operational in 2020 under its original plan. Though the Turkmenistan authorities in its territory has laid down the 200 kilometers from Gylkynish—the gas field to Turkmen-Afghan border, but they have not achieved the financial closure of the project.

The top sources say unless and until the Turkmen authorities change the agreement about the gas delivery point and review about the gas prices, Pakistan will not give its ownership to the project. Under the existing agreement, Turkmenistan will provide the gas to Pakistan at Turkmen-Afghan border and the gas transit loss in the territory of Afghanistan will be borne by Pakistan. However, the PTI government has seriously objected to this agreement and asked Turkmenistan that the existing agreement is not in the interest of the country. The government said that Pakistan’s liabilities will only be invoked when the gas is delivered at Pak-Afghan border not at Turkmen-Afghan border and Pakistan will not be responsible for any gas loss during transit through territory of Afghanistan.

The sources said the government of Pakistan has already constituted a Price Negotiation Committee for TAPI gas. The Price Negotiation Committee already met on June 18. The Petroleum Division’s spokesman when contacted said that financial close of the project is expected in 2021 and the project is most likely to be commissioned by end of 2023. He also said that technical discussions on gas price are ongoing between the Petroleum Division and the Turkmen side.

He also responded saying: “All issues including delivery point and gas price review are on the table and under discussion with the Turkmen side and we are going to resolve them.” Spokesman also went on to say that the project has made substantial progress and entered the implementation phase. The pipeline from Turkmen gas field to Turkmen-Afghan border has already been completed. The technical studies for the Afghan portion of the pipeline have also been completed. The Petroleum Division is actively discussing and processing the Host Government Agreement with all stakeholders.

Due to the COVID-19 situation and constraints of movement, a number of video and phone links continue to take place and are also scheduled to take place between Petroleum Division and TurkmenGas in the comings months. The discussions with ADB and TAPI Pipeline Company Limited take place to ensure progress on the project are also underway.

Spokesman also said that the government of Pakistan is fully committed to implement the TAPI project and in this regard it is current with its financial commitments under the Investment Agreement for the Pre-FID expenditure.

The pipeline will enter from Chaman and pass through Zhob, DI Khan, Quetta, Multan and touch upon the Fazilka—a city at Indian border which is 150 kilometers away from Multan. From Fazilka, the pipeline will enter India.

Under the trans-nations pipeline Pakistan and India will be provided 1.325 bcfd (billion cubic feet per day) gas each and Afghanistan will be getting the share of 0.5 bcfd gas under this mega project.

The ADB is acting as the facilitator and coordinator for the project. The feasibility study, proposed to lay a 56-inch diameter 1,680km pipeline with design capacity of 3.2 billion cubic feet of natural gas per annum (Bcfd) from Turkmenistan through Afghanistan and Pakistan up to Pak-India border.

The TAPI pipeline will be laid down through the proposed route starting from Herat – Kandahar – Chaman – Zhob – DG Khan – Multan and reach Fazilika- a city at Indian border.