China’s help sought for IP gas pipeline project

ISLAMABAD: Cash strapped Pakistan would seek assistance from China to carry out Iran-Pakistan (IP) gas pipeline project to import 750 million metre cubic feet per day (mmcfd) to one billion cubic feet gas per day (bcfd) from Iran.

Secretary Petroleum Imtiaz Qazi Friday said, “The government will seek assistance from China for 32 projects in different sectors and Pak-China Energy Group will meet next month to discuss these projects”.

He said China had also been asked to set up oil refinery at Gwadar and the Public Procurement Regulatory Authority (PPRA) rules were followed in hiring consultant for the IP gas pipeline project.

Managing Director Inter-state Gas Systems (ISGS) Hilal A Raza said Pakistan and Iran had signed sovereign guarantee government on IP gas pipeline project and therefore both sides would make headway on the project as per commitment.

“Government will seek financing from international as well as local market to carry out the IP gas pipeline project after completion of feasibility report,” he said.

He dispelled the impression IP gas pipeline project had been put on backburner after resuming talks on Turkmenistan Afghanistan Pakistan Iran (TAPI) gas pipeline project.

“The government is to follow ‘take or pay’ regarding penalty on IP project due to delay and first penalty would be applicable if Pakistan fails to receive gas till 31 December 2014 under the agreement,” he said.

He said Pakistan would have to pay guarantee equal to amount of 750 mmcfd gas agreed in agreement that amounts to $ 7 to $ 8 million per day. He said despite United States sanctions imposed on Iran, Iran was exporting gas from Turkmenistan to supply gas to Turkey.

He said according to estimates of gas utilities, constrained demand of gas would stand at 8 bcfd against local gas supply of 2 bcfd by 2020. At present constrained demand is 6 bcfd against supply of 4 bcfd.

“Pakistan will have gas supply of 1.3 bcfd under TAPI project, 0.75 bcfd under IP gas pipeline project to be extended to volume of one bcfd and 2 bcfd under LNG projects,” he maintained. Regarding Reformed General Sales Tax on consultant services-Joint Venture of ILF and Nespak, he said “Reformed Tax regime is not implemented and therefore RGST could not be imposed on services for consultant.”

He said the seller had the right to terminate the contract and claim damages if there would be delay on route survey, social environmental impact study, technical feasibility study and engineering designs under IP gas pipeline project.

Managing Director Sui Southern Gas Company Limited Dr Faiz Ullah Abbasi about the fate of Liquified Natural Gas (LNG) import project said import of 3.5 mmcfd LNG would be through re-tendering with accordance to the decision of the Economic Coordination Committee of the Cabinet and after getting certain required technical studies i-e Met Oceanic Study and Environment Impact Assessment Study, which would take eighteen months to import the gas.

“We will be able to provide LNG in first quarter of 2013 with an off-shore option as Mashal Project has been shelved and new initiative of re-tendering the import of gas is on the cards whose approval has been taken by the Board of Directors of SSGCL earlier,” he said adding this project would cost $ 150 million and would be a time saving initiative.

He informed private parties including ‘Gas Port’ had approached with an assurance to provide LNG in the country by the end of next year.

Managing Director Sui Northern Gas Pipeline Limited Rasheed Lon said gas utilities had not participated in bid for consultancy contract for the construction of pipeline. “97 percent work relates to construction and therefore we will participate in construction work of IP gas pipeline,” he added.

He said CNG load shedding would be continued even after March 15, adding that load shedding duration would be minimised in June.