ISLAMABAD, Dec 5: A crucial meeting of the tri-nation ministerial steering committee on Turkmenistan-Afghanistan- Pakistan (TAP) gas pipeline will be held here on December 8-9 that would conclude whether or not the $3.2 billion pipeline project could move forward.
To be presided over by Petroleum and Natural Resources Minister Nouraiz Shakoor Khan, the meeting would be attended by the deputy prime minister of Turkmenistan and Deputy Minister of Mines and Industries of Afghanistan Dr Mahfooz Nedai, besides officials of the Asian Development Bank and the project consultant PENSPEN Consulting, UK.
Officials told Dawn that the meeting had a seven-point agenda but the discussion on five major issues would determine the future of the largest regional trans-nation pipeline project. These include discussion on proposed host-country agreement, certification of Daulatabad gas field reserves, security of the gas pipeline project, land acquisition process and strength of the feasibility study.
From Pakistan’s perspective, however, the most important question is the “take or pay” clause of the tri-lateral agreement, which officials suggest, could emerge as another “IPP-like burden” if estimates of domestic gas requirement go wrong owing to any change in economic indicators.
The 1460-km pipeline project could not take off without this “take or pay” clause because all the countries, investors, contractors and financial institutions would have to make long-term (at least 30 years) investments in the project.
The steering committee meeting is taking place after six months, although three countries are required under a summit agreement signed in Islamabad two years ago to review the developments of the project on a quarterly basis.
A senior government official told Dawn that initial estimates suggest Pakistan would require a minimum of 2.5 bcf (billion cub feet) per day of gas by the year 2012 and this shortfall would touch around 6.8-8 bcfd by 2025, but relevant organizations have been asked to give a second look at these estimates.
An extensive brain-storming exercise is currently in progress among the ministries of petroleum, water and power, the Private Power and Infrastructure Board (PPIB) and Wapda and KESC to finalize gas projections in the light of their respective needs.
The exercise is meant to avoid IPP-like situation because Pakistan would have to guarantee the purchase of a specific quantity of gas or pay for that quantity even if it is unable to utilize. A high-level meeting, presided over by Secretary Petroleum M. Abdullah Yousaf on Tuesday, directed the PPIB, Wapda, KESC, SNGPL and SSGC to complete their homework and come back with fresh estimates. The PPIB is responsible for requirements of the private sector power producers, while Wapda and KESC for their own gas-fired power plants. SNGPL and SSGC have to submit their expansion plans and domestic industrial, commercial, fertilizer and domestic gas requirements.
A petroleum ministry official said Pakistan had already submitted to the parties a report prepared by relevant security and land authorities about the land required for the pipeline in its territory and precise methodology of its acquisition along with cost estimates. Afghanistan and Turkmenistan would respond to this report and submit similar reports prepared by their agencies.
Turkmenistan’s team would submit fresh certification of the Daulatabad gas field from where it is required to dedicate and supply gas to the pipeline project and respond to the related queries. The new certification of the field was demanded by Pakistan to secure support from the international financial institutions and engineering firms for the project.
PENSPEN Consulting would give two separate presentations, one on security of the pipeline route; Daulatabad-Herat-Kandahar-Quetta-Multan, and another on the project’s feasibility study it submitted to the ADB in October this year.
The three sides would also consider details of the proposed “Home Country Agreement” which would cover uniformity of import and export duties, pipeline tariffs and royalties to be applicable in the three countries. The agreement is to be signed by March next year.
The officials suggest that some foreign quarters were lobbying in Pakistan for the import of Liquefied Natural Gas (LNG) as an alternate to the pipeline projects, but the government has its own priorities and has to make decisions in the interest of the country because LNG was a very expensive proposition.
The officials pointed out that India was importing LNG from the Middle East which was costing it heavily and ruining its resources.
At present Pakistan is pursuing three options of gas import. These include gas pipeline from Qatar, Iran and Turkmenistan. Some officials suggest pipeline from Iran suited best to Pakistan. All the three pipelines have the option of carrying gas to India as well. India has not yet made it clear whether or not it intended to join the TAP project.
The ambassadors in Islamabad have started communications and meetings with the government officials to pursue the TAP project. Earlier, around 40 companies had shown interest in the TAP project and some of them had even sought technical details of the project.
The trans-Afghanistan-Turkmen pipeline promises substantial amounts of royalty and security fees to Afghanistan, long-term guaranteed gas supplies to Pakistan and of course gas sales revenues to Turkmenistan, besides chain generation of economic activity throughout the region.
