20 January 2005	Thursday	09 Zilhaj 1425

ISLAMABAD, Jan 19: The Asian Development Bank (ADB) has completed the techno-economic feasibility study of the $3 billion Turkmenistan-Afghanistan-Pakistan (TAP) gas pipeline, and would submit it to the tri-nation steering committee meeting to be held next month in Islamabad.

The study has established a quite good and positive economic viability of the project, the ADB's country director Marshuk Ali Shah said at a news conference here on Wednesday.

The bank expressed concern over higher inflation rates in Pakistan, which, it feared, could put further pressure on the poor people and impact poverty reduction strategy.

Mr Shah said the Steering Committee of Turkmenistan, Afghanistan and Pakistan that is to meet in February will chalk out the future course of action for materialising the $3 billion TAP project.

Alongside that, however, the ADB has also proposed to Pakistan to develop underground gas storage reservoirs by using the capacity of its depleting gas fields to ensure uninterrupted supplies, both in case of gas exports to India or domestic use, in disturbances like the one recently faced in Balochistan.

A separate study being conducted by the ADB on storage of natural gas in Pakistan would be available in two-three months. "Some very specific arrangements and steps will have to be taken" to ensure safety and security of the pipelines to overcome disturbances in future and continue with normal supplies for two-three months in case of any interruptions, said Mr. Shah.

He said the meeting was earlier scheduled for December 2004 but would now be held in February, so that Turkmenistan could, by that time, complete its audit report of the Daulatabad gas field through an independent consultant.

Pakistan had earlier linked the progress on the proposed project with certification of gas reserves in Daulatabad fields, for which the Asghabat has hired an American company. Mr Shah said there was an indication that the field had huge gas reserves.

He said that there were other feasibility reports on security and gas reserves, which would be completed by that time and would be discussed by the steering committee meeting.

He said once it was decided to go-ahead, then bids to initiate the mega project would be invited. He said by 2008-09, Pakistan would be facing gas shortages and to cope with this situation, Pakistan needed to initiate the import of gas.

The ADB country chief expressed the bank's concerns over the rising inflation in Pakistan, which he said has declined in December but even then it was still very high.

He expressed the hope that the State Bank of Pakistan would reduce it reasonably in the next six months because the failure would badly impact and neutralize the growth in industrial and agriculture sector.

He said the ADB would provide about $2 billion to Pakistan in the next two years which is slightly higher than previous years so as to alleviate poverty and boost the growth rate to eight per cent. This will include $800 million in 2005 and $1.3 billion in 2006.

He said Pakistan would achieve the eight per cent GDP growth in next two years, but its sustainability would be the real challenge and hence the ADB would support SMEs, infrastructure and water sector.

He also said with increase in investment in various sectors of economy, un-employment rate has reduced from 8.3 per cent in 2002 to 7.7 per cent in 2004. To a question, he said that there were 17 projects of the Bank at risk because of slow implementation, but with the timely intervention of the government, the number of delayed projects has been reduced from 17 to nine.

He said at the moment there are nine projects which are at risk and if the snags in the implementation of the projects are not removed, the bank would reconsider its lending for the projects.

Mr. Shah said the Bank would also give the loans under mega city renewal system including Karachi under which the mega cities issues like increasing urban congestion, environment problems, katchi abadies' issue would be addressed.

In this regard, the Bank's mission is due in Pakistan in February. To a question, he said that bank is not going to initiate any study to solve the issue of increasing traffic in various cities like Karachi, Lahore and Islamabad.

Responding to a question, he said the government has assured the bank that restriction on movement of wheat among the four provinces, which multiplied the problems of the people, would not again be imposed in the next year.

Responding to a question, the ADB's senior adviser Navid Hamid said the Bank has no objection for the short-term subsidy to handle the crisis like it did with wheat import this year, but the bank was opposed to the continuation of such subsidies to any sector on long term-basis.

Responding to another question on the impact of elimination of textile quota from January 1, he said Pakistan's exports would increase substantially as the quality of Pakistan textile products was very high.