ISLAMABAD: The government has decided to increase gas tariff by five to six per cent with effect from Sept 1.

Minister for Petroleum and Natural Resources Shahid Khaqan Abbasi told reporters during a briefing on the Turkmenistan-Afghanistan-Pakistan-India (Tapi) gas pipeline project that domestic consumers would be exempted from the tariff hike.

He said the groundbreaking of the multi-billion dollar project was expected to be held on Dec 25 and the 1,800-kilometre pipeline would be completed in three to four years. He said the transit fee would be paid to Afghanistan by India, and not Pakistan.

The minister said that natural gas from Turkmenistan would be quite expensive for India because it would have to pay the transit fee to both Pakistan and Afghanistan and Afghanistan would be the net beneficiary, earning $500 to $600 million on account of royalty and meet its energy requirements for at least 10 years out of its share from the pipeline.

He said the pipeline would move along highways already built in Afghanistan and a special security system would be installed that would flag alarm before any incident.

Groundbreaking of the multi-billion Turkmenistan-Afghanistan-Pakistan-India gas pipeline project likely on Dec 25

“It is trust level that $25 billion were to be spent on upstream and downstream of the pipeline project,” Mr Abbasi said.

He said it was decided in the last meeting of the Tapi steering committee held in Ashgabat that the state-owned company, Turkmen Gas, would lead the consortium for the pipeline. “The Turkmen Gas will oversee coordination in construction, financing, ownership and operation of the pipeline.”

The minister said the upstream development of the project would cost around $15bn and downstream $10bn and work on both parts would start simultaneously.

Under the agreement, Pakistan, India and Afghanistan each will have 5pc obligatory shares in the project, while Turkmen Gas being the lead financer will have 51pc shares and the rest 34pc will be available to other partners.

“Pakistan will receive 1.32bn cubic feet per day gas under the project which accounts for 35pc of our total production.” The government has collected Rs85bn (about $850m) on account of the Gas Infrastructure Development Cess to spend on the project.

Mr Abbasi said that keeping in view the country’s future energy needs Pakistan would not only complete Tapi but also the Iran-Pakistan gas pipeline and construct more Liquefied Natural Gas (LNG) terminals in Karachi and Gwadar.

He said China was working on a gas pipeline in Pakistan, while negotiations were under way with Russia for laying another pipeline at a cost of $2.5bn.

If the Tapi project was timely completed, the parties would seriously consider laying another pipeline from Turkmenistan, he added.

Replying to a question, the minister said that a delegation from Qatar was coming on Aug 24 to deliberate on a government-to-government agreement on LNG import. A tender was floated for spot buying of LNG but no response had been received. LNG import through a long-term contract with Qatar was the only solution, he said.

The minister indicated that prices of LNG and Iran-Pakistan and Tapi gas were at the same level when seen in the context of current crude oil price.

Published in Dawn, August 21st, 2015

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