LAHORE, Aug 29: The 1500-km Pakistan-Iran gas pipeline can be laid at only 43 per cent of the cost of $3.5 billion projected by multilateral lenders if the two countries agree to finance the project through their own resources.

“The project would cost around $1.5 billion which is less than half the cost estimates projected by the international agencies,” Sui Northern Gas Pipeline Ltd (SNGPL) managing director Rashid Ahmed Lone told this reporter on Friday.

“Both the countries should consider financing the proposed gas pipeline project, half of which will be laid in Pakistan and half in Iran, from local resources in view of huge savings. Both the countries have the capability, expertise and local raw material required to complete the project,” he maintained.

Although Pakistan has adequate gas to meet the domestic demand till 2008, experts believe that it would need additional supplies either from Iran or Central Asia to bridge the supply and demand gap after that.

Mr Lone pointed out that the SNGPL was already completing a project of laying 580km pipeline to connect Zam Zam and another field in Sindh with the SNGPL system with local financing as well as raw material (steel pipe).

“A 36-inch diameter pipeline was to be laid from newly found gas fields in Sindh to connect them with the main gas pipeline of the SNGPL. The work on the project began in July 2001 and was scheduled to complete in August next year at a cost of Rs15 billion. But it has already been completed at only Rs9 billion, well ahead of schedule and has been transmitting gas since last month. We’ve gained a lot of expertise from it and can complete future projects at very low cost,” he said.

He said his estimates about the cost of the Pakistan-Iran gas pipeline were based on the cost incurred by the SNGPL to complete this project. “Both Iran and Pakistan have pipe manufacturers who can provide international quality pipe required for the project.”

Besides, Mr Lone insisted, the local banks had excess liquidity and were ready to lend at a very low and competitive cost. “Moreover, local banks do not impose conditions like foreign lenders.”