Pakistan, Russia likely to decide fate of 1,100km North South Gas Pipeline next month

The gas pipeline will transport RLNG from Karachi to Lahore

ISLAMABAD: Pakistan and Russia may take important decisions during the next month for the transportation of Regasified Liquefied Natural Gas (RLNG) from Karachi to Lahore by setting up a 1,100 kilometer (km) North South Gas Pipeline (NSGP).

According to sources, a decisive meeting between Pakistan and officials from the Russian Federation is likely to be held during September 2020. The meeting will take important decisions regarding the NSGP project.

Sources further said that an agreement for the construction of the NSGP can possibly be inked between the two countries if Russia accepts Pakistan’s proposal to reduce the cost of the project and awards the project to Gazprom, a Russian energy company, in partnership with Pakistani companies.

Sources added that a meeting recently held under the chair of Prime Minister Imran Khan has raised reservations over Russia nominating ETK company for the laying of the NSGP.

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According to sources, Pakistan has informed the Russian Federation regarding its reservations over ETK’s weak business credentials and ability to carry out a project as big as NSGP. However, the Russian side has disputed Pakistan’s claims while various business interest groups in Pakistan have also been lobbying in favour of ETK.

Sources also informed that the Petroleum Division had proposed three financing options for the NSGP project which includes full funding of NSGP through the Rs418 billion already collected under Gas Infrastructure Development Surcharge (GIDS) without Russian financing or the apportionment of financing through GIDC and Russian Federation.

Phase-I of NSGP is to be completed by December 2022 and phase-II is to be complete by December 2023. Existing pipelines connecting Karachi with Lahore for the transportation of RLNG have been fully utilised.

Sources said that Pakistan has recently allowed setting up of more Liquified Natural Gas (LNG) terminals at Karachi to meet growing gas demands of the country.

An agreement between Pakistan and Russia was signed on October 16, 2015 for the development of the NSGP having a transmission capacity of 1.2 Billion Cubic Feet per Day (BCFD) from Karachi to Lahore.

RT-GR from the Russian side and ISGS from the Pakistan side were nominated as project developers under the agreement. ISGS is responsible for provision of land rights and security whereas RT-GR is responsible for financing, designing, constructing and operating the project.

Earlier in December 2015, RT-GR expressed its preference to develop the project under a Build Own Operate and Transfer (BOOT) model for a period of 25 years.

The Economic Coordination Committee (ECC) in its decision dated April 11, 2016 had approved the project to be developed under the BOOT model subject to clearance by the Ministry of Law, issuance of a guarantee by ISGS which was to be counter guaranteed by the Government of Pakistan.

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Ahmad Ahmadani
Ahmad Ahmadani
The author is an investigative journalist. He can be reached at [email protected]

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