Cost of Pak-Iran pipeline reduced to $1.3 billion

ISLAMABAD: In another major development the cost of laying down the Pak-Iran gas pipeline has come down to $1.3 billion from $1.5 billion.

The commissioning date of the project will now be dependent on the completion of the project and if it gets delayed Pakistan will not be exposed to any penalty, as earlier mentioned in the gas sales purchase agreement (GSPA).

A jubilant Dr Asim Hussain, Advisor to PM on Petroleum and Natural Resources disclosed this development to The News here on Monday. Iran’s Tadbir company would construct the pipeline at the cost of Rs190 million per kilometer. Tadbir will lay down two km pipeline per day. Pakistan would purchase gas from Iran for 20 years and five years would be extendable. Iran would extend $500 million loan in phases and Pakistan would pay 3 percent interest.

Earlier the date of commissioning of the project was December 2014 and now under the new understanding with Tehran, whenever the Iranian company Tadbir completes the laying down of the pipeline, the project would come on stream on that day. Now it is no more legal responsibility of Pakistan to complete the project by December 2014. If the Iranian Company that is the main EPC contractor completes the project on time then it would be the best and in case it gets delayed, Pakistan will not be exposed to penalty which is mentioned in the Gas Sales and Purchase Agreement.

Dr Asim said Iran will complete the 80 kilometers pipeline inside Pakistan from Gabd—a point at Pak-Iran border under its loan of $250 million and the remaining 701 kilometer pipeline will be procured by Pakistan in which another tranche of Iranian loan of $250 million will be used.

To a question he said that Iran will provide gas to Pakistan from South Paras gas field and Tehran have so far laid down the 820 kilometers pipeline in its side which is still 80 kilometer away from Gabd.

However, the top official dealing with this project said the cost of remaining 701 kilometers pipeline will stand over $500 million and to this effect a well reputed Chinese company—- Panyn Chu King Steel Limited (PcK), China has been selected that will provide the pipeline at the rate of $1,650 per tonne including compressors.

Five companies had participated in the bidding out of which Panyn Chu King Steel Limited (PcK), China has been selected. Iranian company had quoted the price of $1980 per tonne and if the Chinese price is taken into account then the cost of the pipeline gets reduced to over $1.3 billion and in case Iranian price is entertained then the cost of the pipeline that will be laid down in Pakistan’s territory would stand at $1.5 billion.

To a question he said that the meeting of the Board of Directors of Inter State Gas System (ISGS) is to take place next Thursday in which the Chinese company bid for providing the pipeline will be formally approved.

When his attention was drawn towards the Sui Northern Company that procured the pipeline three months back at the rate of $920 per tonne, he said that pipeline was not of 42 inches diameter and was without inner coating as the pipeline that will be used for IP project would be of 42 inches diameter with inner coating.

However, the Iranian company Tadbir would complete the laying down of the pipeline of 781 kilometers from Gabd to Nawabshah.Tadbir will start laying down the pipeline from Gadb from March 11 and to this effect a ground breaking ceremony will be held in Iran in which President Zardari will also participate. Sui Southern, Sui Northern and FWO (Frontier Works Organization) will take part in construction of the pipeline. The gas utilities would complete the task related to mechanical issues and FWO civil works.

By The News International


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