ISLAMABAD: Pakistan and Russia have signed a revised deal for laying the Pakistan Stream Gas Pipeline, formerly known as the North South Gas Pipeline, with major shareholding from Islamabad. Both sides also agreed, in principle, to execute the project through a special purpose company, which would be incorporated in Pakistan.
The two sides on Wednesday agreed to rename the North South Gas Pipeline as the Pakistan Stream Gas Pipeline due to the majority of shareholders now being from Pakistan.
The discussions were aimed at finalising the broad contours and parameters of the project. It involves construction of a high-pressure gas transmission pipeline from Port Qasim, Karachi to Kasur (Punjab) for transportation of RLNG towards the northern side of the country in order to fulfil the gas shortage emanating from growing gas demands of industrial and domestic consumers.
The recent developments after the decision of the Supreme Court of Pakistan in the matter of Gas Infrastructure Developments Cess (GIDC) and availability of GIDC funds for the project’s development were a key consideration in the process.
Due to the Supreme Court decision on GIDC, the government now has sufficient funds to finance this project. The government already collected Rs 295 billion and has to recover a further Rs 405 billion from different industries; who have already collected from the consumers on account of GIDC. The government would use these funds to execute this project. Gas for the project will be sourced through existing and new LNG Terminals at Port Qasim, Karachi.
Though Russia will have a minority shareholding in the gas pipeline project, Pakistan will ensure maximum utilisation of Russian material, equipment and resources with the aim of enhancing technical and operational capacity of Pakistani companies and human resources through mutual working and training.
In the revised project structure, Pakistan will hold 74% shares whereas Russia will have 26% stake. Earlier, Russia had to build the pipeline on the build, own, operate and transfer (BOOT) model and transfer its ownership to Pakistan after 25 years.
Russia had also to make 85% of the required expenditure on the project whereas Pakistan had to spend 15% of the capital.
Now, in the revised model, Pakistan has money on account of GIDC and, therefore, it would contribute 74% of the capital and Russia will make 26% of the expenditure. However, Russia will provide all importable material for the pipeline.
Russia-Pakistan technical committee held its first meeting from November 16-18, 2020 in Islamabad on mutual cooperation for the development of gas pipeline project. Energy ministries of the two countries were present in the meeting.
The Russian delegation comprised of representatives from Ministry of Energy of Russian Federation, Embassy of Russian Federation in Pakistan and other Russian companies and corporations.
The Pakistani side included representation from Ministry of Energy (Petroleum Division) of Pakistan, Ministry of Foreign Affairs, and Law and Justice Division and Inter State Gas Systems (Private) Limited. The talks were also attended by Minister for Energy and Special Assistant to Prime Minister on Petroleum.
