Tapi gas pipeline project: Afghanistan blocks progress

MUSHTAQ GHUMMAN

ISLAMABAD: Afghanistan has reportedly blocked further progress on the Turkmenistan-Afghanistan-Pakistan-India (TAPI) natural gas pipeline project, due to differences on pricing of gas, official documents exclusively made available to Business Recorder indicate.

This information is contained in the Asian Development Bank(ADB) Technical Assistance (TA) 7756-Regional: Turkmenistan-Afghanistan- Pakistan-India (TAPI) natural gas pipeline project progress report which has been dispatched to the Minister for Petroleum and Natural Resources Dr. Asim Hussain, Indian Minister for Petroleum and Natural Resources Jaipal Reddy, Minister for Oil and Gas and Natural Resources Turkmenistan and Minister for Mines, Afghanistan Wahidullah Shahrani.

ADB had earmarked $ 225,000 TA aimed at facilitating negotiations amongst the four parties.

The governments of Turkmenistan, Afghanistan , Pakistan , and India have been consulted by the Bank on the extent of assistance needed to facilitate the necessary agreements to trade in the exportation and importation of natural gas in the four countries.

"We are pleased to report significant progress made by the parties in bringing TAPI project closer to reality. India, Pakistan and Turkmenistan initiated majority of the Gas Sales and Purchase Agreement(GSPA). Nevertheless, the target GSPA signing date November 15, 2011 set during the 14th Steering Committee meeting in Ashqabat has not been met," ADB said in the report.

With regard to Afghanistan, the Bank said that there is no agreement on price. A few GSPA clauses need further fine-tuning.

As a way forward, the ADB has suggested that the parties be allowed to continue working in Technical Working Group (TWG) and bilateral formats to finalise GSPA as soon as possible. ADB has also proposed to call the 16th TWG meeting to bring the parties together in an effort to finalise the minor GSPA issues and hold further discussions on transit fee. The necessary bilateral discussion between the parties may be carried out on the sidelines. The Steering Committee has been requested to empower their representatives to approve new target  GSPA signing within first quarter of 2012.

Recently, Pakistan inked one-paper 'intention' of signing GSPA for TAPI pipeline project, and not the agreement.

Camouflaging the media, the Petroleum Ministry suggested that the agreement on gas sales purchase relating to the gas pipeline project was inked by the Managing Director of Inter-State Gas System, Mubeen Saulat, and Chairman of Turkmenistan Gas Trade Concern Amanali Hanalyev.

Since mid-2010, the momentum of project negotiations picked up and, in December 2010, Inter Governmental Agreement (IGA), Gas Pipeline Framework Agreement (GPFA) and Heads of Agreement (HOA) for TAPI, GSPA were signed in Turkmenistan.

The TAPI parties also held a number of extensive rounds of negotiations on GSPA and have been able to finalise the GSPA.

Initially, the Ministry of Petroleum and Natural Resources had planned to sign GSPA during the visit of Turkmenistan President to Pakistan on November 14-15, 2011.

The issue was placed in the ECC meeting on November 11, 2011, and it was stated that Turkmen authorities were vehemently insisting on ensuring the signing of the agreement during the visit of their President to Pakistan.

On the pricing issue, the ECC was inexplicably informed that no country discloses the price of gas negotiated/agreed with other countries.

The ECC was, however, assured that the price of the gas to be imported from Turkmenistan would be lower than the gas to be imported from Iran.

It was also observed that the proposed GSPA was not placed before the ECC. Besides, pricing of the imported gas was not clear. As such, it would not be advisable to sign the proposed GSPA in haste.  However, a one-page document, containing 'intention' of Pakistan, was signed during the visit of the Turkmen President.

A committee comprising Minister for Petroleum and Natural Resources (Convener), Special Assistant to the Prime Minister on Water Resources, Cabinet Secretary, Principal Secretary to the Prime Minister and Finance Secretary as its members had drafted the proposed one-page document, signed during the visit of the Turkmen President.

ADB/buyers meeting took place on 10-12 Jan 2011 while ADB/sellers meeting took place on 24-26 Jan 2011. The 10th TWG meeting was held on 14-17 Feb 2011. In addition, bilateral meetings between TKM/IND and TKM/PAK were held on 7-8 and 10-11 Feb 2011, respectively. ADB facilitated the following TWG meetings: (1) 11th TWG on 3-7 Mar 2011 in Singapore; (2) 12th TWG on 23-25 Mar 2011 in Islamabad, Pakistan; (3) 13th TWG and 13th Steering Committee Meeting on 25-28 Apr 2011 in Delhi, India; (4) 14th TWG on 30 May-3 June 2011 in Manila, Philippines; and (5) 15th TWG on 28 July 2011 in Dubai, UAE.