ICBC withdraws from commitment: Price mechanism to be renegotiated

FAZAL SHER

ISLAMABAD: A high-level delegation of Ministry of Petroleum and Natural Resources led by Petroleum Minister Dr Asim Hussain will visit Iran in the next couple of days to renegotiate price mechanism of gas under Iran-Pakistan gas pipeline project, it was learnt.

However, the Ministry of Petroleum and Natural Resources moved a summary to the Economic Coordination Committee (ECC) of the Cabinet requesting consideration of other options as the Industrial Commercial Bank of China (ICBC) has withdrawn from its commitment to sign the agreement. The ministry in its summary stated that "the contract with Financial Advisor has been signed by the Inter-State Gas System Private Limited (ISGS) on January 16 2012 along with other parties except ICBC. It is apprehended that a probable reason for not signing the agreement till date could be geo-political situation in the region".

Ministry of Petroleum informed ECC that the existing parties of ICBC and Habib Bank of Pakistan (HBL) are showing less interest in Iran-Pakistan Gas Pipeline Project, so ECC may go for other options in this regard. Options for financial arrangements for IP Project proposed by Ministry of Petroleum are: 1) Funding through gas infrastructure development cess, 2) Contract execution with second consortium with other companies 3) Government to Government arrangements with Government of China and/or Russia to fund the complete project and 4) Government to Government arrangement with Iran. ECC discussed the each option in detail and formed a committee comprising Minister for Petroleum and Natural Resources.

"The high level delegation to Iran within the next couple of days would renegotiate gas price with Iran for the 750 million cubic feet per day (MMCFD) of natural gas planned to be imported by December 2014 and other related issues with Iran", official sources said.  The contract of IP gas pipeline has the provision to renegotiate the gas price, an official of the Ministry of Petroleum and Natural Resources revealed and added that Pakistan will save a handsome sum if renegotiations with Iran are successful.

The official said that the work on Front End Engineering and Design (FEED), feasibility and detailed route survey has already been started by the Consultant (M/s ILF/ NESPAK, JV) and the projects will now enter the implementation state. He said that tender for the construction of the 800km pipeline from Iran Pakistan border to Nawabshah would be issued in the next few months.