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Country likely to buy Iranian LPG in PKR

  • Issue to be discussed during Pak-Iran Joint Economic Commission in August
Published July 25, 2022
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ISLAMABAD: Pakistan is likely to strike a deal with Iran for purchase of Liquefied Petroleum Gas (LPG) in Pakistani rupees as Tehran is already considering Pakistan’s proposal, well informed sources in Commerce Ministry told Business Recorder.

The 21th Session of Pak-Iran Joint Economic Commission (JEC) is scheduled to be held from August 16-19 in Islamabad wherein this issue will also come under consideration.

The issues of Pak-Iran Gas Pipeline, joint projects between OGDCL, National Oil Refinery (NIOC) and pending issues between NTDC, CPPA-G and Iranian company Tavanir will also come under discussion, in addition to promotion of barter trade and payment mechanism.

Sharing details on Pak-Iran Gas Pipeline, the sources said that both sides have emphasized their commitment towards early solution of IP project under GSPA and agreed to take necessary measures.

In this regard, Petroleum Division has communicated that the government of Pakistan is committed to implement the project.

During the visit of Prime Minister of Pakistan to Iran in April 2019, it was agreed that the legal teams from both sides would engage in finding out plausible legal solutions for the implementation of the project.

Accordingly, both sides executed an Amendment Agreement No. 3 to the Iran Pakistan Gas Sales and Purchase Agreement (IP-GSPA) with NIOC on 5th September, 2019 in Istanbul, Turkey.

ECC may approve rate of PL on LPG today

Consequent to the signing of the Amendment Agreement No. 3, both sides have extended period of limitation for any claims under or in connection with the IP-GSPA as it is permitted under the applicable French law, allowing more time to the Parties to engage and further discuss the way forward on the IP project.

On joint projects between OGDCL and National Iranian Oil Company NIOC, the sources said, during 20th session of JEC, Pakistani side expressed OGDCL & PPL interest in evaluating the E&P opportunities in Iran.

According to sources, OGDCL has expressed the desire to work as joint venture partner with NIOC for exploration of hydrocarbons within Iran and worldwide.

ODGCL would also like to join hands with National Iranian Oil Company in evaluation of the potential of unexpected areas, shale gas, tight gas reserves, and enhanced oil recovery projects in Pakistan.

However, due to US sanctions, no cooperation could have been materialized so far.

WAPDA and TAVANIR entered into a contract agreement for 30 years for 32-MW electricity on November 6, 2002 to meet the requirement of Makran Division in Balochistan.

The rates per kwh were revised from time to time. The last revision was made on March 15, 2019. TAVANIR has also shown an interest to supply power to other bordering areas.

Quetta Electric Supply Company is working on this and a response will be conveyed to Iranian side shortly.

The sources maintained that MoU was signed in April 08, 2007 for import of 1000-KW power from Zahedan, Iran to Quetta, Pakistan. Feasibility report concluded jointly was submitted to NTDC in 2010.

The estimated cost will be $700 million. NTDC approved the MoU in 2012; however, the approval of ECC is awaited. After approval of ECC the PPA will be negotiated with Tavanir.

As decided in 2014 during the 19h session of Pak-Iran JEC, necessary arrangements have been made to make outstanding payments to Tavanir’s designated companies within Pakistan. This was further reinforced during the meeting held in 2019 between Tavanir, Power Division, Central Power Purchasing Agency, Pakistan (CPPA-G) and National Transmission and Dispatch Company (NTDC).

As modus operandi, CCPA-G discharges itself of payment obligations by receiving Payment Order Letters (POL) from TAVANIR nominated beneficiary for receipt of payments in Pakistani rupees and makes payments as per its liquidity situation. Such payments are later on confirmed by Tavanir.

According to sources, CPPA-G has noted that as on September 17, 2020, payment of about $100 million to Tavanir on account of import of electricity is pending due to non- availability of banking channels. However, payment against authority letter i.e. POL-31 is in process.

NTDC had earlier requested M/o Commerce to develop some formal mechanism for making outstanding payment owed by CPPA-G to Tavanir.

Copyright Business Recorder, 2022

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