Pakistan, Iran hold talks on gas pipeline project today

[LahoreEstate]

By Khalid Mustafa

ISLAMABAD: Amid stiff opposition to the IP project from the most influential world capitals — one in the West and other in the Middle East, Pakistan and Iran will today (Monday) embark upon the most crucial technical level talks on conditions precedent (CPs), which are prerequisites before making the gas sales purchase agreement effective.

Under the gas sales purchase deal, Pakistan is bound to submit some conditions precedent (CPs) to Iran before September 5 or the deal will elapse. However, the date for finalising the conditions precedent (CPs) is one-time extendable too. Both the sides would also deliberate in detail on the issues relating to the project operational plan.

During the talks with Iran, the main focus would be on conditions precedent (CPs) under which Pakistan will extend to Iran the sovereign performance guarantee and comfort letter. “The five-member Iranian experts’ delegation headed by Director Gas Exports is arriving in the very early morning of Monday to take part in the technical parleys. The team will return to Iran on September 4,” a senior official at the Ministry of Petroleum and Natural Resources told The News.

On behalf of Pakistan, Joint Secretary Development of Ministry of Petroleum and Natural Resources, Managing Director Inter-State Gas System (ISGS), MDs of Sui Northern and Sui Southern and other officials of the ministry will participate in the talks.

When approached G A Sabri, Special Secretary of Ministry of Petroleum and Natural Resources confirmed that both the countries were going to hold talks today (Monday). However, he showed inability to share agenda of the meeting saying he was not dealing with this issue.

Hasan Nawab, MD ISGS, being the focal person of all the parleys on IP project did not respond to The News despite making cell phone calls and sending him the SMS seeking his confirmation about the talks and agenda of the meeting between Pakistan and Iran.

However, the official said that the government had appointed the MD ISGS as Project Director, who would ensure the performance guarantee on behalf of the Government of Pakistan. For this purpose, the Ministry of Petroleum and Natural Resources has already been advised by the Steering Committee of ECC on IP that met in Karachi on August 22 to pursue the Finance Division for expediting the process to qualify the financial obligations underlying the GoP guarantee, the copy of the minutes of the August 22 meeting available with The News discloses this.

On the issue of comfort letter that Pakistan will give to Iran, the official said that under the letter, the Government of Pakistan would have to allow third country to import the gas through IP line in case in future any country comes to join the project, but the permission will be subject to the gas tariff and transit fee to be worked out at that time’s best practices.

To a question the official said that the government had abandoned the option to bring the pipeline from Iran to Pakistan under sea, as the cost of the offshore route had been estimated at $4.460 billion, which is almost twice the cost of on-shore route $2.538 billion. “The cost differential will result in higher gas transportation tariff amounting to $10.2 billion over the 25 years project and this is the main reason that forced the government to abandon the off-shore route option.”

To a question, the official said as per on-shore outline the IP gas line will enter in Pakistan from Jiwani in Balochistan and then in Gwadar and by passing through coastal highway it would reach Nawab Shah.

“However, the exact route will be decided after the survey is completed that has been initiated by both the government owned utilities Sui Southern and Sui Northern and the distance of the route may be reduced once the survey is completed,” the official opined.

http://thenews.com.pk/top_story_detail.asp?Id=24217