Feasibility of IP gas pipeline project: contract awarded to German firm

[Naveed Yaseen]

ZAFAR BHUTTA
ISLAMABAD (November 14 2009): Pakistan has awarded a contract to ILF Consulting Engineers of Germany for consultancy on Iran-Pakistan (IP) gas pipeline project to undertake project feasibility. The ILF will work in joint venture with Pakistan engineering consultancy agency, National Engineering Services Pakistan Limited (Nespak), Business Recorder learnt reliably here on Friday.

Only a pre-feasibility study has been undertaken on the IP gas pipeline project and a bankable feasibility study and Front End Engineering Design (FEED) are required to approach the investors and financiers for tendering and procurement of materials, equipment and appointment of construction contractors.

The ILF will undertake feasibility study, Environmental Impact Assessment, FEED and supervision of detailed route survey. The overall cost of services, through the international tendering, received by ILF-Nespak joint venture for both stages, amount to 48.9 million dollars - 15.5 million dollars for stage-1 and 33 million dollars for Stage-2 - against the second lowest bidder, Worley Parson's 138.7 million dollars.

ILF had taken part in the bidding process after pre-qualifying two-and-a-half years ago and was declared the lowest evaluated bidder. "But the award of consultancy contract was delayed due to late signing of the gas sales purchase agreement (GSPA) with Iran. The contract was signed in June 2009," said the sources.

According to sources, following the directions of the Steering Committee on IP on August 22, a meeting of all the stakeholders, including ISGS, SSGC and SNGPL, was held with the ILF-Nespak to discuss the options of allocating consultancy work among various participants, which remained inconclusive.

"Another meeting was held on October 28 in the Petroleum Ministry to sort out the issue, and after detailed deliberations, the decision was taken to award the contract to ILF-Nespak joint venture," the sources said. The German-based ILF consultants have expertise in tunnelling, underground construction, pipeline engineering, feasibility studies, social and environmental impact and detail design.

The government will initially arrange around 15 million-dollar financing through National Bank of Pakistan (NBP), for consultancy services to the ILF-Nespak on the IP gas pipeline project. The Finance Ministry has assured to make arrangement of financing in this regard. Pakistan has already agreed to import 750-mmcfd gas and would seek additional 250-mmcfd gas from Iran on the request of Balochistan government to meet Gwader Port's requirements.

"If the Economic Co-ordination Committee (ECC) gave the nod for additional gas import from Iran, then the size of the pipeline would be increased and Pakistan will have to take up the issue of the size with Iran," the sources said. "If the volume of gas imports is increased, the size of the pipeline may have to be increased to 48 inches, said the sources.

The cost of construction of 42-inch pipeline - from Iran to Nawabshah - was estimated at 1.2 billion dollars. However, with increase in the size, the cost would rise. At present, 48 percent thermal power generation is based on furnace oil, out of which about 62 percent is imported. One bcfd gas will generate an estimated 5,000-mw electricity. Recent studies have shown that the imported gas would be the most economical fuel compared with other imported fuels.

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