business
Friday Nov 06 2020
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Russia approves new structure for North-South Gas Pipeline with Pakistan

A Reuters representational image.

ISLAMABAD: The North-South Gas Pipeline project has received a new push with Russia providing it a new structure, The News reported.

The Russian Ministry of Energy has offered TMK and ETK with its state-owned company Federal State Unitary Enterprises (FSUE).

Senior official privy to the development said the project had seen “many upheavals but the Russian side remained stuck to the project knowing the fact that Pakistan got structures changes several times.

“Officials in the Petroleum Division, previously influenced by a certain lobby, sought inclusion of ETK in place of TMK through wrong accusations that top man of TMK, Pumpyansky, is on the watchlist of US, and afterwards the Russian MoE extended the structure with ETK as was demanded by top mandarins.”

“But later on, sense prevailed with inputs from international law firms which opined that TMK is a better structure for the project, and the same was found in internal inquiries coupled with due diligence on part of some powerful circles.”

With a net worth of $9 billion, TMK is listed at the London Stock Exchange and has reported profits $1 billion. The company is seen to have positive track record with US government by the S&P and Moody’s. Publicly available data shows it hasn’t been subjected to any investigation or sanction by the US administration.

ETK is not a listed company hasn’t been rated by S&P or Moody’s, The News reported.

“The Russians provided ease to Pakistan by offering companies TMK and ETK in the structure under state-owned company FSUE – putting the ball in Pakistan’s court to select a better structure for the project,” said the official.

“Russia also agreed on Pakistan’s proposal on equity structure.”

The official said after the Supreme Court decision on GIDC, the government wants to keep majority equity share in the project and proposed 51% share for Pakistan while Russia gets 49%.

The official appreciated Russia for not backing out despite Pakistani government frequently demanding changes in structure in the last five years.

Moscow has finalized its technical delegation with representatives each from EKT and TMK, which is to land in Pakistan somewhere in the third week of the current month and will negotiate for alteration in the IGA (Inter-Governmental Agreement) and will finalise the way forward with timelines for initiation of the project till its execution and making the project operational.

Originally, the pipeline of 1,100 kilometers was to be laid with a diameter of 42 inches with capacity to transport 1.2 billion cubic feet RLNG per day.

Now Pakistan wants to increase its capacity to transport RLNG of 1.6 bcfd with a diameter of either 52 inches or 56 inches. The Pakistan side has estimated the project’s cost at $2.25 billion but it is yet to be finalized with input from the Russian side.