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Bangladesh Wants to Join TAPI

Thursday 7 June 2012

ISLAMABAD (PakistanToday) –Bangladesh has approached the Asian Development Bank (ADB) for inclusion in the TAPI pipeline project. An official source said Bangladesh has written a letter to ADB showing interest to join the project. He said there is no issue of gas supply and extending the pipeline to Bangladesh, as Turkmenistan has enough gas reserves.

When asked how much gas Bangladesh was interested to import, he said their demand was less and could be provided as Afghanistan has refused its share. However, he said the pipeline plan will be initially executed between the four participating nations and Bangladesh could join in later.

About the way forward on the project, he said that the project will be built completely by single sponsor, unlike the Iran Pakistan (IP) gas pipeline which has a segmented approach. The search for the sponsor has started for the 1700-km long pipeline that is estimated to cost more than $7.6 billion. There would be no difficulty in extending the pipeline to 2500 km if Bangladesh joins in. After the main sponsor is finalized and financial close achieved, the detailed engineering design will be finalized to complete the project by mid 2017.

About renegotiation of the IP gas price, the source said the process will be started soon as the price of Turkmen gas is less than the Iranian gas. There is a clause for renegotiation gas price in IP agreement, if Pakistan managed to get fewer price from any other source.

The finalized price of Turkmen gas is 60% of the Brent price but comes to 70% at the border after inclusion of transit fee and other incidentals, the source said adding that at current level Pakistan will be having $1 billion in saving as compared to Iranian price. “We will be negotiating with Iran to bring the prices at par with TAPI”, he said.

Despite pressure from the United States, Pakistan plans to move ahead with the IP project to overcome the gas deficit of 2 billion cubic feet per day to counter the chronic power shortages of 5,000 MW that were slowing the GDP by 3%/year.

Pakistan is faced with a difficult situation to finance laying of the gas pipeline infrastructure for injecting the imported Iranian gas in the national gas transmission network. Recently a Chinese bank led consortium has backed out from financing the project due to US pressure. The government has imposed a gas infrastructure development cess from January 01, 2012 on all consumer categories except domestic and commercial to generate Rs 40 billion per annum to finance the project. If Pakistan fails to start importing gas from Iran from 2014, it will be liable to pay heavy penalty to Iran for its failure to import the natural gas. Iran has already informed Pakistan that the gas infrastructure on its side was 90% complete.

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