CPEC: China will Finance $ 1.4 Billion for Iran- Pakistan (IP) Gas Pipe Line Project

Arif Qureshi

Islamabad: The Central Development Working Party (CDWP) headed by Minister for Planning Ahsan Iqbal officially announced the inclusion of $7 billion Pakistan-Iran (IP) Gas pipe line project of Pakistani side under the banner of China Pakistan Economic Corridor (CPEC).  The estimated cost of Gwadar-Nawabshah LNG Terminal & Pipeline project which is part of CPEC is about USD 2 billion and the state owned Chinese Exim bank (Export-Import Bank of China)  will provide 85 per cent (USD 1.4 billion) of the financing under government-to-government mode.

The engineering, procurement and construction (EPC) contract of the project will be given to the Chinese Company. Under the China Pakistan Economic Corridor (CPEC) project, a Chinese firm would lay an LNG pipeline from Gwadar to Nawabshah and set up an LNG terminal at the Gwadar port.

Although Central Development Working Party (CDWP) has not yet officially named the Chinese company which work on IP project but sources said it will be the Chinese state firm China Petroleum Pipelines Bureau (CPP) which has submitted technical and commercial bids in accordance with the Public Procurement Regulatory Authority (PPRA) rules last year.

According to a source prior to the Central Development Working Party (CDWP), a forum which authorized major projects under China Pakistan Economic Corridor (CPEC) has approved the Gwadar-Nawabshah LNG Terminal and Pipeline Project and sent to Executive Committee of National Economic Council (ECNEC) with firmed up cost for final approval.

The key objective of this project is to overcome gas shortages by importing LNG and its transportation through Gwadar-Nawabshah pipeline. In phase-I, the pipeline will follow the coastal pipeline corridor, which was formally established for the Iran-Pakistan gas pipeline. In phase-II, a 90-kilometer patch will be constructed from Gwadar to Pakistan-Iran border to tie the national network with Iranian system.

Iran has already built 900 km length of the pipeline on its territory with a cost of about $2 billion but Pakistan has fallen behind the target to take delivery of gas because of many reasons. During his last visit in March Iranian President Hassan Rouhani said that Iran had completed work on its side of pumping natural gas to Pakistan and would be in a position to provide gas to Pakistan in a few months.

There were many hurdles in past to complete Pakistani side of Iran- Pakistan (IP) Gas pipe line project, the leading one was economic sanctions on Iran from United States and European Union which had been lifted in July 2015. Another issue was lack who will finance the project?

Many companies having international repute like Russian Gazprom, Australian BHP Billiton, Malaysians PETRONAS, French Total, Royal Dutch Shell, British BG Group, showed their interest during the last decade but all left the idea to finance because of U.S. sanctions. At one stage in 2013 Iran had also agreed to provide a $500 million loan for construction payable in 20 years.  However, latter Iran refused to fund the project citing ‘acute financial constraint’ as the reason. And now with the financing of Chinese state owned Exim bank under the banner of China Pakistan Economic Corridor (CPEC), its look the project will be completed.

In a briefing to foreign diplomats in Islamabad, the Minister for Petroleum and Natural Resources Shahid Khaqan Abbasi, said that ($7 billion) Iran-Pakistan(IP) gas pipeline project will be completed by 2018, while the Turkmenistan–Afghanistan–Pakistan–India Pipeline (TAPI) project will be completed by January 2020.

He added that about 250 million cubic feet gas would be imported from Iran during first year, while in the second year the import of gas would be enhanced to 500 million cubic feet and in the third year 750 million cubic feet gas would be imported.

The Writer is Editor Daily Online News Paper “The Fortress” can be reached # arifqoreshi@gmail.com

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