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Landmark Pak-Iran gas deal finalised

All issues pertaining to the $1.5 bn Pak-Iran gas pipeline were settled on Thursday and an initial contract will be signed between Pakistan and Iran on Friday. Under the EPC contract to be signed, Tadbir, the Iranian company, would construct the pipeline at a cost of Rs190 million per km and will lay 2 km pipeline per day inside Pakistan.

Both sides were in talks for the last four days and the Inter State Gas Systems (ISGS) on behalf of Pakistan and Tadbir from Iran would ink the landmark contract of the EPC. The agreement for purchasing gas would be for 20 years initially and could be extended for another five years, a senior official who is part of the talks confided to The News.

The gas companies – Sui Southern, Sui Northern – and FWO (Frontier Works Organization) will also take part in constructing the pipeline. The gas utilities will complete the task related to mechanical issues and FWO will do the civil works.

The laying of 781 kilometres of gas pipeline with 42 inches diameter from Gabd – a point at Pak-Iran border to Nawabshah – will be completed in 15 months. Gas will be imported from Iran at the rate of $13 per MMBTU.

Pakistan is to primarily import 750 million cubic feet per day that would be injected in the power sector to help generate 4000 MW of electricity. Later on the flow of gas will be increased to 1 billion cubic feet gas that will generate 5000 MW of electricity.

The replacement of costly furnace oil being used as fuel in powerhouses with the imported gas will help save $1 billion per annum.

Pakistan and Iran have also resolved the issue of interest on the loan Tehran would extend. It was decided that Iran would extend $500 million loan and Pakistan would pay 3 percent interest on loan against 4 percent as demanded by Tehran.

Iran will also reduce the price of gas to be imported as against the price earlier finalised in gas sales purchase agreement. There is a clause in the agreement that if Pakistan arranges import of gas from other country at lower price then Iran would also do accordingly.

“We have struck deal with Turkmenistan for import of gas under TAPI gas line at a reduced price compared to the price of Iran.” Once the EPC gets signed the groundbreaking ceremony would be held as soon as possible so that the project could be materialised by December 2014.

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