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Pak-Iran gas pipeline talks today…Work on pipeline inside Pakistan to begin in a month

Despite clear opposition from the US and its sanctions on Iran for Tehran’s nuclear ambitions, the $1.5 billion Iran-Pakistan (IP) gas pipeline has been accorded approval by the federal cabinet and the crucial talks between Islamabad and Tehran are starting on Monday.

These talks, likely to continue for 3-4 days, will finalise the EPC (engineering, procurement, construction) contract that is to be extended to Tadbir — the state-owned company of Iran for laying the pipeline in Pakistan’s territory.

Once the EPC contract gets finalised, the company will start laying the 781 kilometres pipeline inside Pakistan within a month. Now the question arises whether Pakistan will indeed be able to sustain the US pressure.

The Iranian delegation headed by deputy chief of Tadbir company will take part in the talks while Pakistan’s side, to be led by secretary Ministry of Petroleum and Natural resources, will comprise managing director of Inter State Gas Systems (ISGS) Mobin Saulat and senior officials of finance and law ministries.

The talks will fine-tune the terms of reference, scope of work and the cost of laying the pipeline per kilometre under the EPC contract. The pipeline, compressors and related equipment will be provided by Iran. It would also be discussed as to how long the pipeline would be constructed under $500 million loan. The pipeline will be laid down from Gabd, a point at Pakistan-Iran border, to Nawabshah.

The project that will be completed by December 2014 will first bring 750 million cubic feet gas per day in the 781 kilometres long pipeline with diameter of 42 inches and later on the gas flow will increase up to 1 billion cubic feet per day. The 750mmcfd gas will be injected into the power sector to generate 4,000MW of electricity and when the gas import will reach up to 1bcfd, the electricity generation will increase to 5,000 MW.

When this gas will replace the costly furnace oil being used by the power plants, the country will save about $1 billion a year. According to officials concerned, the cost of laying the pipeline in Pakistan’s territory stands at $1.5 billion. Iran will provide 500 million dollars while the remaining amount will be arranged by Pakistan itself. The government has already imposed the gas infrastructure development cess (GIDC) to raise funds for the project. In addition, Pakistan’s public sector entities such as the OGDCL, Sui Southern, and Sui Northern will also play their role in providing finances for the project.

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