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Talks on $1.5 bn Pak-Iran gas pipeline begin

Pakistan and Iran on Monday initiated the critical dialogue on the engineering, procurement and construction (EPC) contract for the $1.5 billion gas pipeline and agreed Iran would construct two kilometres of pipeline per day, completing the 781 kilometres pipeline in 15-16 months.

The Iranian delegation, headed by deputy chief of Tadbir Company, took part in the talks while Pakistan’s side was led by secretary Ministry of Petroleum and Natural Resources and aided by 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 references, scope of work, and cost of laying the pipeline per kilometre under the EPC contract. The pipeline will be laid from Gabd — a point at the Pakistan-Iran border — to Nawabshah. The pipeline that will be completed by December 2014 will first bring 750 million cubic feet gas per day and later on the gas flow will increase up to 1 billion cubic feet gas per day. The 750mmcfd gas will be injected to the power sector to generate 4,000MW of electricity and when the gas import will reach up to 1 bcfd, the electricity generation will increase to 5,000MW of electricity.

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 one of the top officials who attended the daylong talks, Pakistan has handed over the design of the pipeline to the officials of Tadbir Company, which has already started the process of constructing the pipeline in Iran.

“We have discussed the scope of work and the engineering methodology under which the Iranian company will lay the pipeline in the territory of Pakistan.” There are many bridges, compressors stations and many related things which are to be constructed while laying the pipeline, the official said.

Both sides will discuss today (Tuesday) the finances involved in the project and the loan of $500 million Iran has offered to help complete the project.

The official said the Pakistan side would take up the issue of interest rate at which Iran will offer the loan and its repayment schedule would also be finalised and on the third day of talks, both Pakistan and Iran would finalise the per kilometre price of the pipeline.

According to the officials concerned, the cost of laying the pipeline in Pakistan’s territory stands at $1.5 billion. Of this, 500 million dollars will be provided by Iran whereas the remaining amount would be arranged by Pakistan itself.

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