Pakistan invites EoI for $1.2b gasline project

ISLAMABAD Pakistan on Wednesday officially invited Expression of Interest (EoI) for its 1.2 billion dollars Pakistan-Iran gas pipeline project. The project was delayed due to several bureaucratic bottlenecks and settling price mechanism as it was finally started by the Ministry of Petroleum and Natural Resources and is expected to be commissioned by next year. The Iran-Pakistan gas pipeline will be completed by 2012, Minister for Petroleum and Natural Resources Asim Hussain has said. The Minister in a recent interview told a television channel that Iran had completed its work on laying the pipeline and Pakistan would resume work on the project shortly. The estimated cost of the project is 1.2 billion dollars. Our dependence on Pakistan-Iran pipeline is very high and there is no other substitute to meet the growing demand for energy. India was also to be part of the pipeline project initially but backed out at later stage due to price mechanism and some other issues. Pakistan on Wednesday called for the EOI for 800km of pipeline of 42 inch diameter. According to Inter-State Gas System, Pakistan witnessed rapid economic growth in recent years with real GDP growth averaging (5.54 pc) per annum in the last 5 fiscal years. However, the real GDP growth witnessed an increase from the last year to (4.1 pc in FY-2010). The size of Pakistans GDP has increased from US $88.67 billion in FY-2005 to US $104.34 billion in FY-2008 and stood at US $105.17 billion in FY-2009, an increase of approximately 4 pc in FY-2010 to 109.47 billion dollars and per capita income has increased from US$669 in FY-2004 to US$ 1,018 in FY-2009 showing a marginal increase of 0.3 pc from last year (US$ 1,038 in FY-2008) and US$1,095 in FY-2010. This decline can be attributed to the global financial crisis and the affect of the war on terror on Pakistans domestic environment. The countrys primary energy supplies reached to 63.04 MMTOE in FY-2010 and with higher economic growth fuelling energy needs, the supply-demand gap is fast widening. Moreover, with about a third of countrys energy needs being met through imports, mainly oil, the volatility in international energy prices is creating challenges. Recognising that availability and affordability of energy is essential for sustainable economic development, the GOP has devised a long-term energy security plan for meeting the countrys energy needs upto the year 2030. The Iran-Pakistan (IP) gas pipeline project is a key element of this plan. The project construction would take place on Engineering Procurement Construction Management (EPCM) approach whereby ISGS, would cause to undertake the engineering and procurement activities and get the project constructed through multiple contractors. ILF Germany & NESPAK will assist ISGS as Engineering and Project Management Consultant in this regard. After completing the FEED, bids shall be invited from EPC contractors for construction of the pipeline, in which the local gas utility companies, SSGC & SNGPL, will be encouraged to participate either on their own or in joint venture with international contractors. This is planned to achieve overall cost reduction, as well as technology transfer in the design, documentation and quality control in pipeline construction. This approach would result in significant efficiencies in terms of costs and time, enabling fast-track completion of the project. Iranian officials lately stated: 'we will complete the project and start supply of gas by end of 2012. A segmented approach has been adopted for the IPI gas pipeline project whereby each participant country would be responsible for building and operating the pipeline transportation network in their respective territories. ISGS is responsible for developing and operating the Pakistan segment of the IP gas pipeline. The approximate length of the Pakistan segment of the IP gas pipeline is 781km extending from Iran-Pak border to the Pakistan gas off-take point near Nawabshah. The Pakistan segment shall be constructed and operated by a special purpose vehicle PipeCo. It is planned that a 42 inch diameter pipeline will be constructed to transport gas from Iran-Pak border to Pakistan off-take point near Nawabshah. US officials have expressed opposition to the Pakistan-Iran gas pipeline deal,but they acknowledge Pakistans pressing needs for energy. So far the US has not made any diplomatic commitment for Pakistans growing energy needs. Officials sources said: 'at some stage this pipeline could be linked with India which is why the US is merely demonstrating a benign neglect. Gilani before striking a deal with Iran for the supply of gas had stated: 'Pakistan will go ahead with a plan to import natural gas from Iran even if the US levies sanctions on the country. Due to the high cost of Iranian gas it will not be available for domestic consumers. Most of its supply will go to the industrial sector. Officials said that feasibility report was being prepared and after this process, the tenders would be invited for choosing the best companies so that the project could be completed in a proper manner. In order to avoid shortage of petrol in future, four more storage units have been made. Federal Petroleum Minister Dr. Asim stated in a television interview:'steps have been taken to import LNG and some 17 companies are showing keen interest to provide gas to Pakistan in order to meet its energy demand, steps are being taken to import LPG from different multi-national companies.