Pakistan has awarded the contract of building its portion of the multibillion-dollar Iran-Pakistan gas pipeline to an Iranian firm, 'Express Tribune' reported on Thursday, adding that 'Tadbir Energy' has been awarded the contract to construct Pakistan's portion of the gas pipeline.
It said the initialization of the contract took place during a recent visit of a Pakistani delegation to Tehran. The pipeline construction will be formally launched on March 4 on the Pak-Iran border.
The Pakistan cabinet has already approved a waiver of the Public Procurement Regulatory Authority rules in order to award the contract directly to Tadbir Energy.
Sources added Pakistani public sector firm Interstate Gas Systems (ISGS) and Tadbir Energy have initially signed the contract in Tehran, and now the ISGS board will endorse it. Iran designated Tadbir Energy to work on the project for which Tehran is also extending a $500 million loan.
The firm is controlled by the Imam Khomeini Relief Foundation, one of Iran's largest charitable groups.
Sources added that Tadbir Energy would undertake all engineering, procurement and construction for the first installment starting from the border at a cost of around $250 million.
Tadbir Energy will also undertake the second phase of the project, and will increase the financing by allocating a further $250 million to the pipeline project, subject to discussions regarding its involvement in the distribution of gas in Pakistan later on.
It has also agreed to provide and assist in arranging $250 million as supplier credit and any additional financing for the second phase. The firm will act as the lead contractor along with the nominated local subcontractor.
The total cost of the project is expected to be around $1.5 billion.
Demand for natural gas in Pakistan has outstripped supply in recent years, putting existing reserves under immense pressure.
The total consumption of natural gas in the country stands at 3480 MMCFD million cubic feet per day of which the power sector consumes 959 mmcfd, with 747 mmcdf being consumed in the domestic sector. Meanwhile 578 mmcfd of gas is consumed by the fertilizer industry, four mmcfd by the cement industry. While 107 mmcfd is consumed commercially. 327 mmcfd is consumed by CNG cylinders which are widely installed in locally manufactured vehicles in Pakistan.
The 2700-kilometer long pipeline was to supply gas for Pakistan and India which are suffering a lack of energy sources, but India has evaded talks. Last year Iran and Pakistan declared they would finalize the agreement bilaterally if India continued to be absent in the meetings.
According to the project proposal, the pipeline will begin from Iran's Assalouyeh Energy Zone in the south and stretch over 1,100 km through Iran. In Pakistan, it will pass through Baluchistan and Sindh but officials now say the route may be changed if China agrees to the project.
The gas will be supplied from the South Pars gas field in the Iranian southern province of Bushehr. The initial capacity of the pipeline will be 22 billion cubic meters of natural gas per annum, which is expected to be later raised to 55 billion cubic meters. It is expected to cost $7.4 billion.
Iran has already built more than 900 kilometers of the pipeline on its soil.
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An Iranian company is due to begin construction work of the Pakistani side of the multi-billion-dollar IP gas pipeline soon, Pakistani media reported.
News ID 184353
