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India included in $4b TAPI project

Official sources said that while the Bush Administration continues to oppose $7.5 billion Iran-Pakistan-India (IPI), it has decided to support Turkeministan-Afghanistan-Pakistan and India (TAPI) gas pipeline project to greatly help them overcome their economic problems.

The ADB is said to have eventually circulated final draft of a four-nation inter-governmental agreement on TAPI gas pipeline that would lead to further discussions for crystallising the project.

The petroleum ministry officials said the draft had been finalised by the ADB after including India in the project. They said the earlier inter-governmental agreement was prepared without making India a part of the project and hence an amended draft was required following "an in principle" decision of the Indian cabinet to join the project. The ADB, which is described as honest broker by playing a leading role in the project, had concluded off late through a feasibility study that Indian inclusion would be of great benefit not only for the project but all the stakeholders including India.

The ADB has already incorporated Indian suggestions in the agreement and has circulated it to Turkmenistan, Pakistan and Afghanistan. "We have received the four-nation intergovernmental agreement and we are going through it", an official said.

Sources, however, said before finalisation of the four-nation agreement, the stakeholders have to hammer out seven issues that have been hampering progress on gas pipeline from central Asia to Pakistan for almost two years now.

The capital cost of the 1,435-km pipeline of 56-inch diametre had recently been updated to about $4 billion from $3.3 billion in 2003. The pipeline that is to originate from Turkmenistan s Daultabad gas field will run 145-km in the host country, 735-km in Afghanistan and 555-km in Pakistan to Multan under the preferred southern route i.e. via Herat and Kandahar.

The ADB was also working on northern route on Indian request that should pass through Mazar-e-Sharif, Kabul and Peshawar to Lahore for onward extension to Indian city of Bikaner. ADB had originally funded the feasibility study for the project in 2004 and was now updating it.

The sources said a meeting of the working group comprising Turkmenistan, Afghanistan and Pakistan will be held very soon to achieve two major milestones. India is also expected to attend the meeting as observer for formal approval by the three parties to make it a member. Pakistan would be tabling a draft gas sales and purchase agreement (GSPA) and Turkmenistan would make a formal offer on gas pricing for the project.

The United States is supportive of the project and is ready to assist in security issues. Pakistan believes that bottlenecks hampering progress on the project involved non-confirmation of uncommitted gas volume by Turkmenistan regarding Daulatabad gas field, uncertainties or lack of clarity with regard to price of the gas to be demanded by Turkmenistan and security situation in Afghanistan.

Also there are significant difficulties in the expected implementation of security and risk mitigation measures proposed by the ADB' consultant and usual delays of the Turkmen government in complying with the decisions taken by the tripartite steering committee. There are chances of raising a special security force in Afghanistan to protect the pipeline; still the law and order situation there is a cause of real concern that would remain in place for many years to come.

The ministry of petroleum has also identified as bottlenecks the third party guarantees for the required gas allocation by Turkmenistan government and internal political situation in Turkmenistan. Pakistan had planned under its 30-year Energy Security Plan to commence the project in 2007 and complete it in 2011 - both targets seem unachievable in the given conditions. However, the project is now been envisaged to be completed by 2018.