Pakistan’s changes in structure of gas pipeline project disappoint Russians

Islamabad [Pakistan]: Moscow has expressed disappointment as Pakistan keeps on changing the structure of the Pakistan Stream Gas Pipeline project and is not making any progress on the commercial deal amid US sanctions on Russian entities, reported The Express Tribune.

The Pakistan Stream Gas Pipeline project was launched to build a Liquified Natural Gas (LPG) pipeline from Karachi to Lahore, and aimed to overcome the gas shortage in the Punjab province.

The Pakistani officials went to Russia on October 10 to discuss the long-term oil deal and the gas pipeline project was also on the agenda.

However, according to The Express Tribune, the Pakistani officials had to face an embarrassing situation when they took up the pipeline project before the Russians, as they got so frustrated that they even refused to talk about it.

Initially, Russia had nominated RT Global to complete the project whereas, Pakistan had nominated the state-owned Inter State Gas Systems (ISGS).

However, soon after Russia nominated RT Global, the US imposed sanctions on it, which led to leaving the project, and hence o development was made in the North-South Gas Pipeline project, reported The Express Tribune.

Since then, Pakistan and Russia have changed the structure of the pipeline almost six times but were unable to find any way to complete it.

in July 2021, Pakistan and Russia changed the structure of the project and decided that Pakistan’s state-owned gas companies would hold 74 per cent of the total funding required whereas the Russian firms would own 26 per cent shares.

Later, Pakistan and Russia signed an amended Intergovernmental agreement (IGA) to begin the construction work on the pipeline project in May 2021 during the Pakistan Tehreek-e-Insaaf’s (PTI) tenure.

The then Pakistani ambassador to Russia, Shafqat Ali Khan, signed the protocol to the IGA along with that country’s energy minister, Nikolai Shulginov.

Under a revised deal, it was decided that the Pakistan Stream Gas Pipeline special purpose vehicle (SPV) would also be set up within 60 days of this signing to implement the project.

However, there has been no progress on a commercial deal since then, according to The Express Tribune.

However, after the PTI was removed from power, the PML-N led coalition government came into power and the Pakistani side again proposed to the Russians to revise the structure of the project, and stated that it should be completed on a Build-Operate-Transfer (BOT) basis.

As Pakistan kept on changing the structure, the Russians got furious and refused to speak on the subject during the talks held in Moscow.

According to the sources, the pipeline project had been delayed because of the involvement of several stakeholders in the project. Adding to this they said that even some businessmen working for Russian companies in Pakistan had spoiled it, reported The Express Tribune.

Another one of the factors were that textile and fertiliser barons were also held responsible for the delay in the project’s completion.