Chinese bank ‘backs off’ from Iran gas pipeline

[Roybot]

Islamabad: The all-weather friendship appears overcast, purportedly due to Western pressure.

A federal cabinet committee on Tuesday constituted a ministerial committee for reviewing alternate options to arrange funds for construction of the Iran-Pakistan gas pipeline after a Chinese bank backed off from financing the project.

Headed by Finance Minister Dr Abdul Hafeez Shaikh, the Economic Coordination Committee (ECC) of the Cabinet took the decision after the petroleum ministry disclosed that the Industrial and Commercial Bank of China (ICBC) was reluctant to sign the financial advisor contract despite being the lowest bidder.

The financial advisor is responsible for arranging funds for completing the 800-kilometre-long pipeline, at an estimated cost of $1.5 billion.The committee will comprise the petroleum minister, the water and power minister, the State Bank governor, petroleum, finance and economic affairs division secretaries and the Planning Commission deputy chairman.

“A probable reason for not signing the agreement [by the ICBC] to date could be changing geo-political situation in the region,” said a petroleum ministry summary tabled at the ECC meeting. Earlier, the US has threatened to impose sanctions on companies that deal with Iran.

The ICBC was finalised as the financial advisor through an international competitive bidding. However, according to a petroleum ministry official, the bank had demanded awarding the pipeline construction project to a Chinese firm without competitive bidding.

The petroleum ministry sought the ECC’s permission to cancel the contract with the ICBC and award it to the second-lowest bidder, which is a consortium of United Bank Limited, Burj Capital, ECO Trade and Development Bank, Field Stone Group and Islamic Corporation for Development of Private Sector.

Financing the project: Chinese bank

 

[Bond]

It is all business... Chinese are not dumb enough to invest money in to a losing cause...

 

[Shardul.....the lion]

So China has again backed off from helping Pakistan when it needs help desperately.
Western world will definitely not help funding Iran pipleline morever, they are sanctioning the companies dealing with Iran. So basically China chose American interests over Pakistani interests.

History repeats itself. again and again and again.

 

[Developereo]

China chose American interests over Pakistani interests.

China chose Chinese interests over any foreign interests. China is not yet strong enough to challenge American diktats.

Also, the following is a good enough reason why the bank should not have been chosen in the first place:

the bank had demanded awarding the pipeline construction project to a Chinese firm without competitive bidding.

 

[Bond]

well; that has been the case with most of the chinese funded projects- they demand contract to be given to a chinese firm withought any competitive bidding..

this time China bowed out in front of US pressure..

China chose Chinese interests over any foreign interests. China is not yet strong enough to challenge American diktats.

Also, the following is a good enough reason why the bank should not have been chosen in the first place:

 

[IndoUS]

China chose Chinese interests over any foreign interests. China is not yet strong enough to challenge American diktats.

Also, the following is a good enough reason why the bank should not have been chosen in the first place:

Wow and if India did this you will see huge cry about how India is still a western colony

On topic: Pure business nothing more nothing less, there is only national interest. People should realize this and move on, there are no permanent friendship, only countries with permanent interest(stole this quote from someone on PDF).

 

[Alpha Omega]

There is still Gazprom option. Russians have repeatedly offered to build and fully finance the pipeline.
Any commercial institute would back off from such deal, even the chinese ones because its risky business. But Gazprom is a different story.

 

[Shardul.....the lion]

China chose Chinese interests over any foreign interests. China is not yet strong enough to challenge American diktats.

Also, the following is a good enough reason why the bank should not have been chosen in the first place:

What about emotional calls of frienship, Higher than mountains and deeper than oceans.

China as a friend should help now, Pakistan is in need of help now.

A friend in need is a friend indeed.

But I think India should finance this pipeline with strong guarentees from Pakistan against damage of pipeline.

 

[Developereo]

well; that has been the case with most of the chinese funded projects- they demand contract to be given to a chinese firm withought any competitive bidding..

And you know this because....?

this time China bowed out in front of US pressure..

The US still reigns supreme. China must always safeguard its interests first. We understand that.

Wow and if India did this you will see huge cry about how India is still a western colony

No. India will always get special exemption from the US because of its role in the greater game.

On topic: Pure business nothing more nothing less, there is only national interest. People should realize this and move on, there are no permanent friendship, only countries with permanent interest(stole this quote from someone on PDF).

And the full spectrum of mutual interests between Pakistan and China remains unaffected by these inevitable blips.

What about emotional calls of frienship, Higher than mountains and deeper than oceans.

China as a friend should help now, Pakistan is in need of help now.

A friend in need is a friend indeed.

But I think India should finance this pipeline with strong guarentees from Pakistan against damage of pipeline.

The Pak-China relationship is secure. The mere fact that Indians are obsessed with it and keep burning up about it is proof enough.

 

[illusion8]

And you know this because....?



The US still reigns supreme. China must always safeguard its interests first. We understand that.



No. India will always get special exemption from the US because of its role in the greater game.




And the full spectrum of mutual interests between Pakistan and China remains unaffected by these inevitable blips.



The Pak-China relationship is secure. The mere fact that Indians are obsessed with it and keep burning up about it is proof enough.

Though off topic but can someone shed some light on what is is this greater game everyone is talking about.

 

[Bond]

And you know this because....?

Here you go one of the many examples..

ISLAMABAD: The government has given the contract for 1,100 MW Kohala Hydropower Project to a Chinese firm, setting aside the Pakistan Procurement Regulatory Authority (PPRA) rules and without holding International Competitive Bidding (ICB), well-placed official sources told The News.

The decision to award the contract to the Chinese company came soon after the recent visit of Cao Guanging, the chairman of the state-owned China Three Gorges Project Corporation (CTGPC), during which he took up the issue of awarding the contract of the said project to its subsidiary company, CWE, in his meetings with President Asif Zardari and Prime Minister Yousuf Raza Gilani.

Cao Guanging had also held separate meetings with Federal Minister for Water and Power Naveed Qamar and Finance Minister Dr Hafeez A Sheikh and sought the contract of the project without the application of PPRA rules and the ICB, but the authorities expressed their inability to this effect, arguing it was difficult to set aside the PPRA rules. He was told that the issue was lying with the Ministry of Law, which would decide the fate of the contract.

“Now the Ministry of Law has decided that the project can be given to the Chinese company as the project falls under the jurisdiction of the Azad Jammu and Kashmir and the PPRA rules are applicable only in Pakistan, not in the AJK,” top officials of the ministry confided to this correspondent.

They said: “The Ministry of Law has provided this opportunity to the said company, saying this project has nothing to do with the Government of Pakistan and AJK government. The AJK Council alone is the only forum to decide about the project.”

“Yes, the Ministry of Law has given the go-ahead signal to the government to award the contract to the Chinese company without implementing the PPRA rules in this case,” was the answer of Secretary Water and Power Javed Iqbal when this correspondent contacted him for confirmation.

The official sources said that the Ministry of Water and Power had earlier sought the opinion of the law ministry whether the PPRA rules were applicable in the jurisdiction of Azad Jammu and Kashmir (AJK) and if these are not applicable in the AJK, then Kohala Hydropower Project could be awarded to a Chinese company.

According to the official correspondence between the Ministry of Water and Power and Wapda (copy available with The News), Wapda asserted that the PPRA rules were applicable since the feasibility studies, detailed engineering design and tender documents were fully financed from the public funds. Wapda also argued that grounds of urgency do not exist so as to confer any waiver from PPRA rules and the cost of the project worked out by the sponsor was higher by $344.32 million than cost estimations by Wapda. It desired the project to be offered through ICB to ensure quality and competitive cost of the project. “This shows that the Ministry of Water and Power and Wapda are not on the same page on the issue,” the official sources said.

Kohala project given to Chinese firm without bidding - The News

 

[53fd]

Pakistan does not have all of its eggs in one basket, & neither does China.

That has little to do with Pakistan's friendship with China, which is much more multi-faceted.

 

[Bhairava]

What's the surprise in this..? IP pipeline is a doomed cause unless the sanctions are lifted on Iran.

 

[ziaulislam]

yes, and instead of getting stucked in sanctions we should try ulternative ..may be qatar undersea gas pipeline or TPI pipeline but gas is expensive from qatar which makes it not a good choice and security is volatile in afghn....

 

[kingkobra]

wise decision..