There is nothing strategic about this project. people are blowing hot air
why is called "make or break" talks ??
why is called "make or break" talks ??
Featured Pakistan and Russia signed the Agreement on North-South Pipeline Project
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it is 6 years to sign a pipeline project
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Four-day talks on PSGP successfully conclude: Deal done on $2.5 bn gas pipeline with Russia
Khalid Mustafa
July 16, 2021
ISLAMABAD: In a major breakthrough, Pakistan and Russia here on Thursday successfully concluded the talks and signed the Heads of Terms (HoT) and Shareholders Agreement (SHA) on the country’s most strategic project of 1,100-kilometer Pakistan Stream Gas Pipeline (PSGP) from Karachi to Kasur.
The project’s cost has been estimated at $2.5 billion.
All the heads of terms presented by Russia were altered to make them acceptable and for the sake of more clarity and then both sides signed them. “Russia will have 26 percent shares in the project but will have no sovereign guarantee from Pakistan on the rate of return. Pakistan will be having 74 percent shares in the project, which is why the Managing Director (MD) of Special Purpose Company (SPC) will be appointed from the Pakistan side and Chief Operating Officer will be from the Russian side. The SPC will be responsible of running the PSGP,” one of the participants of the four-day talks told The News.
The completion of the Pakistan Stream Gas Pipeline will enable the country to import and transport over an additional 1.5-2.5 billion cubic feet of gas per day from Karachi to Kasur (Punjab). Currently, Pakistan has the capacity to import 1.2 bcfd, which can go up to 1.5 bcfd if the additional capacity of both FSRUs at PGPL and Engro terminals is used. However, after completion of the PSGP, the two new terminals --- one by Energas and other one by Tabeer -- would also come on stream.
The diameter of the pipeline will be 56 inches. Russia has matchless expertise in laying down the 56 inches diameter pipeline. Russian experts will also teach and train technical human resources of local gas companies — Sui Southern and Sui Northern on how to lay down the 56 diameter pipeline.
Surprisingly, Special Assistant to PM on Power and Petroleum, Tabish Gauhar, has not been part of the four-day talks at any stage and even was not visible during the signing of Shareholders Agreement and Heads of Terms. Tabish Gauhar had opposed the PSGP on the ground that it would get delayed by one and a half years and Pakistan wanted the pipeline in 2023. He was of the view that the PSGP would be costly whereas local gas companies could build the pipeline of 42 inches diameter as Sui Southern and Sui Northern have experience of laying down 15,000-kilometer pipelines of 42 inches diameter. Tabish wanted to build an alternate pipeline with a consortium of both gas companies and PAPCO, a company of PARCO.
However, after four days of talks, both the sides agreed to hold joint technical sessions within 30 days to exchange information on the project implementation status, set technical specifications and prepare a project roadmap after the signing of the SHA. The format and time of the event will be mutually agreed by the nominated entities.
During the course of the meeting, both sides reaffirmed the commitment to implement the project vis-i-vis the emerging energy security scenario of Pakistan in an expeditious manner. Both sides harmonized on the broad understanding to adhere to the terms of IGA as amended from time to time and ink the shareholders agreement within the ambit of terms agreed under the IGA.
www.thenews.com.pk
Khalid Mustafa
July 16, 2021
ISLAMABAD: In a major breakthrough, Pakistan and Russia here on Thursday successfully concluded the talks and signed the Heads of Terms (HoT) and Shareholders Agreement (SHA) on the country’s most strategic project of 1,100-kilometer Pakistan Stream Gas Pipeline (PSGP) from Karachi to Kasur.
The project’s cost has been estimated at $2.5 billion.
All the heads of terms presented by Russia were altered to make them acceptable and for the sake of more clarity and then both sides signed them. “Russia will have 26 percent shares in the project but will have no sovereign guarantee from Pakistan on the rate of return. Pakistan will be having 74 percent shares in the project, which is why the Managing Director (MD) of Special Purpose Company (SPC) will be appointed from the Pakistan side and Chief Operating Officer will be from the Russian side. The SPC will be responsible of running the PSGP,” one of the participants of the four-day talks told The News.
The completion of the Pakistan Stream Gas Pipeline will enable the country to import and transport over an additional 1.5-2.5 billion cubic feet of gas per day from Karachi to Kasur (Punjab). Currently, Pakistan has the capacity to import 1.2 bcfd, which can go up to 1.5 bcfd if the additional capacity of both FSRUs at PGPL and Engro terminals is used. However, after completion of the PSGP, the two new terminals --- one by Energas and other one by Tabeer -- would also come on stream.
The diameter of the pipeline will be 56 inches. Russia has matchless expertise in laying down the 56 inches diameter pipeline. Russian experts will also teach and train technical human resources of local gas companies — Sui Southern and Sui Northern on how to lay down the 56 diameter pipeline.
Surprisingly, Special Assistant to PM on Power and Petroleum, Tabish Gauhar, has not been part of the four-day talks at any stage and even was not visible during the signing of Shareholders Agreement and Heads of Terms. Tabish Gauhar had opposed the PSGP on the ground that it would get delayed by one and a half years and Pakistan wanted the pipeline in 2023. He was of the view that the PSGP would be costly whereas local gas companies could build the pipeline of 42 inches diameter as Sui Southern and Sui Northern have experience of laying down 15,000-kilometer pipelines of 42 inches diameter. Tabish wanted to build an alternate pipeline with a consortium of both gas companies and PAPCO, a company of PARCO.
However, after four days of talks, both the sides agreed to hold joint technical sessions within 30 days to exchange information on the project implementation status, set technical specifications and prepare a project roadmap after the signing of the SHA. The format and time of the event will be mutually agreed by the nominated entities.
During the course of the meeting, both sides reaffirmed the commitment to implement the project vis-i-vis the emerging energy security scenario of Pakistan in an expeditious manner. Both sides harmonized on the broad understanding to adhere to the terms of IGA as amended from time to time and ink the shareholders agreement within the ambit of terms agreed under the IGA.
Four-day talks on PSGP successfully conclude: Deal done on $2.5 bn gas pipeline with Russia
ISLAMABAD: In a major breakthrough, Pakistan and Russia here on Thursday successfully concluded the talks and signed the Heads of Terms and Shareholders Agreement on the country’s most...
www.thenews.com.pk
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No one ever stopped us from having good relations with Russia. The policies pursued by the establishments of the time had no place for Soviet/Russia. We put all our eggs in one basket, and sold our soul for very little money...and look how that turned out for the nation.
farok84
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Pakistan Stream Gas Pipeline: Pakistan wants Russia to increase shareholding up to 49pc
Khalid Mustafa
July 28, 2021
ISLAMABAD: In a shocking development, Pakistan has asked Russia that it has no money to fully fund its 74 percent shareholding in the $3 billion project of Pakistan Steam Gas Pipeline (PSGP) and asked Moscow to raise debt financing up to $1.4 billion against its shareholding for the project raising eyebrows of many if the huge amount of Rs 295 billion ($1.83 billion) collected in the head of GIDC (gas infrastructure development cess) by Finance Ministry till August 2020 has been utilized by the government.
So much so that Pakistan also asked Russia to jack up its shareholding maximum up to 49 percent from 26 percent showing that Islamabad does not have the required amount to finance its own shareholding of 74 percent. This develops a strong impression if the government that collected over Rs385 billion has utilized the GIDC amount either in budget financing?
Besides, the government has now decided to extend sovereign guarantee against the debt financing to the lenders to be arranged by Russia. According to the official document, Inter State Gas System (ISGS) ---Pakistan’s nominated company would arrange the local component for the project from the finance division, local commercial banks and other financing sources. And for the foreign currency component Pakistan would explore financing options through RNE—- the Russian nominated company. And Russia has also been asked to work out its strategy with options of arranging supplier credits, debt financing and increase in its shareholding by up to 49 percent.
The Petroleum Division to this effect has submitted a summary with ECC that meets today (Wednesday) seeking permission for a visit of a high powered delegation headed by Federal Energy Minister, Hammad Azhar comprising secretary petroleum, additional secretary finance ministry and officials of Inter-state gas system (ISGS) to Russia for holding a discussion on the specifics of the debt and equity for the project and agree on sources and terms of borrowing of loans including EXIM (Export and Import) financing, senior officials at Energy Ministry and official documents submitted to ECC, revealed this to The News.
However, the new situation poses the question as to what will the government reply to Supreme Court on utilization of GIDC as GoP has told the SC about presence of Rs 295 billion in the consolidated Account Number 1 and ironically the finance division has not refused the Russians during July 12-15 talks, the unavailability of money to spend on this project during current fiscal year.
The Supreme Court of Pakistan (SCP) through their Judgment dated August 13, 2020 dismissed petitioners’ (Fertilizers, Captive Power and others) appeals and upheld the levy and collection of GIDC in accordance with GIDC Act 2015. The government had given the undertaking to SC that it has by 13 August 2020, collected Rs 295 Billion under GIDC head and remaining amount of Rs400 billion is held up with various economic players due to litigation.
Under SC verdict, the amount collected so far will be disbursed on mega gas infrastructure initiatives including North-South gas pipeline, TAPI, IP and ancillary projects.
The finance ministry had given the undertaking to SC that whenever there will be a cash call from the petroleum division for any project, it will release the amount collected under GIDC. The SCP had directed to collect the remaining amount over Rs. 400 billion through 24 monthly equal installments, for which recovery proceedings have to be started by the Petroleum Division/ Sui Companies.
The SCP has suspended further levy and collection of GIDC with the direction that the government has to start work on North-South gas pipeline which is now renamed as PSGP (Pakistan Stream Gas Pipeline) within next 6 months and the government must take all necessary steps to also start work on IP once the sanctions on Iran are lifted, besides GoP must start work on TAPI, once the pipeline reaches from Afghanistan at Pakistan border and failing to take any action even though the circumstances are conducive, the purpose of the Cess will be considered as frustrated and the Act will be considered as permanently dead.
The SAPM on Power and Petroleum Tabish Gauhar who opposed the pipeline project with Russia on print and electronic media arguing local gas companies should complete the project as it will lower down the project cost and to this effect petroleum division with input of Tabish Gauhar managed to get nod from Cabinet Committee on Energy (CCOE) on June 24, 2021 for initiating alternate pipeline project and CCOE had asked petroleum division to come up with firm proposal for alternate project by July 15, 2021. Now the question arises as to why the petroleum division kept CCOE in the dark and got approval of the alternate pipeline project when it had not taken the finance ministry on board as to whether the finance division has the required amount to spend on the project.
Gauhar is being seen by ‘powerful circles’ as saboteur of many projects which include PSGP, payment to IPPs installed under 2002 power policy, AMI (Advanced Metering infrastructure) project and it is also being felt that Ministry of Energy lacks the will to take right decision on its own when it comes to issues of dry docking and pipeline with Russia. Because of the inordinate delay in the AMI project, Pakistan is facing a penalty of $2.2 million from ADB in the shape of commitment charges for not utilizing the loan of $400 million loan fixed for the AMI project.
Every time Prime Minister was asked to step in and take final decision on the issues like dry docking of FSRU at Engro Terminal and pipeline with Russia showing how incompetent authorities are perched at Ministry of Energy. The powerful circles also feel that the incompetence of this level at the Ministry of Energy has never been seen before. “SAPM and secretary petroleum acts will take all to NAB when PTI is not in power and now will definitely be going to ruin the sector in particular and the government in general.”
Now after four days of talks on heads of terms about the PSGP project with Russia ended on July 15, 2021, the critics are saying that the PSGP project is again back to the BOOT model which was agreed 6 years ago.
In 2015, IGA was signed under which Russia will provide 100 percent financing for the pipeline project. However, on May 28, 2021, amended IGA was signed keeping in view the availability of GIDC amount with Pakistan and Russia shareholding at 74:26 percent respectively. “In this case definitely the GoP is going to give sovereign guarantees,” independent energy experts say.
Under the amended IGA (Inter-governmental Agreement) signed in Moscow on May 28, 2021, with Pakistan having 74 percent shares and Russia 26 percent. Pakistan requires to provide almost $2 billion against its shareholding and Russia needs to come up with $700-800 million investment as per its 26 percent shares.
Russia will come up with over 50 percent equity and the rest will be arranged by it through debt financing. However, keeping in view Pakistan’ rating, 30 percent equity and 70 percent debt is required. During the talks on PSGP held in Islamabad from July 12-15, the situation SAPM on Revenue, Dr Waqar Masood Khan appeared on the scene in the last day of talks and held secret talks with Russia side informing them that Pakistan cannot afford for outflow of huge amount of US dollars in next two years keeping in view the foreign exchange reserves situation. However, Islamabad is ready to provide the amount in rupees not in dollars required for the purchase of 56 inches pipeline and compressors urging the Russian side to arrange debt for the Pakistan side.
Dr Waqar Masood Khan was quoted by the top sources as saying during the fourth day talks that Pakistan wants debt with repayment of loans and interests in next 4 to 5 years not in two years’ time. The Finance ministry representative also said during the talks that the government will provide Rs30 billion each year till 2023. This means that Pakistan will provide Rs90 billion which is equal to $600 million for the project and for the remaining $1.4 billion out of $ 2 billion Pakistan wants Russia to generate through debt financing against Pakistan’s shareholding.
The Russian side then sharply reacted, posing the question what would happen to the fate of their investment against their 26 percent shareholding and repayment of loans and interests to the lenders in the next 4-5 years in case the new government comes to power. The Russia side also responded saying it has not been mandated by Moscow to decide on increasing its shareholding when Pakistan time and again asked it to increase its shareholding up to 49 percent. However, Russian side said that right now it will commit 26 percent shareholding. However, after getting input from top authorities in Moscow, it will share its mind with Pakistan’s authorities about its new demand seeking increase in Russian shareholding by up to 49 percent when both sides will meet within 30 days to finalize the shareholders agreement.
The SAPM on Revenue Dr Waqar Masood Khan, SAPM on Petroleum Tabish Gauhar and Secretary Petroleum Dr Arshad Mahmood were sent questionnaires. Secretary Petroleum just said that the questions asked by The News were based on gross misunderstanding about the project structure, financing structure and way forward. When stressed for more explanation as to why Pakistan is asking Russia to arrange debt financing for the project and urging Moscow to jack up its shareholding by up to 49 percent from 26 percent, he said: “We have never insisted on Russia for this. This is just an option subject to some conditions precedent. Now there are two components of financing - local where Pakistan will take lead and foreign where Russia will take lead but all exposure will be on the balance sheet of SPV which is JV of Pak Russia.” The Secretary Petroleum also went on to say that all structuring has been done in consultation with the Finance Division which is witness to the signed head of terms. He believes the government is moving in the right direction. The GIDC is not an issue. The foreign currency cover of requisite funds needs extra efforts under normal principles of external financing in Project mode.
The SAPM on Petroleum and Secretary Petroleum was asked, saying: “Sir, Pakistan and Russia signed an amended IGA in Moscow on May 28, 2021. But on June 24 CCOE on the summary prepared by the petroleum division with input of SAPM on Petroleum approved the alternate pipeline project keeping in view the GIDC amount of Rs 295 Billion parked with the Finance Ministry. But during recently held talks with Russia, finance ministry representative additional secretary Anwar Shaikh told Russian side that GoP has no money to allocate funds from GIDC head during current financial year for Pakistan Stream Gas Pipeline project and also asked Russia to raise debt for Pakistan from international market against its share in the project against sovereign guarantee. Sir I want to know where the GIDC amount of Rs295 billion which the finance ministry had collected. Finance ministry had given the undertaking to SC that by August 2020 it collected Rs295 billion which will be made available to the Petroleum Division on its cash call for the project. Sir has the government spent the amount collected in GIDC head?. Sir, in meeting with Russian delegation, the finance ministry asked to Russian side to increase their shareholding up to 49 percent from 26 percent because Pakistan has no financing available to fund its 74 percent shareholding in the project. Sir, why did the petroleum division mislead CCOE on an alternate pipeline project when there was no money available with the Finance Ministry. Don’t you think the petroleum division has not only kept CCOE in the dark on the availability of GIDC amount for an alternate pipeline project but also offended Russia.
Sir, The News has also come to know that a delegation from Pakistan headed by the Energy minister comprising you sir and officials from ISGS and the Finance ministry wants to go to Russia for talks on debt financing issues for the project. And under the new scenario, the petroleum division wants Russian side to increase their shareholding from 26 to 49 per cent. Don’t you think it will violate the amended IGA which says Pakistan and Russia will be having 74:26% shareholding. Plz sir give your detailed version.”
The News also sent a questionnaire to SAPM on Revenue Dr Waqar Masood Khan asking if the amount of Rs295 billion collected under GIDC head by August 2020 has been utilized for budget financing or in any other head as finance ministry has asked Russia to arrange debt financing to fund its 74 percent shares in the project.
However, Finance Division’s top officials said that In the presence of GIDC allocation for CFY and direction of the SCP for funding on IP, TAPI and this newly included North South in the judgement, He said the Finance Division can’t say that Finance Ministry has no GiDC to fund this project . He said that in the agreed scheme of funding Pakistan is due to allocate 75 billion over next 3 years from GIDC ( if project cost $ 2 billion is assumed). He said that actually debt portion is required for an economically feasible project also. He said that in case a project is awarded on preferential terms, it also requires supplier credit on preferential terms generally provided by the equipment supplier country’s Eximbank and, the FEC (foriegn exchange component) constitutes 70% of project cost estimated.
According to the summary of the Petroleum Division sent to ECC, both parties finalized the project structure in the form of Protocol on the Amendments to the IGA in November 2020 to implement the Project through a Special Purpose Company (SPC) to be incorporated in Pakistan.
The two governments signed the Protocol to the Amendments to the IGA on 28 May 2021 in Moscow after approval of the Federal Cabinet on 9 March 2021. The Protocol envisages signing of a Shareholders Agreement (SHA) within 60 days from the signing of the Protocol. Further, the Ministry of Defense has also given approval of the pipeline route alignment, proposed by this Division, on 30 June 2021, The next steps involve Feasibility Study, Route survey, land data for land acquisition, Environmental studies by NESPAK.
Ministry of Energy. Petroleum Division had shared a draft Shareholders Agreement (SHA) with the Ministry of Energy Russia on 23 December 2020, In response, the Ministry of Energy, Russia shared Heads of Terms (HOT) for SHA on 17, March 2021 and a revised Heads of Terms through letter dated 2™ July 2021. Moreover, the Russian
Ministry of Energy also conveyed the Russian Nominated Entity under the IGA “PAKSTREAM LLC” established by the consortium of Federal State Unitary Enterprise, Centre for Operational Services, ETK und PAO TMK on 7” June 2021 and requested holding discussions on the HOTs as soon as possible.
The summary submitted to ECC also highlights the details of the signed heads of terms (HoTs) which say that PAKSTREAM LLC (RNE) and ISGS (PNE) are the “Shareholders” of SPC (Special Purpose Company) that will complete and run PSGP project. The RNE will have not less than 26% shares, while the PNE will have up to 74% shares in the SPC.
The SPC, with the participation of RNE and PNE, shall be responsible for the arrangement of funding for the Project through equity and debt. The debt component shall consist of local currency and foreign currency components.
The equity component in the respective ratios of the parties shall be financed through capital and subordinated debts. For the local currency component, SPC through the lead role of ISGS would explore funding lines from the Finance Division of Pakistan, local commercial banks and other sources of financing. For the foreign currency component, the lead role of RNE, the Russian company would explore financing options through International Financial Institutions, foreign banks and other avenues including bilateral financing arrangements.
www.thenews.com.pk
Khalid Mustafa
July 28, 2021
ISLAMABAD: In a shocking development, Pakistan has asked Russia that it has no money to fully fund its 74 percent shareholding in the $3 billion project of Pakistan Steam Gas Pipeline (PSGP) and asked Moscow to raise debt financing up to $1.4 billion against its shareholding for the project raising eyebrows of many if the huge amount of Rs 295 billion ($1.83 billion) collected in the head of GIDC (gas infrastructure development cess) by Finance Ministry till August 2020 has been utilized by the government.
So much so that Pakistan also asked Russia to jack up its shareholding maximum up to 49 percent from 26 percent showing that Islamabad does not have the required amount to finance its own shareholding of 74 percent. This develops a strong impression if the government that collected over Rs385 billion has utilized the GIDC amount either in budget financing?
Besides, the government has now decided to extend sovereign guarantee against the debt financing to the lenders to be arranged by Russia. According to the official document, Inter State Gas System (ISGS) ---Pakistan’s nominated company would arrange the local component for the project from the finance division, local commercial banks and other financing sources. And for the foreign currency component Pakistan would explore financing options through RNE—- the Russian nominated company. And Russia has also been asked to work out its strategy with options of arranging supplier credits, debt financing and increase in its shareholding by up to 49 percent.
The Petroleum Division to this effect has submitted a summary with ECC that meets today (Wednesday) seeking permission for a visit of a high powered delegation headed by Federal Energy Minister, Hammad Azhar comprising secretary petroleum, additional secretary finance ministry and officials of Inter-state gas system (ISGS) to Russia for holding a discussion on the specifics of the debt and equity for the project and agree on sources and terms of borrowing of loans including EXIM (Export and Import) financing, senior officials at Energy Ministry and official documents submitted to ECC, revealed this to The News.
However, the new situation poses the question as to what will the government reply to Supreme Court on utilization of GIDC as GoP has told the SC about presence of Rs 295 billion in the consolidated Account Number 1 and ironically the finance division has not refused the Russians during July 12-15 talks, the unavailability of money to spend on this project during current fiscal year.
The Supreme Court of Pakistan (SCP) through their Judgment dated August 13, 2020 dismissed petitioners’ (Fertilizers, Captive Power and others) appeals and upheld the levy and collection of GIDC in accordance with GIDC Act 2015. The government had given the undertaking to SC that it has by 13 August 2020, collected Rs 295 Billion under GIDC head and remaining amount of Rs400 billion is held up with various economic players due to litigation.
Under SC verdict, the amount collected so far will be disbursed on mega gas infrastructure initiatives including North-South gas pipeline, TAPI, IP and ancillary projects.
The finance ministry had given the undertaking to SC that whenever there will be a cash call from the petroleum division for any project, it will release the amount collected under GIDC. The SCP had directed to collect the remaining amount over Rs. 400 billion through 24 monthly equal installments, for which recovery proceedings have to be started by the Petroleum Division/ Sui Companies.
The SCP has suspended further levy and collection of GIDC with the direction that the government has to start work on North-South gas pipeline which is now renamed as PSGP (Pakistan Stream Gas Pipeline) within next 6 months and the government must take all necessary steps to also start work on IP once the sanctions on Iran are lifted, besides GoP must start work on TAPI, once the pipeline reaches from Afghanistan at Pakistan border and failing to take any action even though the circumstances are conducive, the purpose of the Cess will be considered as frustrated and the Act will be considered as permanently dead.
The SAPM on Power and Petroleum Tabish Gauhar who opposed the pipeline project with Russia on print and electronic media arguing local gas companies should complete the project as it will lower down the project cost and to this effect petroleum division with input of Tabish Gauhar managed to get nod from Cabinet Committee on Energy (CCOE) on June 24, 2021 for initiating alternate pipeline project and CCOE had asked petroleum division to come up with firm proposal for alternate project by July 15, 2021. Now the question arises as to why the petroleum division kept CCOE in the dark and got approval of the alternate pipeline project when it had not taken the finance ministry on board as to whether the finance division has the required amount to spend on the project.
Gauhar is being seen by ‘powerful circles’ as saboteur of many projects which include PSGP, payment to IPPs installed under 2002 power policy, AMI (Advanced Metering infrastructure) project and it is also being felt that Ministry of Energy lacks the will to take right decision on its own when it comes to issues of dry docking and pipeline with Russia. Because of the inordinate delay in the AMI project, Pakistan is facing a penalty of $2.2 million from ADB in the shape of commitment charges for not utilizing the loan of $400 million loan fixed for the AMI project.
Every time Prime Minister was asked to step in and take final decision on the issues like dry docking of FSRU at Engro Terminal and pipeline with Russia showing how incompetent authorities are perched at Ministry of Energy. The powerful circles also feel that the incompetence of this level at the Ministry of Energy has never been seen before. “SAPM and secretary petroleum acts will take all to NAB when PTI is not in power and now will definitely be going to ruin the sector in particular and the government in general.”
Now after four days of talks on heads of terms about the PSGP project with Russia ended on July 15, 2021, the critics are saying that the PSGP project is again back to the BOOT model which was agreed 6 years ago.
In 2015, IGA was signed under which Russia will provide 100 percent financing for the pipeline project. However, on May 28, 2021, amended IGA was signed keeping in view the availability of GIDC amount with Pakistan and Russia shareholding at 74:26 percent respectively. “In this case definitely the GoP is going to give sovereign guarantees,” independent energy experts say.
Under the amended IGA (Inter-governmental Agreement) signed in Moscow on May 28, 2021, with Pakistan having 74 percent shares and Russia 26 percent. Pakistan requires to provide almost $2 billion against its shareholding and Russia needs to come up with $700-800 million investment as per its 26 percent shares.
Russia will come up with over 50 percent equity and the rest will be arranged by it through debt financing. However, keeping in view Pakistan’ rating, 30 percent equity and 70 percent debt is required. During the talks on PSGP held in Islamabad from July 12-15, the situation SAPM on Revenue, Dr Waqar Masood Khan appeared on the scene in the last day of talks and held secret talks with Russia side informing them that Pakistan cannot afford for outflow of huge amount of US dollars in next two years keeping in view the foreign exchange reserves situation. However, Islamabad is ready to provide the amount in rupees not in dollars required for the purchase of 56 inches pipeline and compressors urging the Russian side to arrange debt for the Pakistan side.
Dr Waqar Masood Khan was quoted by the top sources as saying during the fourth day talks that Pakistan wants debt with repayment of loans and interests in next 4 to 5 years not in two years’ time. The Finance ministry representative also said during the talks that the government will provide Rs30 billion each year till 2023. This means that Pakistan will provide Rs90 billion which is equal to $600 million for the project and for the remaining $1.4 billion out of $ 2 billion Pakistan wants Russia to generate through debt financing against Pakistan’s shareholding.
The Russian side then sharply reacted, posing the question what would happen to the fate of their investment against their 26 percent shareholding and repayment of loans and interests to the lenders in the next 4-5 years in case the new government comes to power. The Russia side also responded saying it has not been mandated by Moscow to decide on increasing its shareholding when Pakistan time and again asked it to increase its shareholding up to 49 percent. However, Russian side said that right now it will commit 26 percent shareholding. However, after getting input from top authorities in Moscow, it will share its mind with Pakistan’s authorities about its new demand seeking increase in Russian shareholding by up to 49 percent when both sides will meet within 30 days to finalize the shareholders agreement.
The SAPM on Revenue Dr Waqar Masood Khan, SAPM on Petroleum Tabish Gauhar and Secretary Petroleum Dr Arshad Mahmood were sent questionnaires. Secretary Petroleum just said that the questions asked by The News were based on gross misunderstanding about the project structure, financing structure and way forward. When stressed for more explanation as to why Pakistan is asking Russia to arrange debt financing for the project and urging Moscow to jack up its shareholding by up to 49 percent from 26 percent, he said: “We have never insisted on Russia for this. This is just an option subject to some conditions precedent. Now there are two components of financing - local where Pakistan will take lead and foreign where Russia will take lead but all exposure will be on the balance sheet of SPV which is JV of Pak Russia.” The Secretary Petroleum also went on to say that all structuring has been done in consultation with the Finance Division which is witness to the signed head of terms. He believes the government is moving in the right direction. The GIDC is not an issue. The foreign currency cover of requisite funds needs extra efforts under normal principles of external financing in Project mode.
The SAPM on Petroleum and Secretary Petroleum was asked, saying: “Sir, Pakistan and Russia signed an amended IGA in Moscow on May 28, 2021. But on June 24 CCOE on the summary prepared by the petroleum division with input of SAPM on Petroleum approved the alternate pipeline project keeping in view the GIDC amount of Rs 295 Billion parked with the Finance Ministry. But during recently held talks with Russia, finance ministry representative additional secretary Anwar Shaikh told Russian side that GoP has no money to allocate funds from GIDC head during current financial year for Pakistan Stream Gas Pipeline project and also asked Russia to raise debt for Pakistan from international market against its share in the project against sovereign guarantee. Sir I want to know where the GIDC amount of Rs295 billion which the finance ministry had collected. Finance ministry had given the undertaking to SC that by August 2020 it collected Rs295 billion which will be made available to the Petroleum Division on its cash call for the project. Sir has the government spent the amount collected in GIDC head?. Sir, in meeting with Russian delegation, the finance ministry asked to Russian side to increase their shareholding up to 49 percent from 26 percent because Pakistan has no financing available to fund its 74 percent shareholding in the project. Sir, why did the petroleum division mislead CCOE on an alternate pipeline project when there was no money available with the Finance Ministry. Don’t you think the petroleum division has not only kept CCOE in the dark on the availability of GIDC amount for an alternate pipeline project but also offended Russia.
Sir, The News has also come to know that a delegation from Pakistan headed by the Energy minister comprising you sir and officials from ISGS and the Finance ministry wants to go to Russia for talks on debt financing issues for the project. And under the new scenario, the petroleum division wants Russian side to increase their shareholding from 26 to 49 per cent. Don’t you think it will violate the amended IGA which says Pakistan and Russia will be having 74:26% shareholding. Plz sir give your detailed version.”
The News also sent a questionnaire to SAPM on Revenue Dr Waqar Masood Khan asking if the amount of Rs295 billion collected under GIDC head by August 2020 has been utilized for budget financing or in any other head as finance ministry has asked Russia to arrange debt financing to fund its 74 percent shares in the project.
However, Finance Division’s top officials said that In the presence of GIDC allocation for CFY and direction of the SCP for funding on IP, TAPI and this newly included North South in the judgement, He said the Finance Division can’t say that Finance Ministry has no GiDC to fund this project . He said that in the agreed scheme of funding Pakistan is due to allocate 75 billion over next 3 years from GIDC ( if project cost $ 2 billion is assumed). He said that actually debt portion is required for an economically feasible project also. He said that in case a project is awarded on preferential terms, it also requires supplier credit on preferential terms generally provided by the equipment supplier country’s Eximbank and, the FEC (foriegn exchange component) constitutes 70% of project cost estimated.
According to the summary of the Petroleum Division sent to ECC, both parties finalized the project structure in the form of Protocol on the Amendments to the IGA in November 2020 to implement the Project through a Special Purpose Company (SPC) to be incorporated in Pakistan.
The two governments signed the Protocol to the Amendments to the IGA on 28 May 2021 in Moscow after approval of the Federal Cabinet on 9 March 2021. The Protocol envisages signing of a Shareholders Agreement (SHA) within 60 days from the signing of the Protocol. Further, the Ministry of Defense has also given approval of the pipeline route alignment, proposed by this Division, on 30 June 2021, The next steps involve Feasibility Study, Route survey, land data for land acquisition, Environmental studies by NESPAK.
Ministry of Energy. Petroleum Division had shared a draft Shareholders Agreement (SHA) with the Ministry of Energy Russia on 23 December 2020, In response, the Ministry of Energy, Russia shared Heads of Terms (HOT) for SHA on 17, March 2021 and a revised Heads of Terms through letter dated 2™ July 2021. Moreover, the Russian
Ministry of Energy also conveyed the Russian Nominated Entity under the IGA “PAKSTREAM LLC” established by the consortium of Federal State Unitary Enterprise, Centre for Operational Services, ETK und PAO TMK on 7” June 2021 and requested holding discussions on the HOTs as soon as possible.
The summary submitted to ECC also highlights the details of the signed heads of terms (HoTs) which say that PAKSTREAM LLC (RNE) and ISGS (PNE) are the “Shareholders” of SPC (Special Purpose Company) that will complete and run PSGP project. The RNE will have not less than 26% shares, while the PNE will have up to 74% shares in the SPC.
The SPC, with the participation of RNE and PNE, shall be responsible for the arrangement of funding for the Project through equity and debt. The debt component shall consist of local currency and foreign currency components.
The equity component in the respective ratios of the parties shall be financed through capital and subordinated debts. For the local currency component, SPC through the lead role of ISGS would explore funding lines from the Finance Division of Pakistan, local commercial banks and other sources of financing. For the foreign currency component, the lead role of RNE, the Russian company would explore financing options through International Financial Institutions, foreign banks and other avenues including bilateral financing arrangements.
Pakistan Stream Gas Pipeline: Pakistan wants Russia to increase shareholding up to 49pc
ISLAMABAD: In a shocking development, Pakistan has asked Russia that it has no money to fully fund its 74 percent shareholding in the $3 billion project of Pakistan Steam Gas Pipeline and asked...
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Pakistan mulls funding options to kick off PSGP | The Express Tribune
Considers borrowing from foreign creditors to ease burden on reserves
tribune.com.pk
Pakistan mulls funding options to kick off PSGP
Considers borrowing from foreign creditors to ease burden on reserves
Zafar BhuttaAugust 21, 2021
PHOTO: REUTERS
ISLAMABAD:
Pakistan is considering different options for arranging foreign exchange from global creditors to ease the burden on country’s foreign currency reserves and kick off work on the $2.5 billion Pakistan Stream Gas Pipeline (PSGP) project.
A meeting of the Cabinet Committee on Energy (CCOE) was held under the chairmanship of Federal Minister for Planning, Development and Special Initiatives Asad Umar on Friday.
Sources told The Express Tribune that CCOE was informed that the Petroleum Division was working on different options to arrange the funding.
The Petroleum Division said that different options were on the table to arrange dollars.
The government may arrange dollars from a consortium, supplier credit, Exim credit or through a bilateral arrangement with different countries to finance PSGP, sources said. Pakistan has 74% shareholding whereas Russia holds 26% share in the pipeline.
The cabinet body was told that Pakistan would invest the rupee component out of the collection of Gas Infrastructure Development Cess (GIDC). However, it needs to arrange dollars to avoid the burden on the country’s foreign exchange reserves.
The Petroleum Division presented an update on the project, which included details of shareholders agreement terms, funding arrangements, completion of technical studies and regulatory approvals. The CCOE directed the Petroleum Division to ensure timely completion of various actions so that delays could be avoided.
Officials said that technical teams of Pakistan and Russia were going to meet by the end of August to finalise technical issues of shareholding agreements.
They said that the gas pipeline was a strategic project which will help Pakistan to transfer technology to Sui companies - Sui Southern Gas Company and Sui Northern Gas Pipelines. Russia will build the gas pipeline of 56-inch diametre from Karachi to Lahore to transport imported gas.
Refinery policy
The Petroleum Division presented the draft Pakistan Oil Refinery Policy 2021 for approval of the committee. The proposed policy was discussed in detail.
The Petroleum Division submitted that the purpose of the policy was to attract investment in new deep-conversion refineries as well as for upgrading the existing refineries.
Members of the committee made a number of suggestions for the draft policy. It was decided that the Petroleum Division would deliberate on the suggestions and submit the draft policy again for consideration of the cabinet body in its next meeting.
Sources said that members of the cabinet committee were concerned about the incremental revenue. They raised questions over spending by oil refineries on the new and upgrade projects.
Officials said that the cabinet body sought a detailed briefing on the volume of incremental revenue collection, the mechanism and the share in spending by the refineries.
Net metering
The CCOE exempted small-scale renewable energy projects from the requirement of generation licence.
At present, the customers apply to power distribution companies for a generation licence and finally the National Electric Power Regulatory Authority (Nepra) grants the licence.
Renewable energy experts say the entire process of acquiring the generation licence takes around 100 days.
The CCOE approved the proposal of the Power Division for eliminating the need for generation licences for small-scale RE-based systems (up to 25kW) for net metering.
The measure will greatly facilitate the consumers who wish to install small-scale solar systems for their homes and businesses and avail the facility of net metering.
The Power Division briefed the committee on the issues hampering progress on the transmission line providing interconnection to the 660MW LEPCL Power Plant. The committee was informed that all the technical issues had been examined and resolved.
The committee noted that there were no restraining orders from any legal/regulatory forum regarding the execution of the project. The committee, therefore, directed that project activities be carried out without any delay.
Published in The Express Tribune, August 21st, 2021.
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$3 bn PSGP Project: Pakistan, Russia to hold three-day technical talks on August 24-26
Khalid Mustafa
Sunday, Aug 22, 2021
ISLAMABAD:
Pakistan and Russia are scheduled to hold three-day talks on crucial technical issues regarding their flagship project ‘Pakistan Stream Gas Pipeline’ (PSGP), of $3 billion on August 24-26, both sides will discuss the project implementation and set out the 1040 pipeline’s specification.
Reports said, a 13-member Russian technical team to participate in the talks, as a six-member team from Moscow would arrive Islamabad on Tuesday morning, while the remaining members would take part in the talks through video from Moscow.
While the Pakistan-side, a team of technical experts from Inter-State Gas System (ISGS), Sui Northern Gas Private Limited (SNGPL), Sui Southern Gas Company Limited (SSGCL), and National Engineering Services Pakistan (NESPAK) to participate in the talks and would be headed by Secretary Petroleum Dr Arshad Mehmood.
“We will deliberate the pipeline specifications, diameter, pre-feasibility options and hydraulic specifications, keeping in view the demand growth of gas in the future.
However, both sides will be having the option to also hold parleys on commercial and legal issues on the sidelines of the technical talks,” a senior official privy to the development told ‘The News’.
They said after the talks, both sides would be able to set out with the direction of the mega project and once the technical specifications of the project would be finalised, then its cost could be determined and then work on project financing would be initiated. Both sides would also deliberate the diameter of the pipeline along with the number of compressors to be installed, which would also help finalise the cost of the project.
Both sides have already finalised the Heads of Terms (HoTs), as Russian would have 26 percent and Pakistan to have 74 percent shareholding in the project. The pipeline would be laid down from Karachi to Kasur (Punjab). The HoTs broadly covered the corporate, governance, financing and contractual structure of the project and according to the HoTs, the Special Purpose Company (SPC) is to be incorporated in Islamabad and the Russian nominated entity, PAKSTREAM LLC would be having not less than 26 percent shares.
However, Pakistani nominated entity, Inter-State Gas Systems (Pvt) Ltd., would have maximum share up to 74 percent shares.
The board representation would be according to shareholding of each party and transportation tariff to be approved by the OGRA, funding arrangements would be ensured through local currency component and the lead role would be ISGS, which would explore finances from the Finance Division of Pakistan, local commercial banks, etc.
The Russian nominated company PAKSTREAM LLC would arrange the foreign currency component and to explore financing options, including bilateral financing arrangements, IFIs, foreign banks.
The government would also give sovereign guarantee to the lenders, if required. Talking about the way forward, the parties after technical specifications would be finalised, will also engage to execute necessary agreements such as shareholders agreement and facilitation agreement that included i) incorporation of the project company in Islamabad, ii) funding arrangements, iii) completion of technical studies and regulatory approvals.
www.thenews.com.pk
Khalid Mustafa
Sunday, Aug 22, 2021
ISLAMABAD:
Pakistan and Russia are scheduled to hold three-day talks on crucial technical issues regarding their flagship project ‘Pakistan Stream Gas Pipeline’ (PSGP), of $3 billion on August 24-26, both sides will discuss the project implementation and set out the 1040 pipeline’s specification.
Reports said, a 13-member Russian technical team to participate in the talks, as a six-member team from Moscow would arrive Islamabad on Tuesday morning, while the remaining members would take part in the talks through video from Moscow.
While the Pakistan-side, a team of technical experts from Inter-State Gas System (ISGS), Sui Northern Gas Private Limited (SNGPL), Sui Southern Gas Company Limited (SSGCL), and National Engineering Services Pakistan (NESPAK) to participate in the talks and would be headed by Secretary Petroleum Dr Arshad Mehmood.
“We will deliberate the pipeline specifications, diameter, pre-feasibility options and hydraulic specifications, keeping in view the demand growth of gas in the future.
However, both sides will be having the option to also hold parleys on commercial and legal issues on the sidelines of the technical talks,” a senior official privy to the development told ‘The News’.
They said after the talks, both sides would be able to set out with the direction of the mega project and once the technical specifications of the project would be finalised, then its cost could be determined and then work on project financing would be initiated. Both sides would also deliberate the diameter of the pipeline along with the number of compressors to be installed, which would also help finalise the cost of the project.
Both sides have already finalised the Heads of Terms (HoTs), as Russian would have 26 percent and Pakistan to have 74 percent shareholding in the project. The pipeline would be laid down from Karachi to Kasur (Punjab). The HoTs broadly covered the corporate, governance, financing and contractual structure of the project and according to the HoTs, the Special Purpose Company (SPC) is to be incorporated in Islamabad and the Russian nominated entity, PAKSTREAM LLC would be having not less than 26 percent shares.
However, Pakistani nominated entity, Inter-State Gas Systems (Pvt) Ltd., would have maximum share up to 74 percent shares.
The board representation would be according to shareholding of each party and transportation tariff to be approved by the OGRA, funding arrangements would be ensured through local currency component and the lead role would be ISGS, which would explore finances from the Finance Division of Pakistan, local commercial banks, etc.
The Russian nominated company PAKSTREAM LLC would arrange the foreign currency component and to explore financing options, including bilateral financing arrangements, IFIs, foreign banks.
The government would also give sovereign guarantee to the lenders, if required. Talking about the way forward, the parties after technical specifications would be finalised, will also engage to execute necessary agreements such as shareholders agreement and facilitation agreement that included i) incorporation of the project company in Islamabad, ii) funding arrangements, iii) completion of technical studies and regulatory approvals.
$3 bn PSGP Project: Pakistan, Russia to hold three-day technical talks on August 24-26
ISLAMABAD: Pakistan and Russia are scheduled to hold three-day talks on crucial technical issues regarding their flagship project ‘Pakistan Stream Gas Pipeline’ , of $3 billion on August...
www.thenews.com.pk
farok84
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Technical talks on $3b PSGP project end
National
Khalid Mustafa
August 27, 2021
ISLAMABAD:
The three-day technical talks between Pakistan and Russia on the Pakistan Stream Gas Pipeline (PSGP) project to be laid down from Karachi to Kasur ended here on Thursday with Moscow seeking clarity if the government owns or disowns the viewpoint of Special Assistant to Prime Minister (SAPM) on Petroleum Tabish Guahar, opposing the two countries’ flagship project mentioned in his letter to Energy Minister Hammad Azhar.
"During the three-day talks, the Russian side said that there is no statement from the government side on opposition to the project by the SAPM, which was very disturbing," officials who were part of the talks told The News.
On July 23, the SAPM on Petroleum wrote a letter to Energy Minister Hammad Azhar with the subject on ‘Beyond the Fire Fighting – Proposed Strategic Work streams in the Energy Sector’, giving his version on the PSGP project saying: “We can meet the projected gas demand for the next 10-15 years with a relatively smaller (42 inch) diameter pipeline with the help of local gas companies at a potentially lower upfront project cost (savings of up to $500 million)”.
Russians are of the view that the SAPM is a part of the government and has never been part of the talks on PSGP, but the ex-SAPM Nadeem Babar was a part of the talks on the project and gave his 100 per cent input in finalising the amended Intergovernmental Agreement (IGA) between the two countries.
The secretary petroleum was asked as to whether he, being the government representative, rejects the objection of SAPM or not on the PSGP project. The secretary couldn’t come up with a satisfactory answer. The sources said in future, if the Petroleum Division through the MOFA (Ministry of Foreign Affairs) does not clarify the position on PSGP, then this issue may be taken up at a high level forum between the two countries.
However, during the talks, the Russian side raised certain objections on the route of the pipeline worked out by the NESPAK, saying that the route mentions the passage of the pipeline within and through many cities, which will not only hike the cost of the land because of market prices but also trigger security concerns.
It was also noticed during the talks that the ability of both the Sui companies was not up to the mark for the construction of the pipeline keeping in view the modern techniques in the world. So much so, the experts from both the gas companies during the meeting could not come up with proper answers when they were asked basic questions, including the welding of pipelines.
The source said that the Russian side wants to ink first the facilitation agreement prior to signing the shareholding agreement. It was decided that the Russian team would again come to Islamabad by mid of September to finalise the facilitation and shareholding agreements, which will be formally signed in Moscow in November. The representative of both the Sui gas companies first said that there was no demand of gas for which the said project was needed and then they also changed their stance, saying if kept in view the next 10-15 years' demand, then a 42-inch diameter gas pipeline was needed.
However, the Russian side said Pakistan should come to Moscow to discuss debt financing issues, once all the issues are finalised. It was also observed that there has been no project feasibility done so far. And the government for this purpose has not hired the NESPAK to this effect. The Pakistan government wants the NESPAK to complete FEED (Front End Engineering Design). The Russian experts say that they have worked on pre-FEED studies that can be part of the FEED. But it was decided that a special purpose company (SPC) that will be formed for the project will initiate the proceedings on FEED and bear the expenses.
According to the sources, the Russian side says that on-ground work on the pipeline will begin by December 2022 once the FEED gets completed by February-March 2022 and the project will be completed and commissioned by the end of 2024 if there is a smooth sailing and no big issue comes in the way of implementation of the project.
During the talks, the Russian side didn’t show any willingness for 49 per cent shareholding and they remained glued to their 26 per cent shares in the project. The Russians, however, signaled that if Pakistan insists Russia to increase its shareholding, then Moscow will go for majority shares up to at least 75 per cent.
However, both the sides decided to go for planning to connect the pipeline with Underground Gas Storages Projects in Sindh (A proposal under active evaluation at the Petroleum Division) and the TAPI Gas Pipeline crossing point in Multan. Both sides will continue to exchange notes, relevant data and information on design documents.
They have also agreed to technical specifications, design parameters and transport of RLNG from Karachi to Kasur. Both the parties have resolved to set and follow the laid down timelines to successfully implement the Pakistan Stream Gas Pipeline Project. Both the delegations reaffirmed their commitment to the project ensuring the highest standards of technical, quality parameters and maximum utilisation of Pakistani resources. This shall also act as a forerunner of the growth of the Sui companies in terms of enhancement of technical, operational and training capacities.
Interesting points to ponder upon.
(i) Planning for tie-in to TAPI and,
(ii) Russia's willingness to go for majority shares (75%) for PSGP.
Russians are likely planning a consortium of sort with Turkmen & IEA to lay and operate Afghanistan's portion, they will certainly be a top contender for laying and operating Pakistan's portion.
National
Khalid Mustafa
August 27, 2021
ISLAMABAD:
The three-day technical talks between Pakistan and Russia on the Pakistan Stream Gas Pipeline (PSGP) project to be laid down from Karachi to Kasur ended here on Thursday with Moscow seeking clarity if the government owns or disowns the viewpoint of Special Assistant to Prime Minister (SAPM) on Petroleum Tabish Guahar, opposing the two countries’ flagship project mentioned in his letter to Energy Minister Hammad Azhar.
"During the three-day talks, the Russian side said that there is no statement from the government side on opposition to the project by the SAPM, which was very disturbing," officials who were part of the talks told The News.
On July 23, the SAPM on Petroleum wrote a letter to Energy Minister Hammad Azhar with the subject on ‘Beyond the Fire Fighting – Proposed Strategic Work streams in the Energy Sector’, giving his version on the PSGP project saying: “We can meet the projected gas demand for the next 10-15 years with a relatively smaller (42 inch) diameter pipeline with the help of local gas companies at a potentially lower upfront project cost (savings of up to $500 million)”.
Russians are of the view that the SAPM is a part of the government and has never been part of the talks on PSGP, but the ex-SAPM Nadeem Babar was a part of the talks on the project and gave his 100 per cent input in finalising the amended Intergovernmental Agreement (IGA) between the two countries.
The secretary petroleum was asked as to whether he, being the government representative, rejects the objection of SAPM or not on the PSGP project. The secretary couldn’t come up with a satisfactory answer. The sources said in future, if the Petroleum Division through the MOFA (Ministry of Foreign Affairs) does not clarify the position on PSGP, then this issue may be taken up at a high level forum between the two countries.
However, during the talks, the Russian side raised certain objections on the route of the pipeline worked out by the NESPAK, saying that the route mentions the passage of the pipeline within and through many cities, which will not only hike the cost of the land because of market prices but also trigger security concerns.
It was also noticed during the talks that the ability of both the Sui companies was not up to the mark for the construction of the pipeline keeping in view the modern techniques in the world. So much so, the experts from both the gas companies during the meeting could not come up with proper answers when they were asked basic questions, including the welding of pipelines.
The source said that the Russian side wants to ink first the facilitation agreement prior to signing the shareholding agreement. It was decided that the Russian team would again come to Islamabad by mid of September to finalise the facilitation and shareholding agreements, which will be formally signed in Moscow in November. The representative of both the Sui gas companies first said that there was no demand of gas for which the said project was needed and then they also changed their stance, saying if kept in view the next 10-15 years' demand, then a 42-inch diameter gas pipeline was needed.
However, the Russian side said Pakistan should come to Moscow to discuss debt financing issues, once all the issues are finalised. It was also observed that there has been no project feasibility done so far. And the government for this purpose has not hired the NESPAK to this effect. The Pakistan government wants the NESPAK to complete FEED (Front End Engineering Design). The Russian experts say that they have worked on pre-FEED studies that can be part of the FEED. But it was decided that a special purpose company (SPC) that will be formed for the project will initiate the proceedings on FEED and bear the expenses.
According to the sources, the Russian side says that on-ground work on the pipeline will begin by December 2022 once the FEED gets completed by February-March 2022 and the project will be completed and commissioned by the end of 2024 if there is a smooth sailing and no big issue comes in the way of implementation of the project.
During the talks, the Russian side didn’t show any willingness for 49 per cent shareholding and they remained glued to their 26 per cent shares in the project. The Russians, however, signaled that if Pakistan insists Russia to increase its shareholding, then Moscow will go for majority shares up to at least 75 per cent.
However, both the sides decided to go for planning to connect the pipeline with Underground Gas Storages Projects in Sindh (A proposal under active evaluation at the Petroleum Division) and the TAPI Gas Pipeline crossing point in Multan. Both sides will continue to exchange notes, relevant data and information on design documents.
They have also agreed to technical specifications, design parameters and transport of RLNG from Karachi to Kasur. Both the parties have resolved to set and follow the laid down timelines to successfully implement the Pakistan Stream Gas Pipeline Project. Both the delegations reaffirmed their commitment to the project ensuring the highest standards of technical, quality parameters and maximum utilisation of Pakistani resources. This shall also act as a forerunner of the growth of the Sui companies in terms of enhancement of technical, operational and training capacities.
Technical talks on $3b PSGP project end
ISLAMABAD: The three-day technical talks between Pakistan and Russia on the Pakistan Stream Gas Pipeline project to be laid down from Karachi to Kasur ended here on Thursday with Moscow seeking...
www.thenews.com.pk
Interesting points to ponder upon.
(i) Planning for tie-in to TAPI and,
(ii) Russia's willingness to go for majority shares (75%) for PSGP.
Russians are likely planning a consortium of sort with Turkmen & IEA to lay and operate Afghanistan's portion, they will certainly be a top contender for laying and operating Pakistan's portion.
Tapi to benefit entire region, says FM Qureshi
Qureshi holds talks with Turkmen, Iranian leadership.
www.dawn.com
farok84
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Russia & Pakistan may start building major gas pipeline soon – ambassador
7 Sep, 2021 10:05
Gawadar port Harbor, Pakistan © Getty Images / Aleem_khan
Construction works on the Pakistan Stream gas pipeline project are expected to start in the near future after several rounds of consultations, Pakistani Ambassador to Russia Shafqat Ali Khan said in an interview with RIA Novosti.
“After many years of negotiations, [Moscow and Islamabad] have finally signed an agreement and since then there has been significant progress: we’ve held several rounds of technical consultations, including financial issues,” the ambassador said. “As soon as the final details are agreed, we expect the start of construction. I think it will have a significant impact for future investments (in Pakistan) ... I cannot disclose details… we are very optimistic, " he added.
In late May, the two countries signed a deal on building a major gas pipeline linking the Pakistani southern port of Karachi and another port city, Gwadar, to power plants and industrial hubs in Pakistan’s northern region of Punjab.
ALSO ON RT.COMRussia ready to supply LNG to fuel-hungry Pakistan
Spanning over 683 miles (1,100 kilometers), the pipeline, dubbed ‘Pakistan Stream,’ is expected to have a discharge capacity of up to 12.4 billion cubic meters of natural gas per year.
Under the terms of the agreement, Pakistan would reportedly hold a 74% stake in the pipeline operator while Russia would own the remaining 26%. The initial deal to build the pipeline was clinched back in 2015.
The project is expected to become the largest infrastructure deal between the two nations since the early 1970s, when the Soviet Union built the Pakistan Steel Mills industrial complex, at Port Qasim near Karachi.
www.rt.com
7 Sep, 2021 10:05
Gawadar port Harbor, Pakistan © Getty Images / Aleem_khan
Construction works on the Pakistan Stream gas pipeline project are expected to start in the near future after several rounds of consultations, Pakistani Ambassador to Russia Shafqat Ali Khan said in an interview with RIA Novosti.
“After many years of negotiations, [Moscow and Islamabad] have finally signed an agreement and since then there has been significant progress: we’ve held several rounds of technical consultations, including financial issues,” the ambassador said. “As soon as the final details are agreed, we expect the start of construction. I think it will have a significant impact for future investments (in Pakistan) ... I cannot disclose details… we are very optimistic, " he added.
In late May, the two countries signed a deal on building a major gas pipeline linking the Pakistani southern port of Karachi and another port city, Gwadar, to power plants and industrial hubs in Pakistan’s northern region of Punjab.
ALSO ON RT.COMRussia ready to supply LNG to fuel-hungry Pakistan
Spanning over 683 miles (1,100 kilometers), the pipeline, dubbed ‘Pakistan Stream,’ is expected to have a discharge capacity of up to 12.4 billion cubic meters of natural gas per year.
Under the terms of the agreement, Pakistan would reportedly hold a 74% stake in the pipeline operator while Russia would own the remaining 26%. The initial deal to build the pipeline was clinched back in 2015.
The project is expected to become the largest infrastructure deal between the two nations since the early 1970s, when the Soviet Union built the Pakistan Steel Mills industrial complex, at Port Qasim near Karachi.
Russia & Pakistan may start building major gas pipeline soon – ambassador
Russia & Pakistan may start building major gas pipeline soon – ambassador
farok84
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Four-day talks on PSGP: Pakistan will seek loan from Russia to finance project
ISLAMABAD: Pakistan and the Russian Federation are scheduled to hold four-day crucial talks here from today that will last till October 29 with an aim to finalize the shareholdings agreement for...
www.thenews.com.pk
Four-day talks on PSGP: Pakistan will seek loan from Russia to finance project
By Khalid Mustafa
October 25, 2021
ISLAMABAD: Pakistan and the Russian Federation are scheduled to hold four-day crucial talks here from today (Monday) that will last till October 29 with an aim to finalize the shareholdings agreement for most strategic project of Pakistan Stream Gas Pipeline valued at $2.5-3 billion, shows the official document pertaining to the agenda of the talks on pipeline project.
Under the amended IGA, Pakistan will be having 74 percent shareholding and Russia 26 percent. Once the shareholding agreement is finalized and signed, then a pipeline of 56 inches diameter, having length of 1,040 kilometers, will be laid down from Karachi to Kasur (Punjab), which may have the capacity to carry 2.5-3 bcfd gas. Two LNG terminals, one by Energas and other by Tabeer, will be constructed by 2023-24. The PSGP will also transport the LNG to be re-gasified from the said LNG terminals. Under the new scenario, the government has also decided to use the Pakistan Stream Gas Pipeline to have an intake of 1.35 bcfd gas to be imported from Tajikistan through the TAPI pipeline and to this effect the government has included the required provision in the PSGP project.
Secretary petroleum, when contacted, confirmed that four-day talks on the Pakistan Stream Gas Pipeline project for finalizing the shareholding and facilitation agreements will be initiated from today (Monday).
However, as per the official document, the Russian delegation, headed by Vladimir Shcherbatvkh, Chief Executive Officer of Russian Nominated Entity (RNE) PAKSTREAM LLC, will arrive today (Monday) in the morning and usher in the important parleys to finalize the shareholding and facilitation agreements. In the talks, Pakistan Nominated Entity (PNE), the Inter State Gas System, headed by Managing Director Syed Zakria Ali Shah, would take part. Secretary Petroleum Dr Arshad Mehmood would lead Pakistan’s side.
However, top sources said the government, which has accumulated Rs325 billion from the gas consumers under the head of GIDC (Gas Infrastructure Development Cess), does not want to spend the whole money on the project as it has reportedly consumed it for budget deficit financing. Now the PTI government wants debt from the Russian EXIM bank and other financial institutions to finance the project. The Finance Division has said that it will provide Rs60-90 billion at the maximum in three years for the project, which means Rs20-30 billion every year. Pakistani authorities cannot afford the outflow of $1.5-2 billion from the reserves in one go, which is why it wants to borrow the loan from Russian banks to cater to the needs of foreign component spending in the project, which will be used to purchase pipeline and compressors. And to this effect, Pakistan intends to seek debt during talks with Russian financial institutions for the project at an international Libor rate of 1.5-2 percent with tenure of 20 years for repayment of the debt with mark-up, ensuring slow and staggered outflow of dollars from foreign reserves. This means the project that was earlier based on GIDC funding has been converted to debt based financing mode and the masses who had earlier paid for the pipeline in the shape of GIDC will again pay in the shape of pipeline transportation tariff the debt and mark- up.
In earlier meetings, Pakistan had also asked Russia to jack up its shareholding maximum up to 49 percent from 26 percent, showing that Islamabad does not have the required amount to finance its own shareholding of 74 percent. This develops a strong impression that the government that collected over Rs325 billion has utilized the GIDC amount in budget financing. Besides, the government has also decided to extend sovereign guarantee against the debt financing to lenders to be arranged by Russia. “And Russia had also been asked to work out its strategy with options of arranging supplier credits, debt financing and increase in its shareholding by up to 49 percent.”
In the four-day talks, both sides will follow and adhere to the principles agreed in the Inter-Governmental Agreement (IGA) as amended through Protocol dated 28th May, 2021 and the Heads of Terms of the Shareholders Agreement signed by the parties on 15th July, 2021. Under the earlier Inter-Governmental Agreement, Russia was to erect the whole project with its 100 percent financing. Then the Government of Pakistan took a new decision with maximum investment from its side into the project after the Supreme Court verdict on GIDC (Gas Infrastructure Development Cess). Now under the amended IGA, Pakistan will be having 74pc shares and Russia 26 percent in the project.
Russia has agreed to participate with 26 percent financing, showing how serious Moscow is about building its stakes in the Pakistan economy. Russia in the past built the Pakistan Steel Mills and OGDCL too.
First day of talks on PSGP: Pakistan’s draft for accord found not up to the mark
ISLAMABAD: Pakistan and Russia here on Monday kick-started talks with an aim to finalize the shareholding and facilitation agreements for their flagship Pakistan Stream Gas Pipeline Project of...
www.thenews.com.pk
First day of talks on PSGP: Pakistan’s draft for accord found not up to the mark
By Khalid Mustafa
October 26, 2021
ISLAMABAD: Pakistan and Russia here on Monday kick-started talks with an aim to finalize the shareholding and facilitation agreements for their flagship Pakistan Stream Gas Pipeline Project of paramount importance.
Both sides on the first day of talks discussed the "Key Issues of the Shareholders Agreement" one by one. It was observed that the shareholding draft prepared by the Inter State Gas System (ISGS) was not up to the mark, keeping in view the international requirements needed to make the agreement acceptable to both the countries.
However, Russian Nominated Entity Pakstream LLC will give today (Tuesday) a presentation on its draft of a shareholding agreement, which was prepared by an international law firm. The Russian-nominated entity Pakstream LLC’s official will give a presentation on video links. The 14-member Russian delegation, headed by Vladimir Shcherbatykh, Director General of Pakstream LLC, participated in the talks. The Pakistan side was headed by Secretary Petroleum Dr Arshad Mehmood and comprised top officials of ISGS and senior officials of the Petroleum Division.
It is pertinent to mention that Pakistan will have 74 percent shareholding in the project and Russia 26 percent. The federal cabinet has already accorded approval to the sovereign guarantee for the loan Pakistan will borrow from Russian lenders to finance 74 percent shareholding.
One of the senior officials of Finance Division said on the sidelines of the talks that the finance ministry has no amount of Rs325 billion with it which was collected under the GIDC suggesting it would be better for Pakistan to ask Russia to have majority shares and complete the project through its own 100 percent financing. Otherwise, the government will have to arrange the loan from Russian lenders against its 74 percent shareholding and will have to extend the sovereign guarantee too.
In 2015, an IGA (Inter-governmental Agreement) was signed under which Russia will provide 100 percent financing for the pipeline project. However, on May 28, 2021, the amended IGA was signed keeping in view the availability of GIDC amount with Pakistan and Russia shareholding at 74:26 percent respectively.
Under the amended IGA signed in Moscow on May 28, 2021, with Pakistan having 74 percent shares and Russia 26 percent, Pakistan requires to provide almost $2 billion against its shareholding and Russia needs to come up with $700-800 million investment as per its 26 percent shares.
Officials say that since the Finance Division has utilized the GIDC amount to finance the budget deficit and it has no money to fund its shareholding of 74 percent, so it would be better to ask Russia to have majority shares with provision of 100 percent funding. They said asking Russia to provide debt against its 74 percent shareholding is not a sane decision as Russian lenders will not be able to provide huge loans of $2 billion on short term notice at reasonable interest rate and more importantly Russian financial institutions will seek from Pakistan the fulfilling of ‘terms and conditions’. In earlier talks, Pakistan offered 49 percent shareholding to Russia, the official said, but Moscow did not accept the offer saying its role will not be dominant in running the gas pipeline project having either 26 percent or 49 percent shareholdings.
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Iran gas on our door , did not complete the pipeline
Now Russian gas line , but we take a long time to complete it
Most decisions related to Pakistan's power crisis are due to international politics and our decisions to balance the relations with multiple nations vs looking after our own interest
Now Russian gas line , but we take a long time to complete it
Most decisions related to Pakistan's power crisis are due to international politics and our decisions to balance the relations with multiple nations vs looking after our own interest
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