ISLAMABAD: In a welcoming development, Russia has provided a new structure for much-touted North-South Gas Pipeline Project (NSGPP) in a goodwill gesture, showing how determined and committed Moscow is for developing strategic stakes in Pakistan, a senior official privy to the development told The News.
“In the last five years, the project witnessed many upheavals but the Russian side remained stuck to the project knowing the fact that Pakistan got the structures changed several times.” Under the latest scenario, the Russian Ministry of Energy has offered TMK and ETK with its state owned company Federal State Unitary Enterprises (FSUE).
“The officials in the Petroleum Division earlier influenced by certain lobby sought inclusion of ETK in place of TMK through wrong accusations that top man of TMK, Pumpyansky, is on the watchlist of US, and afterwards the Russian MoE extended the structure with ETK as was demanded by top mandarins. But later on, sense prevailed with inputs from international law firms which opined that TMK is a better structure for the project, and the same was found in internal inquiries coupled with due diligence on part of some powerful circles.”
TMK, with a net worth of over $9 billion, is listed at the London Stock Exchange and has reported profits of $1 billion. So much so, the financial and corporate rating firms, such as S&P and Moody’s, see TMK having positive track record of engagement with the US government and it has never been subject to any investigation or sanctions by the US and all this is publicly available and independently verifiable facts that can be relied upon.
About the ETK, the findings from the US law firms say that it is a lesser known entity with no demonstrated track record of handling large scale gas pipeline projects, nor any large scale projects outside of Russia. The financial health of the company and the shareholding of the company are largely unknown. It is not listed on any stock exchange nor has it ever been rated by an independent third party evaluator of companies like S&P or Moody’s. The Eurasian Pipeline Consortium has no known history of engagement with the US authorities.
So after due diligence carried out by the Petroleum Division and other institutions, it was found that some senior officials of the Petroleum Division played a suspicious role because of ‘influence’ of a certain lobby and discredited TMK and demanded a new structure with ETK knowing the fact that ETK was not at par with TMK in terms of experience and financial health.
“Now, the Russian side, as usual, provided ease to Pakistan by offering companies TMK and ETK in the structure with state-owned umbrella company FSUE putting the ball in the court of Pakistan to select a better structure for the strategic project. And more importantly Russia also agreed with the proposal of Pakistan on equity structure. Following the GIDC verdict by the Supreme Court, Pakistan wants to keep majority equity share in the project and it has proposed that Pakistan will be having 51 percent shares and Russia 49 percent.”
The resolve of Russia to the project, he said, can be gauged by the fact that it didn’t panic despite the fact that the Pakistan side time and again kept on changing its demand for structures in the last five years.
Moscow has finalized its technical delegation with representatives each from EKT and TMK, which is to land in Pakistan somewhere in the third week of the current month and will negotiate for alteration in the IGA (Inter-Governmental Agreement) and will finalise the way forward with timelines for initiation of the project till its execution and making the project operational.
Originally, the pipeline of 1,100 kilometers was to be laid with a diameter of 42 inches with capacity to transport 1.2 billion cubic feet RLNG per day. Now Pakistan wants to increase its capacity to transport RLNG of 1.6 bcfd with a diameter of either 52 inches or 56 inches. The Pakistan side has estimated the project’s cost at $2.25 billion but it is yet to be finalized with input from the Russian side.