-
Turkmenistan sets up company for TAPI project financing
Turkmenistan has established a company for financing Turkmenistan-Afghanistan-Pakistan-India (Tapi) gas pipeline project and allocated US $2 billion from its own resources to implement the project, which will be completed by end-2019 to export gas to Kabul, Islamabad and New Delhi. The four nations as part of the gas pipeline project had already registered the company in November 2014 in which Afghanistan, Pakistan and India would have five percent shareholding each and the remaining 85 percent stake would be held by Turkmenistan.
The investment agreement pertains to five percent shareholding of each of the three gas-importing countries, which means an initial investment of around $200 million. The National Assembly”s Standing Committee on Petroleum and Natural Resources in its last meeting expressed serious reservations over Pakistan government” imposition of a levy for financing of the project. The committee members argued that there was no need to imposition of levy, when 85 percent stake was held by Turkmenistan. Sources said there were two types of investment in Tapi project as $15 billion for developing field. This project had been awarded to Japanese companies that were working to extract gas against service fee and they would not become shareholders in gas field. Other portion was the pipeline project, which requires pipeline material and compressors as well as around $10 billion fund to lay pipeline.
Earlier, Asian Development Bank (ADB) was playing role of transaction advisor. Therefore, it had expressed inability to join this project as financier due to conflict of interest being transaction advisor. However, it had surrendered its role as transaction advisor now and offered $1 billion to finance this project. The ADB is being dominated by Japan and the bank made offer of financing after Japanese companies” consortium won contract of developing gas field in Turkmenistan from where gas is to be supplied to Pakistan, Afghanistan and India under the Tapi pipeline project.
Islamic Development Bank (IDB) dominated by Saudi Arabia had also offered $500 million to finance Tapi pipeline project. The Tapi Company is to achieve financial close of the project by end of this year. Sources said security survey in Afghanistan work completed, adding the mine swiping work had been initiated. Turkmenistan will invest around $25 billion to deliver 3.2 billion cubic feet of gas per day (BCFD) to energy-hungry Afghanistan, Pakistan and India by December 2019, which will continue for 25 years. A gas sale and purchase agreement had already been signed in 2013 to set the pricing mechanism, under which the gas price at Turkmenistan border would be around 20 percent cheaper than Brent crude. Pakistan and India will receive 1.325bcfd of gas each, while Afghanistan will get 500mmcfd. Slater Koekkoek Authentic Jersey
Share This
