The Islamic Development Bank (IsDB) had agreed to provide US$ 500 million loan to part-finance the proposed 1814 km Turkmenistan-Afghanistan- Pakistan-India (TAPI) natural gas pipeline project to transport gas from Turkmenistans Galkynysh fields to Fazilka in India. The TAPI gas pipeline project is estimated to cost US $15 billion.
Interestingly, the TAPI gas pipeline project that is supported by the US as part of its Afghan rehabilitation policy and as an alternative to Russian infrastructure for evacuation of Central Asian gas is being funded by the Saudi Arabia based Islamic Development Bank.
The $500 million funding agreement was signed with between the TAPI project consortium and the Islamic Development Bank last month, an official said on the sidelines of the Petrotech conference being held in the capital. The consortium of state-owned firms of the TAPI Pipeline Co are also in talks with Saudi Fund for Development and the Japanese government for partnership. The state-owned gas utility GAIL India, ISGS of Pakistan and Afghan Gas Enterprise (AGE) have 5 per cent stake each. Turkmenistans national oil company Turkmengaz is the leader of the consortium of national oil companies of the four nations. It has 85 per cent equity in TAPI Pipeline Co (TPCL).
As per the official, IsDB has expressed interest in financing the project not just on Turkmenistans territory, but in Afghanistan and Pakistan.
The TAPI pipeline will have a capacity to carry 90 million standard cubic metres a day (mmscmd) gas for 30 years, with 38 mmscmd going to India and Pakistan each. The remaining gas is to feed Afghanistan.
The project, to which ADB was appointed the transaction advisor in November 2013, had been planned to become operational in 2018, but it is unlikely to see the light of day before 2022. The TAPI project has been on the drawing board for years as the four countries had not been able to get an international firm to head a consortium which will lay and operate the pipeline.
French giant Total SA had initially shown interest in leading the consortium. However, it backed off after Turkmenistan refused to accept its condition of a stake in the gas field that will feed the pipeline.
The four nations to the project in April this year had signed an investment agreement in Ashgabad. He said TPCL will appoint a project monitoring consultant (PMC) to conduct pre-FID activities, including mine clearance in Afghanistan, detailed route survey, front-end engineering design (FEED) and environment and social impact assessment.
The technical study of the TAPI project, done by Penspen, has estimated that it will take over six years to complete from the start of the FEED process, he said. The Turkmenistan-Afghanistan-Pakistan (TAP) project was originally announced in May 2002. India joined the consortium in 2008. In 2014, the pipeline consortium, TPCL, was incorporated. TAPI will carry gas from Turkmenistans Galkynysh field, better known by its previous name South Yoiotan Osman that holds gas reserves of 16 trillion cubic feet. From the field, the pipeline will run to Herat and Kandahar province of Afghanistan, before entering Pakistan. In Pakistan, it will reach Multan via Quetta before ending at Fazilka (Punjab) in India.
(With agency inputs)
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