Saturday, June 22, 2024

Pakistan and Russia- RLNG Pipeline Project

The talks for three days between the two countries, Pakistan and Russia regarding their 1,122 km high-pressure RLNG pipeline that is from Port Qasim, Karachi to Kasur, Punjab had concluded with both sides agreeing on an amendment in their Inter-Governmental Agreement- IGA.

In a recent statement issued in the meeting, this project was termed as an initial start of a new era of pure strategic relationships between these two countries. However, the Pakistani Ministry of Energy (Petroleum Division) and the Russian Ministry of Energy Federation held the very first Russia-Pakistan Technical Committee meeting that was from 16th to 18th of November 2020 at Islamabad on the cooperation for their development of the North-South Gas latest Pipeline Project.

The project is purely a flagship strategic venture that is between the institutions of Pakistan and Russia that will strengthen the long-term relationships and bilateral ties between these two countries through their people-to-people contact. The Russian delegation also consisted of representatives from their Ministry of the Energy of the Russian Federation and the Embassy of the Russian Federation here in Pakistan.

The Pakistani delegations who were involved included the representation from the Ministry of Energy (Petroleum Division) Law and Justice Division, and Ministry of Foreign Affairs along with Inter-State Gas Systems (Private) Limited.

The talks were also attended by Minister for Energy and Special Assistant also to the Prime Minister (SAPM) on the Petroleum. Both the sides and parties had signed an Inter-Governmental Agreement (IGA) in the year 2015 when Russia was to completely finance their project, but after that the Gas Infrastructure Development Cess (GIDC) verdict by the Supreme Court, and the availability of liquidity with its Petroleum Division, their Inter-Governmental Agreement has been amended where the North-South Gas Pipeline Project (NSGPP) has also been renamed as the Pakistan Stream Gas Pipeline Project (PSGPP) with a total of 26 per cent equity share from Russia’s side.

“Russia has not only adapted to the keep 49% shares in the equity offered by Pakistan but has decided to have its equity at 26%. This means Pakistan also be having a total of 74% equity in this project. The pipeline project also will be backed by the agreement based on ‘take and pay’ mode that is with no sovereign guarantee,” this all was spoken at an official talk with media.

Pakistan and Russia both are keenly interested in investing in this project and embarking it upon the timely basis that is the schedule, in a cost-effective way, and successfully implement it for the benefit of the people of the country Pakistan while also ensuring the optimum gas tariff.

Both the sides affirmed their maximum utilization of the Russian and Pakistani materials, equipment, and also the resources, that are intending to enhance their technical and operational capacity of the companies of Pakistani and also the human resources through the mutual working and training.

The parties have agreed in the principle to implement this project through a special purpose company that is to be incorporated in Pakistan by Pakistan and the Russian parties, wherein Pakistan will also have the majority shareholding in it.

Sui Northern and Sui Southern Gas pipeline companies from our country Pakistan will also be assigned to the laydown of the gas pipeline. However, Russia will be providing the equipment, Russian-made gas pipeline and compressors.

Both the sides have also decided to make a Joint Venture Company (JVC), consisting of its Board of Directors with representation from both of the sides. The company will be named as per Russia-Pakistan JVC that will also operate the gas pipeline with its leading role of Pakistan.

Mehjabeen Qasim
Mehjabeen Qasim
Business Journalist at Startup Pakistan

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