According to a media report published on Friday, Pakistan & Russia have signed an agreement for gas pipeline project, i.e., by the end of 2023, they will construct of about 1,100-km gas pipeline from Port Qasim in Karachi to Lahore, at a cost estimation of USD 2.5-3 billion.
Hammad Azhar- Federal Minister of Energy tweeted on Thursday “[The Govt of Pakistan and Russia have agreed upon and signed [the] ‘Head of Terms’ [of the project],”.
“Shareholding and corporate structure finalized. This project has been suffering from delays since 2015 but effective progress made today,” he further added.
A 12-member Russian delegation, led by AA Tolparov- Deputy Director of the Department of Foreign Economic Cooperation & Fuel Markets Development, reached to Islamabad on Monday for further discussion on the project.
Russia named its official company Pakstream Limited, which negotiated with Pakistan’s Inter State Gas System (ISGS) for the terms. Two companies have reached an agreement on the “Heads of Terms” & on the company’s shares agreement with Pakistan’s share of 74% & Russian share of 26%.
The intergovernmental agreement (IGA) of the project had been signed in 2015 but was not applied. The project had been postponed ever since then as the construction could not be commenced owing to US restrictions on Russian companies.
Now, In May this year, Pakistan & Russia signed an amended IGA to begin construction work on project.
The IGA has been updated as a protocol relating to mirror the consumption of Gas Infrastructure Development Cess (GIDC) & continual partnership with Russia to develop the project.
The flagship Pakistan-Russia energy project will improve mutual cooperation in the hydrocarbon sector between both the countries & provide massive technological uplift & employment prospects to local companies in Pakistan.
A Russian company will construct the gas pipeline project from Karachi to Lahore with a capability to transport 2 bcfd of gas.
The government intends to boost this capability to 3 bcfd in the next 3 years after the growth in demand of local gas.
Consequently, Pakistan demands one more gas pipeline to transportation this the import gas to Punjab province. Though, despite this, the country has no legal framework to regain the value of imported gas from domestic users.
