“Out of five who had bid, we shortlisted these three for making detailed presentations on the international best practices in pipeline projects and their proposals,” IndianOil’s finance director S.V.Narasimhan told reporters on 23 August. “We will finalize the financial consultants by the month end or at the beginning of September,” he said.
The selected consultants will be given until November to present project models for the execution of the gas pipeline project, now estimated to cost over $7 billion given the rise in the input costs of products such as steel. The project design will have to address security concerns, provide a financing model for the execution of the project, and establish the formula for ensuring delivery of natural gas at India’s border at a price lower than that of imported liquefied natural gas (LNG), among other aspects. India is committed to having in place technical, legal, and financial consultants ahead of the second round of the India-Pakistan joint working group meeting in Islamabad next month.
While IndianOil has been given the task of appointing the financial consultant, gas infrastructure major GAIL (India) Ltd will nominate the technical and legal consultants shortly. Pakistan is also planning to appoint its own consultants as the three nations work towards finalizing the way forward before the end of the year.
It is understood that Italy’s ENI, the sixth largest oil and gas producing concern in the world, has also indicated its interest in funding the gas pipeline project. Informed sources said that some of the Indian oil and gas groups have also given their consent to independently finance the project, named as the ‘Peace Pipeline’.
Sources said there would be no problem in arranging finances for the Iran-Pakistan-India gas pipeline, as international banks and institutions consider it a very feasible project. All three countries are going ahead with the project, despite serious reservations being expressed over it by the US government. However, it is apparent that the US’ “concern” has not made the parties delay work on the project. “The gas project is very much on the cards, and will not be abandoned,” a source familiar with the recent three-nations talks’ said.
A high-level meeting presided over by Pakistan’s Prime Minister Shaukat Aziz in August discussed the country’s pressing energy needs, and decided to pursue all the three gas pipeline projects, the other two from Turkmenistan and Qatar. Unlike scepticism aired by the Indian media about the project, technical experts in India are reported to have no two opinions about the importance of Iran-Pakistan-India pipeline and the sovereign guarantees offered by Pakistan for security of the gas pipeline within its boundaries under an international agreement. However, sources have said that India was seeking subsidised gas prices from Iran, and that was giving rise to discussions about the so-called risks involved in the project. The estimated $4-billion pipeline would run for about 1115km in Iran, 705km in Pakistan, and 850-km in India; Pakistan’s investment in the project would be around $1billion.All the three countries are expected to establish separate consortia for construction of the gas pipeline in their respective territories.