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Turkmenistan has asked Pakistan to include its investment in the TAPI gas pipeline project under a law that was passed to protect foreign investment in the Reko Diq project, a senior official at the energy ministry told The News on Friday.
The Foreign Investment Promotion and Protection Act (FIPPA), 2022, was approved by the parliament to provide legal cover for the Reko Diq project, a copper and gold mine in Balochistan province, which is being developed by a consortium of foreign companies.
The demand was also raised in the Special Investment Facilitation Council (SIFC), which decided to seek inputs from all the stakeholders and formulate recommendations for the apex committee of SIFC, the official said.
“Yes, we have received the demand of Turkmen Gas Company seeking the cover of the legislative Act of FIPPA of its investment and the authorities at the highest level of SIFC ) are examining it,” the official said.
Pakistan has already assured the protection of Turkmen investment with a sovereign guarantee under the Host Government Agreement (HGA). However, the FIPPA, 2022, would extend nothing but the added advantage to Turkmen Gas Company that it would have the legislative cover in terms of protection that has been guaranteed to protect foreign investment in connection with the Reko Diq project.
The official said that the FIPPA, 2022, may also increase the credibility of Turkmen gas companies before banks for bankable feasibility and loans as well.
The gas pipeline project worth $10 billion would be built and commissioned at a 30:70 percent equity and loan business plan. Out of 30 percent equity, Turkmenistan has an 85 percent share, and Afghanistan, Pakistan, and India each have a five percent share. Pakistan’s equity stands at $200 million.
The remaining 70 percent of the funding would be based on loans that the TAPI consortium will arrange from international financial institutions.
The project has been delayed about seven years, mainly because of failure in financial closures and, in the latest scenario since the Taliban took power in Afghanistan, the Asian Development Bank (ADB) halted due diligence and processing activities about the TAPI project until the Taliban regime is legitimized by the United Nations and big economies of the world.
However, Turkmenistan and Pakistan, on June 9, 2023, signed a Joint Implementation Plan (JIP) to accelerate work on the TAPI Gas Pipeline project in Islamabad. Pakistan has suggested to Turkmenistan to lay down some portion of the gas line up to Herat in Afghanistan to ensure the ownership from the Taliban, which will also help move the project forward.
The TAPI gas pipeline project aims to bring natural gas from the Galkynysh gas field in Turkmenistan to Pakistan through Afghanistan via a 56-inch diameter pipeline. The Galkynysh gas field is located in the eastern region of Turkmenistan.
The proposed route of the supply source is Herat, Kandahar, Chaman, Zhob, DG Khan, Multan, and Fazilika, with a pipeline length of 1,849 kilometers. It will transport up to 33 billion cubic meters (bcm) (average 3.2 BCFD) of natural gas per year over a 30-year period, where Pakistan’s off-take will be 1.35 BCFD.
