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As energy crunch gets worse, Turkmen pipeline is illusive.

Summary: As Pakistan's energy crunch worsens, international gas is proving to be illusive.

As Pakistan's energy crunch worsens, international gas is proving to be illusive.

This energy chase by Pakistan now revolves around the off-again-on-again Turkmenistan-Afghanistan-Pakistan-India, or TAPI, gas pipeline.

The snag which could prove disastrous now stems from the pricing of the gas that Turkmenistan wants to charge Pakistan. India, Pakistan's political arch-rival, but which, too, sufferers due to its very own energy crisis, has thrown a spanner in the works. While Pakistan insists that all three would-be recipients of Turkmen gas should pay a uniform price, India has gone ahead and concluded a bilateral pricing agreement, leaving Pakistan and Afghanistan high and dry. What exactly is the price, India has greed to pay Turkmenistan, is still a closely guarded secret. But Pakistan has postponed the talks for now.

TAPI is planned to be 1,640 kilometres long, to be partly funded by Manila-based Asian Development Bank. The bank has okayed the proposal to provide equity for the project on Pakistan's behalf. TAPI will supply a total of 3.2 billion cubic feet daily of gas. Out of this, Pakistan and India each will receive 1.365 bfcd and Afghanistan 0.5 bfcd.

TAPI's route from Turkmenistan runs through Afghanistan and on to the central Pakistani city of Multan from where it will head to Fazilka, north western India. In Islamabad, officials of the Ministry of Petroleum and Natural Resources, or MP&NR, call the bilateral Turkmen-Indian pricing move as "dealing a blow to Pakistan."

"The Indian move foils Pakistani endeavours for a uniform gas price. It has literally put the finalisation of the Gas Sales Price Agreement in the doldrums," they say.

MP&NR has conveyed Turkmenistan that Pakistan will match the lowest price between the seller and the buyer country. New Delhi's move almost ditches the earlier joint proposal by Pakistan, Afghanistan and India, the three buyer countries, who had told Turkmenistan that they will agree to a uniform gas price. But even then Turkmenistan had wanted bilateral, or separate pricing agreement with each of these three consumers. MP&NR Officials say, "our government is of the view that Turkmenistan is not inclined to supply gas to Pakistan at the same prices at which it is going to sell to India."

Pakistan and Turkmenistan were to hold pricing talks at Ashkhabad in mid-August, but these may now take place in September. Islamabad will express its "grave concern" on the separate gas pricing deal with India, key negotiators in MP&NR tell me.

One of the apparent reason for the current bickering over the pricing formula is the sulphur content of the Turkmen gas. India has desired that the sulphur content should not be more than 0.25 per cent. Islamabad, at the same time, has taken objection to separate pricing deal between India and Turkmenistan. Are there any other points of discord? The next round of talks will indicate.

Turkmenistan is of the view that in order to reduce the sulphur content, it will have to set up a plant which will push up prices for all consumers.

Separate tariff arrangements will have, what officials feel "serious political repercussions" for each of the three prospective buyers of Turkmen gas. Although the officials don't spell out what these repercussions will be, but one can say that the idea of high gas prices will be hard to sell in Pakistan. This is particularly so because the industry and the household consumers are already agitating against high gas and energy tariffs.

Views expressed by the author are his own and do not reflect the newspaper's policy.

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Publication:Khaleej Times (Dubai, United Arab Emirates)
Geographic Code:9PAKI
Date:Aug 21, 2011
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