Russia steps in after Chinese bank backs off from Pak-Iran gas pipeline

Russia steps in after Chinese bank backs off from Pak-Iran gas pipeline

Monday, March 19, 2012: Russia has become Pakistan’s next destination to seek finances for the completion of Pak-Iran gas pipeline, after Chinese bank backed off amid rising pressure from the United States.

A Chinese bank was to finance $1.5 billion to the project but they backed down. The decision to negotiate a deal with Russia came in a recent meeting of the sub-committee formed by the Economic Coordination Committee (ECC) of the
cabinet.

Earlier in February, Russia had offered Pakistan that it would fully finance the pipeline if its energy giant Gazprom was awarded the contract without bidding during a four-day visit of Foreign Minister Hina Rabbani Khar to Moscow.

In order to give its assent to the offer, the government will have to waive Public Procurement Regulatory Authority (PPRA) rules – designed to ensure transparency in government dealings.

Ijaz Chaudhry, Petroleum Secretary, said, “A delegation will visit Russia soon to negotiate a deal with Gazprom. No decision, however, has been taken yet to award the contract to Russia, but Pakistan will discuss this option.”

Chaudhry also dispelled perception that the Industrial and Commercial Bank of China (ICBC) had distanced itself from the project and said “we have written a letter to ICBC, asking it to clear its position as financial adviser to
the project.”

The Inter-state Gas Systems (ISGS) had signed a deal with financial advisers for raising funds for the project, except for ICBC which was in the process of taking approvals.

“It is apprehended that a probable reason for not signing the agreement could be geo-political situation in the region,” said a summary tabled before ECC.

Earlier, the sub-committee had considered approaching China and Russia to seek financial assistance for the project. However, Russia now appeared to be leading the race, a ministry official said, adding the committee also studied
the Iranian offer of $250 million for constructing the pipeline.

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Posted by Wajahat Javed on Mar 20 2012. Filed under Business, Pakistan. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry