ISLAMABAD: Taking a step forward on $1.25 billion Iran-Pakistan Gas Pipeline project, the government on Thursday selected a consortium led by IBIC of China to arrange financing within 12 months to implement the project for delivery of gas by December 2014 and simultaneously pursue gas imports from Turkmenistan.

At the same time, the government also rejected a demand by one of the prospective importers of Liquefied Natural Gas (LNG) to provide sovereign guarantees for purchase of gas for dedicated consumers or allow subletting capacity allocations and decided to strictly follow the initial conditions required under the expressions of interest.

The two major decisions were taken in two back-to-back meetings of the steering committee of the economic coordination committee led by Petroleum Minister Dr Asim Hussain and an inter-ministerial forum led by Prime Minister Yousuf Raza Gilani.

A senior government official told Dawn that the steering committee of the ECC selected a consortium led by IBIC of China and comprising Habib Bank of Pakistan after completion of the bidding process to arrange financing through equity participation and underwriting in a period of 12 months.

The committee that includes Foreign Minister Hina Rabbani Khar and Balochistan Chief Minister Mir Aslam Khan Raisani also approved a benchmark price for import of gas from Turkmenistan at around 78 per cent of the crude oil price for delivery in Pakistan and asked the ministry of petroleum to take steps to implement the Turkmen gas import plan.

The petroleum ministry, said the official, was also asked by the steering committee to take up increasing the gas quantities from Iranian pipeline from existing contract of 750 million cubic feet per day (MMCFD) to 1000 MMCFD. A reduction in gas price is also sought in the light of increased quantities and a lower price is now available from Turkmenistan.

These decisions would now be submitted to the ECC and subsequently to the cabinet over the next two weeks for formal approval and implementation.

Besides rectifying these decisions, a separate meeting presided over by the prime minister directed the petroleum minister to expedite implementation of LNG import project to meet growing energy shortfall in the country.

The meeting decided not to make any deviation from expressions of interest (EOIs) issued by the petroleum ministry on the basis of which three companies – Global Energy of Turkey, Engro Corporation and Pakistan Gasport of Jamshoro Joint Venture – had submitted their proposals and got capacity allocations granted by the Oil and Gas Regulatory Authority (Ogra) and the petroleum ministry.

Accordingly, the request by the Turkish firm to have sovereign guarantees for the project, subletting of its capacity allocation to other firms and a guarantee to have dedicated LNG buyer was turned down so as to avoid a repetition of an earlier LNG import attempt that was bogged down at the Supreme Court because of procedural deviations.

As a result, a letter was also issued to the Turkish firm about the decision with the advice to implement the project as per deadlines committed with Ogra.

The prime minister also directed the petroleum ministry to take immediate steps to resolve the issues of gas supply to both domestic and industrial sectors.

Secretary petroleum Ejaz Chaudhry told the prime minister that 100 MMCFD gas from Kunar-Pasakhi field would be injected into the national system within a month to ease pressure of gas outages on the domestic and industrial consumers.

He said the KPK would get 15 MMCFD gas from Kohat Gas Field immediately which would be put into the national system.

He said negotiations with the CNG Association were under way to rationalise the supply of gas to the CNG stations and top priority would be given to the domestic consumers in these negotiations.

The petroleum ministry was negotiating terms with the industrial sector to ensure uninterrupted supply of gas to the households.