By AMANULLAH BASHAR
Mar 13 - 26, 2000
A high-powered Pakistan delegation of the Ministry of Petroleum is
currently visiting Iran to weed out problems regarding $1.1 billion Iran-Pak Refinery
project which is to be established at Gaddani beach adjacent to Hubco Power Project.
The delay in establishing the project has however provided a cost
relief to the two countries as due to slump in refinery sector and technology advancement
in refinery sector by China and other European countries altogether have resulted in
dropping the cost of the refinery project. According to an estimate, the cost of Iran-Pak
Refinery has come down from $1.1 billion to $850 million.
The Joint Venture Agreement(JVA) between Iran and Pakistan for setting
up Iran-Pak Refinery was signed in 1996. This important project from Pakistan's point of
view continued to suffer an uncalled for delay for one reason or the other. Soon after the
signing of the project, there was a difference of opinion about proposed location of the
project as some of the government officials were interesting to shift the proposed project
from Gaddani beach to Port Qasim. However the proposal of shifting the location was
strongly opposed due to refinery may add to the congestion around Port Qasim which is not
affordable from strategic point of view. The shifting of the project was also opposed by
the then government of Balochistan. In 1998 when the government offered 25 per cent
guaranteed rate of return to Pak-Arab Refinery being established near Multan, the Iranian
partners also demand for the same rate of return. Although the government conceded to the
demand and allowed similar rate of return to Iran-Pak Refinery Project, however this
facility was capped for 3 years for Iran-Pak Refinery while the PARCO was allowed the
facility for 8 years. Consequently the project gone into a deadlock again as it was
naturally taken as a discrimination with the Iran-Pak Refinery Project.
No one can deny the fact that Pakistan's economy which has to pay
heavily on import of oil, round $2.5 billion for the current fiscal year is not in a
position to continue to bear this burden. The country will have to develop its own
resources save precious foreign exchange required to survive economically.
Although the negotiations between the two countries are going on for
carrying out the project without any further delay however the budgetary allocation in the
forthcoming budget of Pakistan will confirm about the seriousness of the government in
this project. It may be recalled that the previous government had not made any budgetary
allocations when it passed the federal budget in June 1999. The budgetary allocations for
this project two years back were utilized for some other expenditures instead of the
Former government had set a budget target of Rs63.3 billion for the
energy sector which was 48.4 per cent higher as compared with Rs43.4 billion of the
previous year. It is yet to be seen how the present government led by Gen. Pervez
Musharraf deals the oil and gas sector in the forthcoming federal budget for 2000-2001.
Another delayed project in the energy sector is $2 billion
Pakistan-Turkmenistan gas pipeline project which was signed in 1997. Although the pricing
agreement for purchase of gas has also reached between the two countries and an
International Consortium was also willing to invest in this project yet the unending
political disturbance in Afghanistan from where the proposed pipeline has to pass through
continued to stall this project to be materialized. The continued political disturbances
in Afghanistan scared the investors consortium led by the US company Unicol which has
backed out of its earlier offer.
Boris Shikmurdaov, foreign minister of Turkmenistan who recently
visited Pakistan had a meeting with Petroleum Minister Usman Aminuddin and discussed
matters relating to mutual interest with particular reference to the proposed gas pipeline
Both sides agreed to weed out the hindrances impeding the early
implementation of the project and committed to work closely and to further strengthen
bilateral relations between the two countries.
The proposed massive 1464 kilometer gas pipeline plans to bring 20
billion cubic meters (700 billion cubic feet) of gas from southern Turkmenistan to
The two countries attach great importance to an early commencement of
this project which is pending since the mid 90s. Currently the two countries are focusing
for maintenances of durable peace in Afghanistan. The peace in Afghanistan not only of
vital importance for this gas pipeline project but also important for strengthening
economic ties with other Central Asian States.
The Turkmenistan president, during his visit to Pakistan in March 1995
had signed a memorandum of understanding for the gas pipeline project. The feasibility of
the project was also completed and some foreign companies had shown interest in funding
the project but work on the proposed project could not start.
In October 1997 the two countries had signed a price agreement under
which Turkmenistan had agreed to deliver gas to Pakistan at Multan for minimum $1.65 to
maximum $2.05 per million BTU( British Thermal Unit).