Presence of ADB will work as a great confidence builder for other financiers

     From SHAMIM AHMED RIZVI, Islamabad
Mar 03 - 09, 2003.

The steering committee on Turkmenistan-Afghanistan-Pakistan (TAP) gas-pipe, in Islamabad last week, signed a protocol, which provided far a time-saving schedule for speedy implementation of US dollars 3.5 billion project. It also endorsed proposal to invite India to participate in the project.

Indian participation, it was felt will make the venture commercially more viable besides meeting Indian rising demand for gas. A formal request to this effect will be made jointly by TAP as well as the Asian Development Bank (ADB) before the next meeting in April in ADB Headquarters in Manila. The project feasibility study is being financed by the ADB.

Petroleum and Natural Resources Minister Naurez Shakoor led Pakistan's team during the meeting, which included Petroleum Secretary Abdullah Yousuf, Director General, Gas Naeem Malik, Director General, Pakistan Holdings, Khurshid Anwar, Managing Director, Sui Southern Gas Company Limited, Rashid Lone, and other senior officials of the ministry.

Yolly Gurbanmuradov, Deputy Prime Minister, and Juma Muhammad Mohammadi, Minister for Industries and Mining, headed Turkmenistan and Afghanistan delegations respectively. The ADB team was led by Marshuk Ali Shah, mission resident chief.

Naurez, who was accompanied by deputy Prime Minister, Turkmenistan, and Afghan Minister for Mines and Industries told newsmen after the meeting that since the viability of the project depends on the extension of the pipeline to India, it was unanimously decided by the committee that the document of the TAP would be forward to the Indian government with an invitation to join the project prior to Manila meeting.

Naurez said that the steering committee reviewed that updated progress on the project and express satisfaction on all the related issues such as route, construction and operation. The matter relating to formation of consortium comprising international oil and gas companies banks, governments' guarantees also came under discussion. The committee also discussed various risks involved and its mitigation requirements.

It approved pre-qualification document for formation of consortium for which the first draft would be issued to oil and gas companies by April 2003, which would be asked to submit their qualifications by July 31. The short-listing of the parties would be made by August this year, ahead of scheduled by two months.

The meeting assigned the task of completing study on market demand by March 15. The ADB would hire services of the international consultants for feasibility study of the project to be completed before June 30.

The TAP Gas Pipeline, the long dormant project that hopes to pump Turkmen natural gas to markets in South Asia, is finally poised to step off the drawing board. Fast paced development during last 6 months proved that Turkmenistan, Afghanistan and Pakistan are determined to make this pipeline happen against all odds.

On May 30, 2002, heads of Pakistan, Turkmenistan and Afghanistan signed a tripartite accord in Islamabad to revive the 'reluctant pipeline' and formed a high-level committee to oversee the progress of phase one of the project. Phase one includes identification of financers, evaluation of potential markets, determination of principles to form the consortium which will build, operate and own the pipeline and selection of consultant to oversee the project. The committee, comprising Pakistani Minister of Petroleum and Natural Resources, Juma Muhammadi, Afghan Minister of Mines and Industry and Yolly Gurbanmuradov, Turkmen Deputy Minister responsible for oil and gas, met in Ashgabat on July 9-10 2002 to compare notes and formulate future strategy for implementation of the project.

Feasibility study of the project according to experts, could cost somewhere between US $ 3.5 million. The fact that a conservative financial institute like ADB came forward to foot the bill of study, speaks volumes not only about economic viability of TAP but also suggests that time may be ripe for looking a practical sides of the project. To leave no doubts about commitment of ADB toward the project ADB's principal economist, Rajiv Kumar said in the concluding session of the meeting on July 10, "Commercial interest is not the driving force for ADB to participate in this project. We are participating in this project to share and implement the vision, which the three heads of state Pakistan, Afghanistan and Turkmenistan have shown by signing the trilateral agreement in their summit meeting in Islamabad. Regional cooperation is a very high priority mandate of ADB. We will do our best to make this vision come through and to implement this historic project which will bring peace, prosperity and stability in the region".

Although ADB cannot be expected to finance the entire project which may come to hefty US $ 3.4 billion it is an undeniable fact that presence of ADB will work as a great confidence builder for other financiers. This solves one major worry of the planners of the project.