Pakistan Approves Russia Funded Gas Pipeline Project

Pakistani government on Monday approved the construction of Russian funded North-South gas pipeline, reported The Express Tribune, a local newspaper.

Economic Coordination Committee (ECC) of the cabinet also sought legal advice for setting up a special purpose vehicle (SPV) for project execution to deflect adverse impact of sanctions against the Russian company that would build the pipeline.

The pipeline will start from Nawabshah and end at Kasur, near Lahore. It will be owned by the Russian firm for 25 years.

In October 2015, Moscow and Islamabad signed an intergovernmental agreement on the construction of the pipeline. In December 2014, Rostec announced that its subsidiary, RT Global Resources, would be building oil and LNG pipelines and terminals in Pakistan with total cost of about $3 billion.

However, the company is on the sanctions list – a concern that Pakistan raised with Russia in January this year during a delegation-level visit to Moscow, The Express Tribune reported.

Russia has proposed a Pakistan registered SPV that would address the issue of sanctions. However, the ECC has directed the law ministry to give legal opinion within a week whether the proposed SPV is covered under the Government-to-Government cooperation agreement that both the countries signed in October last year. In case, the SPV is not covered, the oil ministry will again present the case to the ECC for its consideration.

According to the newspaper, the ECC also allowed Inter-State Gas System (ISGS) to give guarantees to Russia on behalf of Pakistan. Russia has sought guarantees that Pakistan will buy a minimum of 1.2 billion cubic feet gas per day.