Russian Rostec Wants Higher Tariff for Pakistani Gas Pipeline

Russian Rostec is in talks with Pakistani officials to raise the tariff for the proposed North-South gas pipeline that will bring regasified LNG from southern Pakistan to northern cities such as Lahore, Russian news agency Tass reported September 26.

"The tariff offered by the Pakistani side is not satisfactory for us so far. We will never be able to earn back the expenses we will sustain on that kind of money. We are working to increase the tariff," Rostec CEO Sergey Chemezov said.

In October 2015 in Islamabad, an intergovernmental agreement was signed between the governments of Russia and Pakistan on the construction of the North-South gas pipeline from Karachi to Lahore. The pipeline will have a length of 1,100 km and a capacity of up to 12.3bn m³/yr. It will connect LNG terminals in the ports of Karachi and Gwadar in southern Pakistan with power plants and industrial gas consumers in Lahore in the north of the country.

The Russian company's logo (Rostekh - energy efficiency)

Pakistan’s Economic Coordination Committee (ECC) has agreed the creation of an SPV (Special Purpose Vehicle) in Pakistan, whose responsibilities will include implementing the project in way that meets the parameters of the intergovernmental agreement. The ECC has taken a decision to implement the project on Build, Own, Operate, Transfer terms so that after its commissioning the project company will own and operate the line for 25 years and then transfer it to the Pakistani side.

Last month, Pakistani newspaper The Express Tribune reported that Russia has sought a tolling fee of $1.25/mn Btu for transmitting the imported LNG through the North-South gas pipeline.

Shardul Sharma