NEW DELHI (TIP): Aiming to speedup implementation of the ambitiousTurkmenistan-Afghanistan-Pakistan-India (TAPI) natural gas pipeline, theUnion Cabinet on February 7approved the setting up of a specialpurpose vehicle to build the 1,680-kmpipeline that terminates at Fazilka inPunjab.Tapi Ltd, the Dubai-based SPV,would undertake the feasibility studyand design work for the pipeline, huntfor a consortium leader to build the $9 billion project, operate it, arrangefor finances and work to ensure safedelivery of gas.
At the Cabinet meeting chaired byPrime Minister Manmohan Singh, theSPV was given the go-ahead andpermitted Gas Authority of IndiaLimited (GAIL) to join it as India’srepresentative.It was announced officially thatTAPI Ltd initially requires $ 20million contribution, with each of thefour participating countries funding $5 million. GAIL being a NavratnaCompany, is empowered to make aninvestment of this level for India.TAPI Ltd is being formed for theproject as multinational corporationsare unwilling to participate in theproject without a share inTurkmenistan’s rich gas fields. Theproject had got stuck since India wasnot agreeable to the suggestion by theother three that each country buildthe pipeline on its own and operate it.
At a meeting of the steeringcommittee last September,Turkmenistan suggested formation ofan SPV to put the project after allparties reaffirmed their commitmentand intention to fast track it since italso a symbol of regional cooperation.India joined the Turkmenistan-Afghanistan-Pakistan (TAP) Projectin April, 2008, two years after theUnion Cabinet gave its ‘in principle’approval. Thereafter, the name of theproject stood amended toTurkmenistan-Afghanistan-Pakistan-India (TAPI) Gas Pipeline Project.The pipeline originates and runs144 km in Turkmenistan, passes 735km through Afghanistan and travels800 km in Pakistan en route India.
Last May, the four countries signedthe gas sale and purchase agreement.The 1,680 km pipeline will carry 90million cubic metres a day (mmcmd)of gas and is scheduled to becomeoperational in 2018 and supply gasover a 30-year period. India andPakistan will get 38 mmcmd each,while the remaining 14 mmcmd willbe supplied to Afghanistan. TAPI willcarry gas from Turkmenistan’sGalkynysh field, known earlier asSouth Yoiotan Osman that is knownto hold gas reserves of 16 trillioncubic feet.Turkmenistan, which holds morethan 4 per cent of the world’s naturalgas reserves, signed pacts last May tosell gas last to India and Pakistanthrough the 1,680-km pipeline at theCaspian Sea resort of Avaza inTurkmenistan.
Role of the SPV
Undertake a feasibility study anddesign work for the pipelineHunt for a consortium leader to buildthe $9 billion projectOperate it and arrange for financesOperational in 2018The project is scheduled to becomeoperational in 2018 and supply gasover a 30-year periodIt will carry 90 million cubic metres aday (mmcmd) of gasIndia and Pakistan will get 38mmcmd each, while the remaining 14mmcmd will be supplied toAfghanistan