TAPI project moves closer to securing funding

19 October 2016, Week 41, Issue 903

Participants in the Turkmenistan-Afghanistan-Pakistan-India (TAPI) natural gas pipeline are reportedly moving closer to wrapping up financing arrangements for the project, which is likely to carry a price tag of US$10 billion.

Mobin Saulat, the head of Pakistan’s state-owned Inter State Gas Systems (ISGS), said last week that the four transit states had already committed to spending US$4 billion of their own money on TAPI. They are also preparing to present the scheme to investors next month in the hope of attracting additional funding, he told Reuters.

“There will be roadshows soon in all the major financial hubs,” Saulat said. He did not say how much the transit states hoped to raise in this manner, but he did express optimism about the campaign’s success. “The project’s planned commissioning is 2020, and I think we are very much on target,” he remarked.

The ISGS chief did not name any potential investors. But he did state that the Asian Development Bank (ADB) had indicated interest in making funds available. There has also been “huge interest shown and commitments made from some of the major suppliers who said they would be able to get supplier credit,” he added.

Meanwhile, he said, TAPI is also making progress on other fronts. The transit states are in the “final stages” of choosing a project management consultant, he said, and Turkmenistan’s state gas concern Turkmengaz is nearing a deal for the supply of compressors that will be installed along the pipeline.

Saulat was speaking around the same time that Turkmenistan’s government announced that it had borrowed US$700 million from the Islamic Development Bank to help fund the TAPI project. Ashgabat will use the funds to cover the costs of construction and equipment purchases, according to Turkmen state news agencies.

When finished, TAPI will follow a 1,814-km route connecting Central Asia and South Asia. It will carry 33 bcm per year of gas from Galkynysh, Turkmenistan’s largest hydrocarbon deposit. India and Pakistan will each import nearly 14 bcm per year via this pipeline, and the remaining volumes will go to Afghanistan.

The project was first mooted more than 20 years but has progressed slowly, largely owing to concerns about the safety and security of gas shipments through Afghanistan.

Joseph Murphy

Edited by

Joseph Murphy

Editor

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