ISLAMABAD: The Economic Coordination Committee (ECC) of the cabinet on Thursday approved construction of 700km Gwadar-Nawabshah pipeline to transport liquefied natural gas (LNG). The pipeline would also facilitate Iran-Pakistan pipeline project if international sanctions on Tehran go.

The meeting presided over by Finance Minister Ishaq Dar approved the Gwadar-Nawabshah LNG Terminal and Pipeline Project under which a 700km pipeline of 42-inch diameter would be laid along with two compressor stations.

The terminal will have the capacity to handle up to 500 million cubic feet per day (mmcfd) of gas.

Interstate Gas Systems (Pvt) Limited (ISGS) will be authorised to execute the project. The committee also directed the Ministry of Petroleum and Natural Resources to finalise the funding plan, preferably on a government-to-government basis; or build, operate and transfer; or build, own, operate basis.

According to Petroleum Minister Shahid Khaqan Abbasi, the government would lay the pipeline “as an alternate plan” in view of international sanctions working against Iran-Pakistan gas pipeline.

He said Pakistan could face penalties under the bilateral gas agreement beyond Dec 31, 2014 due to failure in implementing the project, but Islamabad had issued a notice of force majeure to Iran because of circumstances beyond Pakistan’s control, like US sanctions against Tehran.

After the completion of Gwadar-to-Nawabshah pipeline, only about 70km of pipeline segment between Gwadar and Iranian border would be left which could be constructed immediately whenever international sanctions are lifted against Tehran.

He said this plan was commercially viable and Japan, Russia and China had taken keen interest to participate in this project.

Informed sources, however, said China seemed to be the strongest contender for the Nawabshah-Gwadar pipeline given the geo-strategic environment and Beijing’s overwhelming role in the development of Gwadar Port and export processing zone.

The ISGS had been directed to complete tendering and agreement signing process within two months so that the pipeline was ready by November 2015.

Cotton support price

The committee also allowed seed-cotton support price for 2014-15 crop at Rs3,000 per 40kg for base grade-III cotton on the recommendation of the Agriculture Policy Institute to benefit the farming community. The Trading Corporation of Pakistan (TCP) will accordingly procure one million bales of cotton at the support price.

The finance minister said the government was aware that the recent floods had badly affected a large part of the agriculture sector.

The ECC also approved with amendment the proposal submitted by the Ministry of industries and Production to determine local manufacturing status of machinery, equipment and other capital goods (Energy Sector) in light of the 2014-15 Finance Bill.

It also decided to facilitate local manufacturers and provide them with a level-playing field.

Accordingly, a working committee would be formed by the Federal Board of Revenue with representation from Ministry of Industries and National Tariff Commission, engineering development board, the Board of Investment and local manufacturers of energy equipment to review whether appropriate incentives could be offered to manufacturers to address their grievances and enhance their competitiveness for increased local and export sales.

Published in Dawn, October 3rd, 2014