Strategic retreat: NBP, OGDC burst the IP gas pipeline bubble

[JAISWAL]

ISLAMABAD: The government has faced a major set back in the Iran-Pakistan (IP) gas pipeline project as the country's largest bank National Bank of Pakistan and the country's largest exploration company Oil and Gas Development Company Limited on Thursday refused to finance it due to possible sanctions by the US.

Sources told The Express Tribune that a representative of National Bank of Pakistan (NBP) informed the steering committee on gas import projects on Thursday that it had branches in different countries of the world and therefore it feared that these branches could be closed due to US sanction against Iran.

Oil and Gas Development Company Limited (OGDCL) already cash constrained due to the circular debt said that its US investors, having a 1.6% share in the company, had threatened to retreat if the company financed the IP gas pipeline project.

The project, first proposed in the 1990s, has faced numerous delays. The United States last year said that Pakistan should be wary of committing to the proposed Iran-Pakistan natural gas pipeline.
The spiralling circular debt is another reason, another sources said. The Government Holding Company, however, is still committed to finance $60 million for the project.

TAPI project one step closer:

The steering Committee that met on Thursday also gave a go-ahead to sign the Gas Sales Purchase Agreement (GSPA) with Turkmenistan for Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline project at 70 per cent parity of Brent oil. Pakistan earlier signed GSPA with Iran at gas price equal to 78 per cent of crude oil under Iran-Pakistan (IP) gas pipeline project. The TAPI gas pipeline project is valued at more than $3 billion.

Petroleum Minister Dr Asim Hussain confirmed to The Express Tribune that the steering committee had approved to hire a bank consortium of Pakistan and China including Habib Bank and Industrial and Commercial Bank of China Limited.The meeting informed that the government would generate Rs34 billion per year through charging Gas Development Cess (GDC) on natural gas to finance gas import projects, said an official.

The petroleum ministry also informed Prime Minister Yousaf Raza Gilani on Thursday during a meeting that the steering committee had approved the financial consultancy for Pakistan-Iran Gas Pipeline, which was a major step forward as far as the project was concerned.


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Strategic retreat: NBP, OGDC burst the IP gas pipeline bubble – The Express Tribune

 

[thakur_ritesh]

reason why india limited its interest in this project long back.

reason why till the time there is no regime change in iran even the oman-iran-india gas pipeline will not see the light of the day.

reason why india is looking at new opportunities emerging out of israel, because it is assumed the last bit of sanctions will be where there will be a possible blanket ban on any sort of oil or gas export by iran to the outside world, so by looking for alternate sources we are trying to limit any damage in supplies that might happen in future and also limit over dependence on GCC oil and gas.

 

[Ray]

The Dark Knight strikes Again!

 

[sesha_maruthi27]

Hell, the very bad economy of pakistan will dip further creating worse and worse situations.

Hey guys, one thing I can't understand that even though their economy is bad the petrol prices in pakistan is around 23-25 rupees only. How come this is a possibility ?

Expert advice, comments and suggestion is welcomed........

 

[thakur_ritesh]

Hell, the very bad economy of pakistan will dip further creating worse and worse situations.

Hey guys, one thing I can't understand that even though their economy is bad the petrol prices in pakistan is around 23-25 rupees only. How come this is a possibility ?

Expert advice, comments and suggestion is welcomed........

where did you get the petrol prices for pakistan from?

here are the figures: Petrol Prices in Pakistan - Current Fuel Petroleum & Diesel Price in Pakistan

 

[sesha_maruthi27]

It may not be 23-25 rupees but see this...........

Petrol costlier in India than in Pakistan, Bangladesh, Sri Lanka, US
Published: Tuesday, Nov 29, 2011, 19:34 IST
Place: New Delhi | Agency: IANS

Petrol costs more in India when compared to neighbouring countries like Pakistan, Bangladesh, Sri Lanka and is even dearer than what is charged in the US, the petroleum ministry said in a written reply in the Rajya Sabha Tuesday.

According to the reply by Minister of State for Petroleum RPN Singh, one litre of petrol costs Rs48.64 in Pakistan, Rs52.42 in Bangladesh and Rs61.38 in Sri Lanka. In India, the fuel costs Rs66.42, despite oil marketing companies reducing prices Nov 16.

Even in the US, petrol costs much less -- at Rs44.88 a litre.

However, the fuel costs much more in the UK, with a litre of petrol going for Rs104.60.

The government has always been criticised for the skewed tax structure on petrol and diesel. The minister, however, said the central government's revenue does not increase with increase in the price of these products as the excise duties were specific.

The excise duties on petrol are currently at Rs14.78 per litre, and on diesel Rs2.06 per litre, said Singh.

After the last downward revision of Rs2.22, petrol now retails at Rs66.42 in Delhi. However, diesel costs much less at Rs40.91 in the national capital.

But states levy a host of other taxes such as sales tax, value added tax (VAT) and entry tax.

"Whenever there is an increase in retail selling prices of these petroleum products, the state governments' sales tax/VAT collection goes up correspondingly," Singh said.

Illustrating the states' increase in revenue due to hike in fuel prices, the minister said for every Re1 increase in petrol price per litre, the Delhi government raked in 20 paise as the VAT rate in Delhi was 20 percent.

Similarly, for every Re1 increase in price of a litre of diesel, the Delhi government raked in 12.5 paise in taxes as the VAT rate for the fuel was 12.5 percent.

Petrol costlier in India than in Pakistan, Bangladesh, Sri Lanka, US - Money - DNA

 

[sesha_maruthi27]

Price per liter of unleaded gasoline, fall 2011.

World petrol prices, compare gas prices, diesel prices| MyTravelCost.com

Here it says that in pakistan it is 90 and in India it is 121. (price in U.S.D.)

 

[thakur_ritesh]

For the benefit of the discussion when you are referring to prices, be clear in what currency is it being mentioned. The prices have been converted to inr and comparison drawn.

Anyways, when converted to inr, the present day petrol rate in Pakistan converts to rs52 a liter.

Now look a little further at the link I provided (http://pakbiz.com/finance/petroleumprices.html). The price of diesel in Pakistan when converted to inr, the pricing varies from rs51.3-58.41, now compare the per liter diesel price in India. Diesel sells cheaper in India.

Now look at the price of kerosene. The per liter price in Pakistan when converted to inr is rs52.75. Make a comparison with the prevailing rates in India. Kerosene sells cheaper in India.

Pakistan isn't subsidizing other petro products through petrol, India is.

Why is it happening?

Diesel and kerosene prices in India have heavy political weightage, more so in case of kerosene, so we see diesel price is closer to actuals than kerosene. Interestingly petrol in India is not related to the vote bank politics and so the politicians subsidize other petro products through it.

How do they do it? By taxing the byproducts, and it is done at both union and state level.

 

[agentperry]

pakistan is still run by AAA- somethings dont change

 

[pankaj nema]

Pakistan HAS neither the money to pay for the construction of the pipeline Nor any money for the Gas