AFTER extensive negotiations covering a lot of ground work, Pakistan and Russia on Friday signed an inter-governmental agreement for the construction of the all important gas pipeline from Karachi to Lahore to transfer LNG from the terminal at the port city of Karachi. The $ 2 billion project to be implemented in compliance with BOOT model (Build Own Operate Transfer) will cover 1,100 kms and will be completed by December, 2017 to help meet the burgeoning demand for electricity and gas.
The Pak-Russia agreement is historic as the two countries are cooperating in a Mega project for the first time after the completion of Pakistan Steel Mills in the 1980s and thus taking the economic relationship to a new level. It also reflects thatPakistan is diversifying cooperation with different countries on the basis of merit to meet its critical energy shortages. Whencompleted in three phases, the pipeline would certainly a breakthrough as it will have the capacity to transmit 12.4 billion cubic metres per annum of the imported LNG. Presently Russia’s RT-Global Resources is conducting surveys andengineering work along the pipeline route. The project’s implementation will imply maximum involvement of Russian producers and contractors. RT-Global Resources will create a consortium uniting Russian and foreign investors including Chinese and Pakistani ones as well as potential contractors. The project is also likely to give further boost to economic activity in Pakistan as some of the companies would supply materials while others would benefit from the experience of implementation of such a mega project. However, we would caution that the pipeline project must proceed ahead with pace for completion on schedule and no bureaucratic hurdles should be allowed to come its way. We say so because in the past fascinating agreements of all sorts were signed but their track record is miserable as these were later either shelved or their pace of implementation was slowed down and the cost escalated to manifold.