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    Pakistan Extends Tax Break to Gas Pipe Projects

Summary

Pakistani government has offered various tax exemption to transnational gas pipeline projects like Iran-Pakistan and Tapi pipeline projects.

by: Shardul Sharma

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Pakistan Extends Tax Break to Gas Pipe Projects

Pakistani has extended income tax, sales tax and customs duty exemption to transnational gas pipeline projects such as the Iran-Pakistan and Turkmenistan-Afghanistan-Pakistan-India (Tapi) pipeline projects, The Nation reported June 11.

The exemption granted by the Economic Co-ordination Committee (ECC) of the cabinet would also be available to any other project declared as large diameter gas pipeline project by the ministry of energy petroleum division. The ECC granted these exemptions during a meeting held May 30, the newspaper reported.

The long-delayed Tapi gas pipeline has finally started making progress on ground, despite continuing acts of terrorism that many believe make the project  unrealistic. Work on the Afghan section of the Tapi pipeline started in February with the groundbreaking ceremony taking place in Herat city. The ceremony was attended by Afghan and Turkmen presidents, Ashraf Ghani and Gurbanguly Berdymukhammedov, along with Pakistan's prime minister Shahid Khaqan Abbasi and India's junior foreign affairs minister MJ Akbar.

Turkmenistan, which will supply gas to Afghanistan, Pakistan and India with an 85% stake in the $10bn project, started work on its territory in 2015. The pipeline is projected to transfer 33bn m³/yr of gas from Turkmenistan’s giant Galkynysh gas field to participating countries by 2020, a year later than the initial plan. The total length of Tapi will be 1,814 km, of which 214 km run through Turkmenistan; 774 km through Afghanistan; and 826 km through Pakistan to the border with India.

The Iran-Pakistan gas pipeline project continues to remain in limbo due to US sanctions on Iran. In February, Iran's oil minister Bijan Zanganeh said Pakistan had deferred Iranian gas imports for so long that the Tehran is considering referring Islamabad to the international arbitration court. According to the agreement signed between the two nations, Pakistan should have started taking 22mn m³/d of Iranian gas imports in January 2015, the line having been completed the month before.