Russia Seeks $1.25 per unit to Transport LNG Through Pakistan's North-South Gas Pipeline

Russia has sought a tolling fee of $1.25 per unit for transmitting the imported LNG through the North-South gas pipeline, reported The Express Tribune, a Pakistani newspaper.

PT Global Resources, a subsidiary of Rostec, has commenced discussions with Pakistani side regarding commercial aspects of the North-South gas pipeline construction project in the South Asian nation. In October 2015 in Islamabad, an intergovernmental agreement was signed between the governments of Russia and Pakistan on the construction of the North-South gas pipeline from Karachi to Lahore. The pipeline will have a length of 1,100 km and a capacity of up to 12.3 bcm a year. It will connect LNG terminals in the ports of Karachi and Gwadar in southern Pakistan with power plants and industrial gas consumers in Lahore in the north of the country.

The fee was proposed during negotiations between the two countries in Islamabad, officials have told the newspaper.

Pakistan’s Economic Coordination Committee (ECC) has agreed the creation of an SPV (Special Purpose Vehicle) in Pakistan, the responsibilities of which will include responsibility for implementing the project, that meets the parameters of the intergovernmental agreement. The ECC has taken a decision to implement the project on BOOT (Build, Own, Operate, Transfer) contract terms, under which the constructed gas pipeline after its commissioning will be owned and operated by the project company for 25 years and then transferred over to the Pakistani side.

Officials said the SPV will also be listed on the Pakistan stock market by floating its shares in order to generate funds for the project.