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    Sberbank, ChelPipe Close TAPI Finance


The Russian savings bank is backing a loan to a Russian pipelne operator, but the project still has big problems in its way.

by: Dalga Khatinoglu

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Natural Gas & LNG News, Asia/Oceania, Corporate, Import/Export, Investments, Contracts and tenders, Political, TSO, Infrastructure, Pipelines, News By Country, Afghanistan, India, Pakistan, Turkmenistan

Sberbank, ChelPipe Close TAPI Finance

Russian state-owned savings bank Sberbank has agreed to underpin part of the 1,814km Turkmenistan-Afghanistan-Pakistan India pipeline (Tapi), it said April 3.

It guarantees a $219mn loan from the Islamic Development Bank to the Chelyabinsk pipe plant (ChelPipe Group) which won the tender, held by state-run Turkmengas, to supply pipes for the Turkmen section of Tapi.

“To ensure that supplies are made, Sberbank efficiently structured a financial instrument that meets the requirements of both international and Islamic banking, which enabled Sberbank to act as the confirming bank for the export letter of credit,” Russian bank said April 2.

Work on the long-delayed Tapi project has been accelerated in the recent months. The Turkmen section is 214 km, the Afghan section 774 km and the Pakistan section runs 826 km to the border with India. The $10bn project aims to transfer 33bn m³/yr of gas from Turkmenistan’s giant Galkynysh gas field to participating countries by 2020. However, many believe the security situation in Afghanistan could yet derail the project.

Pakistan and Turkmenistan signed a host governmental agreement on the project in March, after Pakistan’s defence ministry approved the route of pipeline, which allows state-owned Inter State Gas Systems (ISGS) to carry out an aerial survey required ahead of launching the civil

The director of Tapi project in Afghanistan, Abdul Rahman Mujahid, announced last October that the initial work on the Afghan section Tapi completed 95%.

Turkmenistan has 85% of the $10bn project cost and the other three countries each have 5%. The Turkmen share is too large for a country that size, given its annual budget in 2019 was set at manat 83.86bn (13.3% less than 2018): that is $24bn based on the official exchange rate but only about $10bn in open market exchange rate.

On the other hand, a civil war is still raging in Afghanistan, where five members of Tapi team were killed in Kandahar province last May. Using LNG imports, Pakistan and India are also able to manage their current and future demand requirements.