Financing of IP gas pipeline in doldrums

After being informed that the interest of selected consortium led by Industrial and Commercial Bank of China (ICBC) and Habib Bank of Pakistan (HBL) had waned away from the Iran Pakistan gas pipeline project after harsh statements from United States, the Economic Coordination Committee formed a committee to sort out details of four alternate proposals for financing the project within next three days.
The committee which met under the chairmanship of Finance Minister Dr Abdul Hafeez Shaikh formed a committee comprising Minister for Petroleum, Minister for Water and Power, Governor SBP, Secretaries Economic Affairs Division, Petroleum, Finance and Deputy Chairman Planning Commission to work further on each option and give its recommendations to ECC.
Earlier, the committee discussed at length different options proposed by Ministry of Petroleum for financial arrangements for IP project, as the Petroleum Ministry informed that the existing parties of ICBC and HBL were showing less interest in the project.
The options proposed for financial arrangements included funding through gas infrastructure development cess, contract execution with second consortium, government to government basis arrangements with China or Russia to fund the complete project or arrangement with Iran.
The committee allowed sale of 450,000 tons of wheat to the local millers. Ministry of National Food Security and Research had sought sale of one million tons of surplus wheat to the local millers.
PASSCO Managing Director argued that retaining the surplus wheat would create burden on government in the shape of incidental charges. It discussed the possibility of export of wheat to Iran on barter trade arrangement. It decided to allow sale of 450,000 tons of wheat to private parties from the surplus one million tons. It decided barter trade arrangements with Iran would be explored with identification of items, which may be procured from Iran in return. It constituted a committee of Minister for Water and Power, Minister for Food Security, Deputy Chairman Planning Commission and Secretaries from Commerce, Finance and Food Security to look further into the matter and give its recommendations to the committee.
ECC approved a grant of Rs 6.1 billion to Ministry of Railways for repair of 96 locomotives. The loan will be given in advance to Pakistan Railways Advisory and Consultancy Services Limited, which is a subsidiary of Pakistan Railways whose shares are wholly owned by the government. It formed a committee comprising Minister for Water and Power, DCPC, Secretary Finance and Secretary Water and Power to look into the matter of delay in payments by the power purchasers to IPPs under Power Policy 2002.
The committee decided to exempt levy of GST on the fixed charges of the hydro electric power which will lower the prices of the WAPDA problem. It also approved fixing the price of imported urea at Rs 1,600 from Rs 1,300 per 50 kg bag.
ECC also constituted a committee to look into the implications of the construction of Economic Zones over Export Processing. It may be recalled that China Pakistan Economic Zones have already been approved by the ECC. The Economic Zones are beside the construction of the Pakistan China Economic Zones (CPEZ).