The ADB had initially demanded 1 per cent of the cost as success fee for helping set up a pipeline consortium and selecting a leader but the four nations, which are to bear these expenses, opposed it
Asian Development Bank (ADB) would charge a ‘success fee’ of $30 million and a retainer fee of $50,000 per month for helping build the $7.6 billion Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline project.
The ADB was appointed transaction adviser by the four nations to the pipeline project in December 2013. Its main task towards the 1,735 kilometers long TAPI pipeline is helping to set up an international consortium, including a leader with the experience of constructing and operating transnational pipelines.
Indian media quoted sources privy to the development as saying that the ADB had initially demanded 1 percent of the cost as success fee for helping set up a pipeline consortium and selecting a leader.
The four nations, which are to bear these expenses, opposed it and brought the fee down to $30 million. Other than the success fee, ADB will also get a retainer fee of $50,000 every month till such time that a consortium is put and its leader selected.
Billed as the peace pipeline for the troubled South-Asia region, the United States backed TAPI gas pipeline has not yet taken off as no international pipeline company is willing to implement it unless Turkmenistan gives a share in the gas fields.
The four nations are looking for an international reputed firm with experience in building and operating cross-country pipeline to lead the pipeline construction consortium that may include national oil companies like GAIL India, which otherwise neither have the financial muscle nor experience of cross-country line.
Sources said that while several financial institutions have expressed interest in financing the project, no pipeline company has so far come forward to take up the project.
The ADB will help the four nations put up a credible consortium that would build and operate the line passing through volatile Afghanistan and Pakistan territories. The TAPI pipeline would originate from Turkmenistan and pass through Afghanistan and Pakistan before entering India.
It will have a capacity to carry 90 million standard cubic meters gas a day for a 30-year period and will be operational in 2018.