TAPI on fast track as Pak-Iran gas project in doldrums

The PML-N Government in Pakistan is moving fast on the Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline project, and the ECC is expected to give its approval for the first legal service agreement as early as Wednesday.

According to The News, an official summary will be tabled before the ECC for approval.

The meeting today will consider approval of the Transaction Advisory Service Agreement (TASA) for the TAPI gas pipeline project.

Under TASA, there will be a monthly retainer fee of USD 50,000. After the formation of TAPI Ltd and execution of Novation Agreement, all subsequent retainers fee shall be paid in advance equivalent to six months retainer fee in lump sum.

A success fee of USD 30 million shall be payable by the consortium leader to the Transaction Adviser on the date on which the consortium leader assumes responsibility.

The summary states that the Turkmenistan-Afghanistan and Turkmenistan-India bilateral Gas Sales and Purchase Agreement (GSPA) were signed on May 23, 2012 followed by Turkmenistan-Afghanistan GSPA which was finally signed on July 9, 2013.

In accordance with the Gas Pipeline Framework Agreement (GPFA) signed on December 11, 2010 TAPI parties agreed to form a special purpose vehicle (SPV) as TAPI Ltd with four designated gas companies from the TAPI countries and proceeded with this vehicle to undertake certain pre-project activities, including the selection of the consortium leader.

TAPI parties have also agreed to appoint Asian Development Bank as Transaction Advisor for the project.

The sub-committee of the ECC had approved the establishment of TAPI Ltd by the four TAPI companies with equity injection into the company to the tune of USD 5-10 million and advised that gas infrastructure cess should be utilised for the required equity injection.