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TAPI pipeline: ADB to charge $30 million 'success fee'

The bank was appointed 'Transaction Advisor' by the four nations to the pipeline project in December last year

Press Trust of India  |  New Delhi 

asian development bank

Asian Development Bank (ADB) will charge a 'success fee' of $30 million besides a retainer fee of $50,000 per month for helping build the $7.6 billion Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline project.

ADB was appointed 'Transaction Advisor' by the four nations to the pipeline project in December last year. Its main task towards 1735-km TAPI is helping set up an international consortium, including a leader with experience of constructing and operating transnational pipelines.

For this, ADB had initially demanded 1% of the cost as 'success fee' upon a pipeline consortium being set up and its leader assumes responsibility, sources privy to the development said.

The four nations, which are to bear these expenses, opposed it and brought the fee down to $30 million (Rs 180 crore).

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 'Peace Pipeline' for the troubled South-Asia region, the US-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 TAPI 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 while several financial institutions have expressed interest in financing the project, no pipeline company has so far come forward to take up the project.

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 metres a day (mmscmd) gas for a 30-year period and will be operational in 2018.

If the consortium is put in place this year, the first gas can flow in 2017 or 2018, sources said.

India and Pakistan would get 38 mmscmd each, while the remaining 14 mmscmd will be supplied to Afghanistan.

TAPI will carry gas from Turkmenistan's Galkynysh field, better known by its previous name South Yoiotan Osman that holds gas reserves of 16 trillion cubic feet. From the field, the pipeline will run to Herat and Kandahar province of Afghanistan, before entering Pakistan. In Pakistan, it will reach Multan via Quetta before ending at Fazilka (Punjab) in India.

First Published: Tue, July 15 2014. 17:12 IST
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