World Bank to help develop private gas pipelines in Pakistan

The World Bank will assist Pakistan in developing private sector gas pipelines through multinational energy firms and international financiers to link its power and industrial sector with the untapped gas reserves. The World Bank (IBRD) sources told that a four-member energy mission of the bank would visit Pakistan for 10 days to hold discussions with the local gas companies, international oil companies, power utilities and financial institutions.
The mission, comprising Marc Heitner, Waqar Haider, Rashid Aziz and Ralph G. Schwimmbeck, will look into measures to improve the pipelines in private sector and to develop the necessary policy framework including issues relating to Gas Regulatory Authority (GRA).
In a letter to secretary petroleum, Tjaarda P. Storm van Leeuwen, the head of IBRD's energy sector unit for South Asia appreciated Pakistan's measures during the last 18 months in the oil and gas sector. He hoped that "the remaining agenda will be implemented over the next three years or so as announced at the Pakistan Development Forum" meeting last month in Islamabad.

The bank noted that infrastructure bottlenecks, particularly gas pipelines prevent Pakistan from taking full advantage of its recent gas discoveries and to substitute for fuel oil, which is imported at a relatively high cost for use in thermal power plants.
"While it will take some more time to restructure and privatise Sui Northern Gas Pipelines (SNGPL) and Sui Southern Gas Company (SSGC), one way of accelerating development is to introduce the concept of private gas pipelines into Pakistan, preferably in such a way that the government is not bearing the commercial risks", the letter said.
The ministry of petroleum and natural resources had already evinced great interest in possible private sector investments in gas pipelines and related infrastructure and requested the bank for assistance in developing the necessary policy framework. Sources said the mission would suggest measures to optimally introduce private pipelines and policy changes.
Besides ministers and officials, the mission will hold talks with heads of all local and international oil and gas companies operating in Pakistan, chairman of Wapda Lt-Gen Zulfiqar Ali Khan and chiefs of IPPs. Heads of Citibank Pakistan, J.P. Morgan, ABN-Amro will also be involved in these deliberations.

Pakistan has discovered around 6 to 8 tcf of natural gas reserves in the recent three years. A couple of new gas fields have already been developed but could not be linked to the gas transmission system due to lack of infrastructure facilities.
The government has recently approved around Rs 20 bn development programme, to be implemented by the SNGPL and the SSGC, but most of the power plants are still running on the high cost furnace oil as independent gas pipelines from gas fields to thermal power stations could not be developed. Pakistan's fuel-based annual import bill currently stands in the region of $ 2.5 to $ 3 bn, of which around $ 800 mm worth of furnace oil is consumed by thermal power stations.