Undersea pipeline: $10 bn Russian investment to benefit Pakistan

Undersea pipeline: $10 bn Russian investment to benefit Pakistan

ISLAMABAD: Russian company Gazprom is to lay down a $10 billion undersea gas pipeline not specifically for Pakistan but for the region that initially will be laid down from the Persian Gulf up to India touching Pakistani waters and Bangladesh’s coastal areas.

The News

‘’So the impression that building a $10 billion undersea gas pipeline is investment for Pakistan is wrong, as it is for other regional countries as well,’’ a top official at the Petroleum Division confirmed to The News.

Pakistan and India have already signed MoUs and agreements with Russia separately for the project under which both countries would get gas from the undersea pipeline through the spur pipelines.

However, the three countries, Pakistan, India and Bangladesh, will benefit from the $10 billion Russian investment as buyer countries. Managing Director Inter-State Gas System Mobin Saulat also confirmed that the undersea pipeline would be laid down with an estimated investment of $10 for the regional countries. However, in the same breath he said, “Since the undersea pipeline will provide gas up to 1bcfd, so it is investment for Pakistan too.’’

And more importantly, Pakistan will also get transit fee in dollar terms for the undersea pipeline that is to pass through Pakistan’s sea territory. He also said Russia-Pakistan economic corridor will also be set up and Russia will also invest in fiber optic link, roads and power projects as ancillary facilities.

Saulat said Pakistan will take the gas up to 1bcf per day when the said pipeline will come on stream with massive rollover impact on economy. Russia is already engaged with Pakistan on North South Gas Pipeline, which will cost $2-2.5 billion. However, Gazprom has also shown interest in building gas storages in Pakistan with investment of $400-500 million.

Russia is also interested in investing in exploration and production activities in Pakistan and to this effect Gazprom is currently engaged with the top management of OGDCL.

However, under the agreement, another top Petroleum Division official said Gazprom Company from gas deposits in Iran and in other Middle East countries owned by Russia will ensure gas sourcing in the pipeline for the said buyer countries. The buyer countries under separate agreements with the said Russian company will have gas intakes from the said pipeline.

The official said Pakistan will share its credible data with Russian company about the demand of gas with future projections in next one decade keeping in view existing pricing structure, and regulatory and taxation regimes. The data for demand would be worked out keeping view the renewable power policy and future LNG terminal being installed by private companies.

‘’The same data India will provide to Russian company too.’’ After having the required data from Pakistan and India, the Russian company will ink commercial agreements with buyer countries. Based on data from both the countries, Gazprom will carry out the feasibility and the whole process staring from sharing the data to completion of feasibility report will be finished in one year time and if the project is found feasible, then the pipeline will be laid down undersea in 3-4 years. The official said under TAPI gas line project, Pakistan will be having 1.3bcf per day.

To a question, the official said that Pakistan had the option to build spur pipeline to connect the undersea pipeline and the spur pipeline will be connected to S-N pipeline. Russia may build spur pipeline also and connect to S-N pipeline which is also to be constructed by Russian company.
source: The News

Reconstruction of the Karakoram Highway

Reconstruction of the Karakoram Highway

As part of the China–Pakistan Economic Corridor, reconstruction and upgrade works are underway on the 887-kilometre-long (551 mi) National Highway 35 (N-35), which forms the Pakistani portion of the Karakoram Highway.

Route description

The KKH spans the 887-kilometre-long (551 mi) distance between the China–Pakistan border and the town of Hasan Abdal. At Burhan Interchange near Hasan Abdal, the existing M1 motorway will intersect the N-35 at the Shah Maqsood Interchange. From there, access onwards to Islamabad and Lahore continues as part of the existing M1 and M2 motorways. Hasan Abdal will also be at intersection of the Eastern Alignment, and Western Alignment.
E-35 Expressway between Hasan Abdal and Havelian




Upgrades to the 487-kilometre-long (303 mi) section between Hasan Abdal and Raikot of the Karakoram Highway are officially referred to in Pakistan as the Karakoram Highway Phase 2 project. At the southern end of the N-35, works are already underway to construct a 59-kilometre-long (37 mi), six-lane controlled-access highway between Hasan Abdal and Havelian which upon completion will be officially referred to as the E-35 expressway, or Hazara Motorway.
Havelian to Shinkiari




North of Havelian, the next 66 kilometres (41 mi) of road will be upgraded to a four-lane dual carriageway between Havelian and Shinkiari. Groundbreaking on this portion commenced in April 2016.
Shinkiari to Thakot




The entire 354 kilometres (220 mi) of roadway north of Shinkiari and ending in Raikot, near Chilas will be constructed as a two-lane highway. Construction on the first section between Shinkiari and Thakot commenced in April 2016 jointly with construction of the Havelian to Shinkiari four-lane dual carriageway further south. Construction on both these sections is expected to be completed with 42 months at a cost of approximately $1.26 billion with 90% of funding to come from China's EXIM bank in the form of low interest rate concessional loans.
Thakot to Raikot


Between Thakot and Raikot spans an area in which the government of Pakistan is currently either planning or actively constructing several hydropower projects, most notably the Diamer-Bhasha Damand Dasu Dam. Sections of the N-35 around these projects will be completely rebuilt in tandem with dam construction In the interim, this section of the N-35 is currently being upgraded from its current state until dam construction commences in full force at a later date. Improvement projects on this section are expected to be completed by January 2017 at a cost of approximately $72 million.


In Dec 2017, China suspended funding for portion of Karakorum Highway (KKH) from Raikot to Thakot on allegations of corruptions in the project.
Raikot to the Chinese border




The next 335 kilometres (208 mi) of roadway connect Raikot to the China-Pakistan border. Reconstruction works on this section of roadway preceded the CPEC, and were initiated after severe damage to roadways in the area following the 2010 Pakistan floods. Most of this section of roadway was completed in September 2012 at a cost of $510 million, and was severely dilapidated even prior to the 2010 flooding.
China-Pakistan Friendship Tunnels




In addition to flooding, a large earthquake rocked the region nearest to the China-Pakistan border in 2010, triggering massive landslides which dammed the Hunza River, and resulted in the formation of the Attabad Lake. Portions of the N-35 were submerged in the lake, forcing all vehicular traffic onto barges to traverse the new reservoir. Construction on a 24-kilometre (15 mi) series of bridges and tunnels to Attabad Lake began in 2012 and required 36 months for completion. The bypass consists of two large bridges, 78 culverts and five kilometres (3.1 mi) worth of tunnels that were inaugurated for public use on 14 September 2015 at a cost of $275 million.
Gilgit to Skardu




The 175-kilometre (109 mi) road between Gilgit and Skardu will be upgraded to a four-lane road at a cost of $475 million to provide direct access to Skardu from the N-35.
Cost and Financing


As part of CPEC, approximately $11 billion worth of infrastructure projects being developed by the Pakistani government will be financed by concessionary loans, with composite interest rates of 1.6%, after Pakistan successfully lobbied the Chinese government to reduce interest rates from an initial 3%. The concessional loans are subsidised by the government of China, and are to be dispersed by the Exim Bank of China and the China Development Bank. For comparison, loans for previous Pakistani infrastructure projects financed by the World Bank carried an interest rate between 5% and 8.5%, while interest rates on market loans approach 12%.


The China Development Bank will finance the $920 million towards the cost of reconstruction of the 487-kilometre (303 mi) portion of the Karakoram Highway between Hasan Abdal and Raikot.


An addition $1.26 billion will be lent by the China Exim Bank for the construction of the Havelian to Thakot portion of this stretch of roadway, to be dispersed as low-interest rate concessional loans.


Construction works on the China-Pakistan Friendship Tunnels can be traced to 2013, when China began construction on a 24-kilometre (15 mi) bypass of Attabad Lake with a combination of 5 km worth of tunnels, two large bridges, and 78 small bridges to bypass the lake which had been formed after a 2010 earthquake triggered massive landslides. The resulting landslides cut off both the Indus River and Karakoram Highway resulting in the formation of the reservoir. Prior to completion of the bypass, all vehicular traffic had to be loaded onto barges to traverse the new reservoir. Construction of the tunnels began in 2012 and required 36 months for completion. The 24 km long series of bridges and tunnels was inaugurated on 15 September 2015 at a cost of $275 million and was hailed as a major accomplishment.