The Hindu Business Line : Ernst & Young combine appointed advisor to Iran-India pipeline project

AFTER a warding off stiff competition from other consultants, the Ernst & Young (E&Y) India and E&Y UK combine is to be appointed as the financial advisor for the Iran-Pakistan-India pipeline project. A decision to this effect was taken late Tuesday evening, sources said.

This is not the first time that the two outfits of E&Y have jointly taken up an advisory project, the sources told Business Line. Besides, E&Y, KPMG and Standard Chartered were also in the fray for being nominated as a financial consultant for the ambitious Iran-Pakistan-India pipeline project.

While Indian Oil Corporation (IOC) was mandated to make an offer for the appointment of a financial advisor for the project, GAIL (India) Ltd has been asked to tender for appointing technical and legal advisors. The financial advisor shall lead the consortium of the advisors and act as the lead advisor, the sources said, adding that the pre-project activities are divided into two phases.

The first phase will broadly cover the in-principle agreement at the State level to support the import of natural gas, the project structure, and issues related to safety and security of supply and the necessary inter-Government agreements in trans-national pipeline projects. This has to be completed by December 31, the sources stated. In the second phase, the advisor has to be ready with the financial closure of the pipeline project.

Elaborating on the role of financial advisor in the second phase, the sources said it would vary, depending on the project structure — whether Indian companies will remain only as buyers at the India-Pakistan border or participate in the pipeline. Currently, no specific role for a financial advisor is being contemplated during project implementation and commissioning, the sources added.

India had signed an agreement with Iran in May to purchase 7.5 million tonnes (mt) of LNG. India and Pakistan expect the pipeline to be laid by 2010. The consultant is expected to submit its report within a stipulated time frame.

On the basis of the recommendations of the financial consultants, there would be a preliminary understanding on the preferred project structure by early November 2005. Once there is an agreement on the project structure between the three countries, the trilateral framework agreement would be finalised by the year-end, he said. The three countries are planning to lay a 2,600-km pipeline to transport natural gas from Iran to India through Pakistan.

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