The Cabinet on Thursday, while giving its nod for formation of a special purpose vehicle (SPV) called TAPI Ltd for the Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline project, allowed GAIL (India) to join it.

According to an official statement, TAPI Ltd is required to have an initial contribution of $20 million, which is $5 million from an identified entity from each of the four participating countries. GAIL being a Navratna company is empowered to make an investment of this level for India, it said.

GAIL has agreed to make an investment of up to $5 million in the proposed SPV.

“An active interest in the project by all the partner countries at this stage would sustain the credibility of the project and generate interest in the international market and could eventually pave the way for selection of an appropriate consortium leader in the future,” the statement said.

The four countries involved in the project signed an Inter-Governmental Agreement along with a Gas Pipeline Framework Agreement (GPFA). To accelerate the project, parties have formed the Minister Level Steering Committee and Technical Working Group.

Suitable provisions for security and safety of the pipeline have been made in the Inter-Governmental Agreement (IGA) and Gas Pipeline Framework Agreement (GPFA).

In the meeting of the 16th Steering Committee held on September 23, 2012, all parties reaffirmed their commitment and intention to fast-track this important regional co-operation project, it said.

“As a way forward, Turkmenistan suggested the formation of a SPV by the TAPI members. The SPV would take up the feasibility study and design work of the pipeline to meet the agreed timelines, as well as search for a consortium lead,” the statement said.

Turkmenistan and Pakistan agreed to the formation of TAPI Ltd considering it to be in consonance with the GPFA. Afghanistan also agreed to the formation of TAPI Ltd so long as there was consensus among the parties.

The $7.6-billion TAPI project will transport gas from Turkeminstan. The envisaged 1,080-km pipeline (144 km in Turkmenistan, 735 km in Afghanistan and 800 km in Pakistan) will have a capacity to transport 90 mmscmd of gas – 38 mmscmd each for India and Pakistan and the remaining 14 mmscmd for Afghanistan.

Kabul, according to reports has withdrawn from purchasing its share of gas under the project, and this 14 mmscmd is now available to India and Pakistan. Afghanistan has said that it does not require the gas at present, but may approach Turkmenistan in future.