Economy

Gas pricing key to TAPI project

Richa Mishra New Delhi | Updated on March 12, 2018 Published on February 13, 2011

The prevailing delivered price of imported gas is about $7/mBtu.

Gas pricing will be the key to the Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline project that is expected to get India 38 million standard cubic metres a day (mscmd) of gas from Turkmenistan.

The supplier, Turkmenistan, has proposed that the landed cost of the gas for the buyers should be in sync with the prevailing delivered price in that country, an official source told Business Line. Meanwhile, according to reports, Pakistan has proposed that there should be a common price of gas for all buyers.

To make the project attractive for India, the delivered price (or the landed cost) of Turkmenistan gas has to be lower than that of imported gas. In India, the prevailing delivered price of domestically produced gas is $4.2/mBtu and that of imported gas, about $7/mBtu.

The landed cost of Turkmenistan gas in India would rise considerably after payment of transit and transportation fees, as India is at the tail end of the proposed pipeline. A transit fee is payable to the countries through which the $7.6 billion pipeline passes, while transportation charges will be levied by the consortium operating the pipeline.

Starting Monday the TAPI member-countries are going to hold multilateral and bilateral meetings in Turkmenistan to address various commercial and technical issues. In its bilateral talks, India is likely to discuss changes in the proposed pricing formula suggested by Turkmenistan.

Sources said that keeping all the aspects in mind, India has proposed that the pricing formula be linked to a basket of low and high sulphur fuel oil. However, no final decision has been taken as yet.

After the last technical working group meeting it was decided to appoint a transaction advisor. The Asian Development Bank (ADB) is expected to appoint a transaction advisor for the pipeline project by April.

The advisor would facilitate formation of a consortium company and selection of the consortium leader for execution of the TAPI project.

The TAPI project envisages constructing 1,680 km of pipeline with a total gas capacity of 90 mscmd. The length of pipeline in Turkmenistan, Afghanistan and Pakistan up to the Indian border is 145 km, 735 km and 800 km, respectively.

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Published on February 13, 2011
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