New Delhi, Feb. 7: The government today approved a special purpose vehicle for the Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline project and allowed GAIL (India) Ltd to join it.
An entity from the four participating countries is required to contribute $5 million each to the SPV.
“GAIL has agreed to make an investment of up to $5 million in the proposed SPV, that is TAPI Ltd,” an official statement issued after the cabinet meeting said.
“An active interest in the project by all the partner countries at this stage will sustain the credibility of the project, and generate interest in the international market and can eventually pave the way for the selection of an appropriate consortium leader in the future,” the statement said.
GAIL, which was accorded the maharatna status by the government last week, is now capable of making such investments.
Oil ministry officials said the SPV route was considered as no multinational company was willing to invest in the project unless it got a share in Turkmenistan’s rich gasfields.
Turkmenistan does not permit foreign equity in onshore oil and gasfields. It has agreed to grant service contracts to overseas investors, but multinationals are unwilling to take financial and operational risks for the less profitable contract.
The four participating countries have signed an inter-governmental agreement and a gas pipeline framework agreement.
A minister-level steering committee and a technical working group have also been formed.
“Turkmenistan suggested the formation of the SPV by the TAPl members. The SPV will take up the feasibility study and design work for the TAPl pipeline to meet the agreed timelines for the project as well as search for a consortium lead,” the statement said.
The $7.6-billion TAPI project will transport gas from Turkmenistan. The envisaged 1,080km pipeline (144km in Turkmenistan, 735km in Afghanistan and 800km in Pakistan) will have the capacity to transport 90 million metric standard cubic meters per day (mmscmd) of gas — 38 mmscmd each for India and Pakistan and the remaining 14 mmscmd for Afghanistan.