Pakistan to borrow $300 million for gas

Pakistan government has planned to borrow $300 million from local banks to build a pipeline that will carry natural gas from Iran, easing its worst energy crisis that is curbing economic growth.State-owned companies will provide about $210 million in equity for $1.3 billion pipeline, said Mobin Saulat, acting managing director of Inter State Gas Systems, which is responsible for gas pipeline project. Pakistan may approach foreign companies including OAO Gazprom, International Petroleum Investment Co and China National Petroleum Corp for rest of financing, he said. “We’ve done market testing to see appetite among local banks,” Saulat told Bloomberg in interview. “The signal we’ve got is that around $300 million can be raised from a local consortium.” Domestic funding is crucial because US and international sanctions against Iran, imposed over concerns that the country is trying to build nuclear weapons, are likely to block western and multilateral funding. Islamabad-based Inter State Gas is responsible for completing gas pipeline by year 2014, a deadline agreed on by two countries last year after political, security concerns delayed project by a decade. Under June 2010 accord, Iran will provide about 21.5 million cubic meters of gas a day to Pakistan for 25 years.It can be extended by five years and volumes may rise to 30 million cubic meters a day. Gazprom, Russian gas-export monopoly, International Petroleum Investment, an arm of Abu Dhabi government and CNPC have shown interest in the venture, Saulat said.Gazprom may fund and help build 780-kilometer pipeline, he said declining to elaborate. Pakistan’s gas shortfall is forecast to reach 2.22 billion cubic feet a day in current fiscal year 2011-12, according to government data. It forced government to ration supplies to cars that run on CNG, while big cities faced load shedding for about 12 hours a day.Inter State Gas invited banks last month to help arrange funding and plans to seek bids for construction next month, Saulat said. Pipeline will carry gas from South Pars field via Baluchistan to off-take point in Nawabshah, Sindh. From / Gulf Today