New Delhi, (IANS) The Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline project is unlikely to be ready by its proposed timeline of 2018, a ratings agency said on Friday.
“The TAPI pipeline is unlikely to be commissioned by the proposed timeline of FY18, and India will continue to rely on domestic gas and imported LNG,” India Ratings said in a report citing four major issues confronting the four-nation pipeline.
The four key issues to be resoved, it said, are the seller’s willingness to sell gas at a price feasible for the ultimate buyer, quantum off-take assurance by end-consumers, funding of the pipeline and geopolitical risks associated with its construction and operation.
“The willingness of Turkmenistan state concern to price its gas in a manner which would ensure its cost competitiveness in countries where the gas is finally sold is essential for the project to take off,” it said.
Moreover, the extractability of the proven reserves of 16 trillion cubic meters of gas from the South Yolotan-Osman field could pose a challenge.
“This could limit the quantum of gas available for transportation from the pipeline,” the agency said.
The TAPI pipeline will have a carrying capacity of 90 million standard cubic metres a day (mmscmd) gas and will be operational in 2018. India and Pakistan would get 38 mmscmd each, while the remaining 14 mmscmd will be supplied to Afghanistan.
India Ratings said many user industries may find the gas unviable for their operations if the landed price of gas in India from the pipeline were to be high at $10-12 per million British thermal unit, which is more than double the domestic gas price.
“Transit fee payable to each nation from where the pipeline passes and funding tie-ups for the project could hinder the prospects given the geo-political risks and the lack ofoff-take agreements,” it said.
Financial closure for the project that is estimated to cost nearly $7.6 billion would involve significant support from participating countries including equity participation and guarantees for the project debt.
“This is because the construction and operation of the pipeline, which will pass through difficult and conflict-affected geographies in three countries, carry major credit risks,” the report said.
“The pipeline will be a boost for energy-starved India. However, its commissioning faces multiple challenges which are unlikely to be addressed quickly and will make it a long gestation project,” it added.
At a TAPI steering committee meeting earlier this year in Islamabad, Pakistan Prime Minister Nawaz Sharif called for the early completion of the pipeleine, saying the states concerned should take all necessary steps to start the project as soon as possible as its cost would continue to increase as time passed.