Undeterred Pakistan knocks on Russia's door

ISLAMABAD, March 29, 2012

http://www.thehindu.com/news/international/article3258986.ece

Undeterred by the U.S. threat of sanctions on the Iran-Pakistan gas pipeline, Islamabad has decided to explore the Russian option to render financial services to the project after the state-owned Industrial and Commercial Bank of China (ICBC) developed cold feet.

A technical delegation will visit Moscow next week to meet relevant authorities and companies, including Gazprom, to seek financial assistance. Local media reports suggest that Russia has offered to fully finance the project — estimated to cost $1.5 billion — if Pakistan awards it to Gazprom without bidding. This offer was apparently made to Pakistan in February during the visit of Foreign Minister Hina Rabbani Khar.

Though there was no official word on whether such an offer was made, both the Petroleum Ministry and the Foreign Ministry confirmed that the Russian option was being actively considered. Gazprom has been eyeing a role in the Iran-Pakistan pipeline for some years now but its insistence on joining the project without bidding requires sidestepping the Public Procurement Regulatory Authority rules by Pakistan.

Delayed by one hiccup after the other, the Iran-Pakistan pipeline stumbled yet again recently with ICBC dragging its feet over signing the contract with Inter-State Gas Systems to provide financial advisory services to the project. No reason was offered for the delay but the Petroleum Ministry's summary to the Economic Coordination Committee of the Cabinet earlier this month said: “It is apprehended that a probable reason for not signing the agreement [to act as financial adviser for the project] till date could be [the] geo-political situation in the region.”

Russia has also evinced interest in the Turkmenistan-Afghanistan-Pakistan-India gas pipeline and CASA-1000, the Central Asia-South Asia electricity bridge. Pakistan and Russia have a Joint Working Group on Energy Cooperation — one of the many components of an emerging relationship that seeks to break away from the past that saw Islamabad align with the U.S. to create and promote the mujahideen against the Soviet occupation of Afghanistan.