Struggling to get the TAPI gas pipeline underway, its four squabbling promoters have decided to float a special purpose vehicle, pumping in $5 million equity each, to keep the transnational project alive until a multinational corporation takes charge.
With international firms shying away from the project, the promoter countries have been at loggerheads. While Turkmenistan, Afghanistan and Pakistan were of the view that the four promoters could build and operate the pipeline on their own, India has been steadfast that the project could be started only if a multinational leads it.
“Our stand is that we will not move forward until we have a credible consortium leader. Without that, our end-use industries would be at the mercy of Afghanistan and Pakistan, where the political scenario is uncertain,” an official heading the negotiations on India’s behalf said.
Besides the complex and difficult relationships among the participating nations, none of the nominee companies of the four countries has the financial and managerial capability to execute the project, he said.
The four countries have now decided to float TAPI Ltd, a Dubai-based SPV, which would scout for a consortium leader as well as a credible financier while the US government does its bit to veer around Turkmen law to get upstream equity for its multinational. India’s position was reflected by the December 16 approval by the board of its nominee GAIL India Ltd.
“In order to continue to be engaged in the TAPI pipeline and considering the opportunity of tying up gas in the interest of the country and for GAIL, along with the associated project risks, it was deliberated to join the SPV,” say the minutes of the meeting.
Global majors Exxon Mobil and Chevron have put a pre-condition of a share in the upstream Turkmenistan gas field to lead the project and to commit a lion’s share of the $9 billion required to construct the 1,680 km pipeline from Turkmenistan, crossing Afghanistan and Pakistan, to India.
However, Turkmenistan has refused as its national laws do not permit foreign equity in oil and gas fields on land. It agreed to grant service contracts to the overseas investors