High dollar returns on Faisalabad-Peshawar oil pipeline raise eyebrows
ISLAMABAD: Various stakeholders on Thursday raised serious objections to unusually lucrative dollar-based guaranteed returns proposed for a $432 million oil pipeline from Faisalabad to Peshawar and demanded substantial rationalisation of the incentives to avoid the creation of a new “super IPP”. The Oil and Gas Regulatory Authority (Ogra) had called a public hearing on Frontier Works…
Islamabad - Numerous stakeholders raised objections to the high dollar-based returns proposed for a $432 million oil pipeline from Faisalabad to Peshawar on Thursday. The Oil and Gas Regulatory Authority (Ogra) held a public hearing regarding Frontier Works Organisation's (FWO) petition for a transportation tariff for the 437km pipeline.
The tariff, which would ensure Azerbaijan's State Oil Company (Socar) participation, aims to recoup investment within four years. Participants generally backed the pipeline due to its advantages over road transportation, but argued the investors' terms could undermine these benefits. The tariff would start at $64 per tonne in 2029 and drop to $14.5 per tonne by 2058.
FWO representatives emphasized the long-term nature of the project, while some intervenors questioned the minimum throughput guarantees and rising fuel demand amidst energy transition. One commentator deemed the structure a "super IPP" due to its high demands and lack of precedent. Ogra Senior Executive Director Misbah Yaqoob said she would examine if dollar-based returns were justified and consider rationalizing the "ship or pay" allowance.
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