TAPI pipeline: ADB to fund 3pc of Afghanistan’s equity
PESHAWAR (Pajhwok): Islamabad has approved $200 million equity participation in the Turkmenistan-Afghanistan-Pakistan-India (TAPI) Pipeline Company and signing of the investment agreements for the project.
At a meeting in Islamabad on Friday, the Economic Coordination Committee (ECC) also allowed the release of $12 million of the equity share for the company and the signing of shareholders and investment agreements for the pipeline
The 1,680-km pipeline project is estimated to cost $10 billion. Turkmenistan, being the consortium leader, has agreed to contribute 85 percent. The remaining equity would be equally shared by Afghanistan, Pakistan and India.
Chaired by Finance Minister Ishaq Dar, the ECC was informed the Afghan government would fund 2pc shareholding and the remaining 3pc of its equity would be financed by the Asian Development Bank. The ADB has also evinced an interest in financing Pakistan’s part of the project.
According to Dawn, Turkmenistan has taken responsibility for the project’s development and operation. The newspaper quoted official sources as saying that Pakistan’s share in the financing and costs stood at $200m.
Under the shareholders agreement, a mechanism has been defined for the stakeholders transacting company business, injecting equity, taking loans, becoming entitled to dividends and default.
Although Turkmenistan has pledged special rights to the minority shareholders to have at least one director in the company even if a country’s shareholding falls to only one share. All important financial decisions will need unanimous approval of all sides.
The four nations will pay pre-financial-investment-decision (pre-FID) equity in four equal quarterly instalments in advance, from next month, so that the financial close can be achieved by December next 2016. The pre-FID budget is $226m.
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