New Delhi, February 7
Aiming to speed up implementation of the ambitious Turkmenistan-Afghanistan-Pakistan-India (TAPI) natural gas pipeline, the Union Cabinet today approved the setting up of a special purpose vehicle to build the 1,680-km pipeline that terminates at Fazilka in Punjab.

Tapi Ltd, the Dubai-based SPV, would undertake the feasibility study and design work for the pipeline, hunt for a consortium leader to build the $ 9 billion project, operate it, arrange for finances and work to ensure safe delivery of gas.

At the Cabinet meeting chaired by Prime Minister Manmohan Singh, the SPV was given the go-ahead and permitted Gas Authority of India Limited (GAIL) to join it as India's representative.

It was announced officially that TAPI Ltd initially requires $ 20 million contribution, with each of the four participating countries funding $ 5 million. GAIL being a Navratna Company, is empowered to make an investment of this level for India.

TAPI Ltd is being formed for the project as multinational corporations are unwilling to participate in the project without a share in Turkmenistan's rich gas fields. The project had got stuck since India was not agreeable to the suggestion by the other three that each country build the pipeline on its own and operate it.

At a meeting of the steering committee last September, Turkmenistan suggested formation of an SPV to put the project after all parties reaffirmed their commitment and intention to fast track it since it also a symbol of regional cooperation.

India joined the Turkmenistan-Afghanistan-Pakistan (TAP) Project in April, 2008, two years after the Union Cabinet gave its ‘in principle’ approval. Thereafter, the name of the project stood amended to Turkmenistan-Afghanistan-Pakistan-India (TAPI) Gas Pipeline Project.

The pipeline originates and runs 144 km in Turkmenistan, passes 735 km through Afghanistan and travels 800 km in Pakistan en route India.

Last May, the four countries signed the gas sale and purchase agreement. The 1,680 km pipeline will carry 90 million cubic metres a day (mmcmd) of gas and is scheduled to become operational in 2018 and supply gas over a 30-year period. India and Pakistan will get 38 mmcmd each, while the remaining 14 mmcmd will be supplied to Afghanistan. TAPI will carry gas from Turkmenistan's Galkynysh field, known earlier as South Yoiotan Osman that is known to hold gas reserves of 16 trillion cubic feet.

Turkmenistan, which holds more than 4 per cent of the world's natural gas reserves, signed pacts last May to sell gas last to India and Pakistan through the 1,680-km pipeline at the Caspian Sea resort of Avaza in Turkmenistan.

Role of the SPV

• Undertake a feasibility study and design work for the pipeline
• Hunt for a consortium leader to build the $9 billion project
• Operate it and arrange for finances