The estimated 1,814 kilometers TAPI Natural Gas Pipeline (or “Peace Pipeline”) is expected to export up to 33 billion cubic meters of natural gas per year from Turkmenistan’s Galkynysh Gas Field to Afghanistan, Pakistan and India over three decades. Construction, operation, and maintenance of TAPI will generate thousands of jobs in the near-term in participating countries and help to create new cities. An independent study of TAPI calculated an Economic Internal Rate of Return of 16.8 percent for the project, and the projected annual revenue for the Afghan treasury is estimated to be around USD $400 million. Following initial discussions on the project in the 1990s, the Asian Development Bank began serving in 2013 as the TAPI Secretariat and oversaw earlier feasibility studies in 2005 and 2008. Over the past decade, Steering Group meetings with the four participating countries and ADB advanced progress on the commercial terms for the sale and transit rates for the natural gas, a critical step toward securing public and private financing for construction of the pipeline. Since 2013, the ADB has also acted as the project’s Transaction Advisor.
On 13 December 2015, the President of Turkmenistan, H.E. Gurbanguly Berdimuhamedov, the President of Afghanistan, H.E. Ashraf Ghani, the Prime Minister of Pakistan, H.E. Nawaz Sharif, and the Vice-President of India, H.E. Hamid Ansari signed a Memorandum on Energy at a groundbreaking ceremony in Mary, Turkmenistan (near Galkynysh Gas Field) to commemorate the start of construction of the 1,800 km TAPI pipeline to be completed by 2020. Each leader described the pipeline as more than just a conduit of natural gas but as a vital means to improve connectivity. In addition, State Concern TurkmenGaz (with an 85% share), Afghan Gas Enterprise, Inter State Gas Systems (Pakistan), and GAIL (India), signed the project’s Shareholders Agreement. It contains the principles agreed among the shareholders regarding the management and operation of TAPI Pipeline Company, Ltd. (which will build, operate, and own the pipeline and is in the process of being stood up) and the transfer of shares. The signing follows the endorsement of State Concern Turkmengaz as consortium leader of the TAPI pipeline, as the parties prepare to commence the next phase of detailed design. An integral part of the Government of Afghanistan’s Energy and National Infrastructure and Connectivity Development National Priority Programs, the TAPI pipeline will continue to face security, financial, and other challenges as construction begins.
Recommended Actions by RECCA-VII and Beyond:
- Support the TAPI Pipeline Company, Ltd. in the convening of investment road shows around the world to raise the remaining funds required for the project.
- The four participating countries should undertake threat and opportunity assessments in provinces hosting the pipeline and jointly design a pipeline security mechanism.
|Budget & Funding Status||USD $10 billion for the pipeline and $15 billion for the gas field|
|Institutional Partners||TAPI Pipeline Company, Ltd. (TurkmenGaz, Afghan Gas Enterprise, Inter State Gas Systems, and GAIL), Turkmenistan, Afghanistan, Pakistan, India, Japan, the Asian Development, and a consortium of Japanese and Chinese companies|