Plans for two main gas transmission pipelines to connect LNG import terminals located on the Arabian Sea coast with major inland cities including Lahore, Faisalabad and Rawalpindi are advancing. Each proposed 1,100 km long, 56-inch diameter pipeline could transport at least 1.6 billion-cubic-feet-of gas a day, which is sufficient to take-off the 3 billion-cubic-feet-a-day planned regasification capacity.

The government would receive fees from the transmission of natural gas from the coast to inland northern cities. To this end the government in Islamabad has materially advanced the planned construction of these two transmission pipelines and associated storage facilities, with its decision to employ GIDC (Gas Infrastructure Development Cess) funds as well as seeking private sector funding. For example, reports in the Pakistan newspaper The News carry a suggestion that one of the pipelines might be built as a venture with either Russia or China or a local Pakistani consortium. In addition, the government is taking action to obtain the necessary land and approvals for the pipelines and has already asked the Asian Development Bank for a feasibility study of developing gas storage facilities.

However, Pakistan’s government has drawn the line at providing sovereign guarantees for the offtake of gas from the proposed and existing LNG import terminals. This could adversely affect potential private investor interest.