Shareholders and Facilitation Agreements: Pakistan, Russia agree to sign accords by Feb 15, 2022

Khalid Mustafa
Saturday, Nov 27, 2021

ISLAMABAD: Pakistan and Russia have agreed to sign the Shareholders and Facilitation Agreements for $3 billion Pakistan Stream Gas Pipeline (PSGP) by February 15, 2022 on terms and conditions agreed earlier in May 28, 2021, July 15, 2021.

This and several other agreements were signed as protocol in the seventh meeting of the Russian-Pakistani Inter Governmental Commission (IGC) on Trade, Economic, Scientific and Technical Cooperation being held in Yekaterinburg, Russia, from November 24-26, 2021.

According to the well-informed diplomatic sources, both the sides on Friday concluded the three-day talks at the level of Inter-Governmental Commission with agreement to sign statutory documents of the Special Purpose Company (SPC) for construction of the Pakistan Stream Gas Pipeline by January 31, 2022. Russia also showed willingness to build underground gas storage for the Pakistan Stream Gas Pipeline which will transport gas from Karachi to Kasur (Punjab). The Pakistani delegation was headed by Federal Minister for Economic Affairs, Omer Ayub Khan and other members included Secretary Economic Affairs Division, Mian Asad Hayauddin, Pakistan Ambassador to Russia, Shafqat Ali Khan and representatives of the Pakistan Embassy Trade Wing and of Ministries of Energy, FBR, Commerce and other relevant ministries. The Russian side was headed by Minister of Energy of the Russian Federation Nikolai Shulginov and included representatives of energy, trade, economy, agriculture, railways, etc.

Both the sides agreed to hold the fourth meeting of the Joint Working Group on Trade and Investment in the mid- 2022. More importantly the Russian side showed willingness to help Pakistan explore mineral resource sector (Copper, Gold, Iron, Lead and Zinc ores of Balochistan, Khyber Pukhtunkhwa and Punjab) and to this effect Moscow will extend technical, economic cooperation and investment. Both agreed on the constitution of a sub-working group comprising mineral sector experts to identify areas of cooperation and investment particularly upgradation of Basin Survey and Data Management. Russia also expressed interest in supplying air navigation and air space control systems, weather radars and medical equipment to Pakistan. Russia also showed agreement in supplying and after-sales service of Russian civil aircraft of interest to the Pakistani state and commercial organizations subject to compliance with ICAO standards and PCAA (Pakistan Civil Aviation Authority) rules and regulations.

Russia, according to the top official sources, will also develop major stakes in Pakistan Railways and to this effect Sinara Transport Machines (STM) JSC and the Pakistan Railways would cooperate for renewal of railway machines fleet and joint implementation of infrastructure projects in Pakistan. Russia will supply mechanized track maintenance and renewal machines (tamping machines, ballast regulators, ballast cleaning machines, track laying cranes) track inspection machines, 50 shunting (2400HP or less) and 100 mainline (over 3000HP) diesel locomotives. Both sides will study technical and economic feasibility of joint production of locomotives in the Locomotive Factory Risalpur. The studies will also be conducted for the participation of Russian company --STM in co-investment to infrastructure projects like Karachi-Pipri, Karachi Circular Railway, ML-3 (Quetta – Taftan section), coal terminals infrastructure development in Faisalabad (pilot project) and other projects. Service centers for the rolling stock and track machines in cooperation with Habib Rafiq Engineering (PVT) Ltd will be established. More significantly, export credit support from the Russian banks and financial institutions will be arranged. The Russian company Uralvagonzavod JSC, wants to supply 5000 freight wagons, road construction equipment and other products manufactured by STM. The Pakistan Petroleum Limited (PPL), Oil and Gas Development Company Limited (OGDCL) of Pakistan and Mari Petroleum Company Limited of Pakistan (MPCL) have shown interest to work with Russian oil and gas companies offshore and onshore in Pakistan and outside the country.

The IGC welcomed the Russian proposal to study the prospects of implementation of System of Production Facilities Monitoring software, developed by Gazpom EP International B.V. for oil and gas fields production facilities in Pakistan. They also expressed interest in developing cooperation between Gazprom Neft-Snabzheniye LLC (a subsidiary of Gazprom Neft PJSC) and Pakistani companies in logistics and procurement for large-scale infrastructure projects. They welcomed the interest of Transneft Diascan JSC and Transneft Research Institute LLC in providing services of in-line inspection and R&D of pipeline transport to Pakistan.

Russia also noted for consideration the Pakistan proposal of seeking investment in setting up of new refineries and upgradation of existing refineries, virtual pipeline, onshore storage of LNG and strategic oil storages. Pakistan will offer to Russian Ministry of Energy the promising projects in hydropower and renewable energy sources in Pakistan, including a multipurpose dam on the river Shyok.

Both the sides supported the interest of Power Machines JSC to participate in the bidding of electro-mechanical works for the construction of the second stage of the Dasu HPP, and to participate in other prospective projects in the power industry. They reaffirmed their mutual desire to strengthen cooperative ties between enterprises of both countries. The Pakistan side indicated that it will ensure facilitation of equal participation of Russian enterprises in government purchases through open bidding on a reciprocal basis. It also emphasized on developing a framework whereby business to business trade and investment takes place in an efficient and seamless manner. Both would encourage cooperation between respective business enterprises to explore bilateral trade and investment opportunities.

Pakistan was also informed that Ulyanovsky vtomobilny Zavod LLC (UAZ LLC) is interested in supplying assembled vehicles for state and private customers and offered the vehicle assembly project (DKD/SKD kits) in Pakistan. The IGC meeting noted that the current volume of bilateral trade did not correspond to the existing potential. The Russian-Pakistani sides agreed to strengthen cooperation in trade and investment and take measures to expand access to mutual markets to significantly increase the volume of bilateral trade.

They also agreed to encourage their investors to transfer technologies to each other, and set up joint ventures in areas of mutual interest including SEZs and other similar formations. Concrete spheres, forms and objects of investment and technological cooperation will be defined in further contacts between government agencies and business circles.