Staff Report
ISLAMABAD: Despite strong reservations from the ministries of finance and power, the government has approved a dollar-based guaranteed return on the transportation of petroleum products through the 477-kilometre Machike-Thallian-Tarujabba White Oil Pipeline, estimated to cost $300 million.
The project will be executed on a government-to-government basis by a joint venture comprising Azerbaijan’s state-owned oil company SOCAR, Pakistan State Oil (PSO), and the Frontier Works Organisation (FWO). Positioned as a strategic investment from Azerbaijan, the project had long been advocated by the FWO using local resources.
At a recent meeting, the Economic Coordination Committee (ECC) of the Cabinet approved the terms and conditions proposed by the Petroleum Division to launch the project, citing its potential to enhance bilateral ties with Azerbaijan and attract future investment.
However, official documents reviewed by Dawn reveal that Power Minister Sardar Awais Leghari cautioned against offering guaranteed dollar returns. He noted that lessons should have been learned from the experience with Independent Power Producers (IPPs). He urged a detailed assessment of costs and internal rate of return (IRR) before proceeding.
