Cabinet approves formation of SPV for TAPI project
New Delhi: The Cabinet on Thursday approved the setting up of a special purpose vehicle to build the $9 billion Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline, as multinational firms have been unwilling to build the project.
The Dubai-based SPV, TAPI Ltd, will scout for consortium leader who will build and operate the project, arrange for finances and would be responsible for safe delivery of gas through the pipeline that will traverse militancy-infested areas in Afghanistan and Pakistan.
An official statement issued after the Cabinet meeting chaired by Prime Minister Manmohan Singh said: "The Union Cabinet gave its approval for formation of the Special Purpose Vehicle (SPV) for the TAPI pipeline project and to permit GAIL India Ltd to join the SPV (as India representative)".
Oil Minister M Veerappa Moily did not attend the Cabinet meeting as he was in the US.
"TAPI Ltd is required to have an initial contribution of $20 million, that is $5 million from an identified entity from each of the four participating countries," it said. "GAIL, being a Navratna Company, is empowered to make an investment of this level for India."
The SPV is being formed for the project as no MNC is willing to participate in the project unless they get a share in Turkmenistan's rich gas fields.
While Turkmenistan, Afghanistan and Pakistan were of the view that the four promoters could build and operate the pipeline on their own, India has insisted that the project be taken up only if a multinational company leads it.
New Delhi does not want to be at the mercy of Afghanistan and Pakistan for its gas needs and also feels that none of the nominee companies of the four countries have the financial and managerial capability to execute the project.