960410

Japan firm turns

lukewarm on

pipeline project

ASHRAF KHAN

KARACHI: Kimutso, the Japanese firm, is dragging its feet in the joint venture, to lay a 120 million dollar furnace oil pipeline from Karachi to Jamshoro.

"The pipeline throughput guarantee, given by the Government of Pakistan, was considered by Kimutso on the lower side and the company might leave the consortium", an Islamabad-based official confided to Business Recorder on Wednesday on condition of anonymity.

The consortium comprises Pakistan State Oil (PSO), Consolidated Company of Middle East, Kimutso and some Western companies.

The Islamabad source said the financial close of the project was due by December, 1995, which could not be achieved. Alternate financing arrangements, including equity in case of backout of Kimutso, were being looked into. PSO had expected that financial close for the project would be achieved by February last, but it could not be done.

The source said the Kimutso was demanding payment of return in dollars as this was the pre-condition of the financial companies, to which Kimutso was looking for investment. On the other side, the government has shown its reluctance to guarantee that.

However, the official was optimistic of a headway at a meeting going on in Islamabad on Wednesday between the Kimutso representatives and the government officials to resolve the issue. "If it proceeds successfully we would reach an accord within a fortnight", the official said, "and then we will be laying it after three or four months."

Of late, PSO is engaged in the construction of a 900km white oil pipeline from Karachi to Multan at a cost of 600 million dollars. The International Finance Corporation (IFC) has signed a memorandum to invest in the project. In this case, PSO formed a consortium with Pak Arab Refinery Ltd., Shell Pakistan Ltd., Etrad Company of Saudi Arabia. The construction consortium includes Visser and Smith of Netherlands and Takfen of Turkey, led by Amec Utilities of UK, Caltex Oil Pakistan Ltd., Army Welfare Trust and the IFC.

Another pipeline, being laid from Zulfiqarabad to Hub, will be commissioned by June this year. Asia Petroleum Ltd is implementing the project.

The pipelines, especially white oil pipeline from Karachi to Multan, will help the country double its storage capacity from two weeks to one month.