Stakeholders Alarm Over Dollar Returns on Faisalabad-Peshawar Pipeline

News Desk
ISLAMABAD: Various stakeholders on Thursday raised serious objections to unusually lucrative dollar-based guaranteed returns proposed for a $432 million oil pipeline from Faisalabad to Peshawar, demanding substantial rationalisation of the incentives to prevent the creation of a new “super IPP”.
The Oil and Gas Regulatory Authority (Ogra) had called a public hearing on Frontier Works Organisation’s (FWO) petition for grant of a transportation tariff for the 437km oil pipeline, which envisages recovery of investment in four years to ensure participation of Azerbaijan’s State Oil Company (Socar). Ogra Vice Chairman Shahzad Iqbal presided over the session.
Participants generally supported the pipeline project due to its distinct advantages over traditional road transportation of fuel, but strongly argued that the aggressive financial terms sought by investors could undermine these economic benefits.
Neither the petitioners nor the regulatory authority responded to inquiries regarding whether any precedent exists for allowing a private investor in a public infrastructure project to recover its entire capital expenditure within a remarkably short span of four years.
The controversy surrounding the tariff structure highlights broader concerns about sovereign guarantees and foreign currency-denominated returns in Pakistan’s energy and transport sectors.
Economists warn that locking the national exchequer into high dollar-indexed payouts could severely burden consumers and exacerbate inflationary pressures at a time when the economy is striving for fiscal consolidation and sustainable energy pricing frameworks.
Following the fierce pushback during the public hearing, Ogra is expected to review the submissions and technical objections before making a final determination on the tariff petition.
Stakeholders have urged the regulator to strike a fair balance between attracting vital foreign direct investment from partners like Azerbaijan and safeguarding public interest against exorbitant tariff burdens.