ADB cancels PKR 166.9 million grant for Pakistan’s gas storage system

ISLAMABAD: The Asian Development Bank (ADB) has revoked a $0.6 million (PKR 166.9 million) grant designated for the development of the gas storage system in Pakistan.

Sources reveal that the Energy Division, from January 2022 to December 2023, failed to meet the objectives of the Technical Assistance, leading to the cancellation of the $0.6 million gas storage development system in Pakistan by the ADB.

The document indicates that the ADB had sanctioned the knowledge and support Technical Assistance (TA) for Gas Storage Development Systems on December 16, 2021.

The TA aimed to analyze and recommend gas storage modalities and options across Pakistan, considering safety, reliability, cost, and the impact on amenities as primary factors.

It also sought to propose a policy, legal, and regulatory framework adhering to international best practices for the development, operation, and maintenance of gas storage facilities.

Additionally, the TA was to provide advisory services on a transaction model, financial structure, and development roadmap for the inaugural gas storage facility in the country.

The estimated cost of the TA was $600,000, financed through a grant from ADB’s Technical Assistance Special Fund ($300,000 from TASF 7 and $300,000 from TASF-other sources).

The TA’s outputs were assessed based on safety, reliability, cost, and impact on amenities, leading to gas storage infrastructure development across Pakistan.

Furthermore, a legal, policy, and regulatory framework for building, operating, and maintaining gas storage facilities was established.

Transaction advisory services for an optimal project capital structure and a roadmap for financial closure were also developed.

The expected outcome of the TA was a strengthened gas supply chain, meeting strategic reserve requirements.

The TA, initially planned for implementation over a 24-month period from January 2022 to December 2023, designated ADB as the executing agency, with ADB’s Central and West Asia Department, in collaboration with the Ministry of Energy (Petroleum Division), as the implementing agency.

Following the TA’s effectiveness in February 2022, the recruitment of the consulting firm tasked with undertaking the Gas Storage Development Systems Study commenced.

However, the process was subsequently paused after the TA implementation was put on hold in March 2023.

The TA activities were halted in March 2023 due to Pakistan’s financial and economic challenges. The activities and targeted outputs of the TA were considered non-essential due to changes in priorities.

Given the prevailing uncertainties and challenging situations in the country, it was decided not to extend the TA, closing it on the original completion date.

As no consulting firm was engaged, no disbursement was made from the TA, as per the document.

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