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Islamabad: India and Pakistan are edging closer to launching a gas pipeline project from Iran in an ambitious plan to work together towards meeting their energy shortages. For Pakistan's equity investors, such a deal coming together will eventually bring new benefits.
The new gas pipeline could be worth more than $7.5 billion, making it the most lucrative project ever undertaken by the two south Asian neighbours. Funding will come from international lenders and commercial banks, though the possibility of stock being floated to raise capital, cannot be excluded.
Soaring oil prices have made it virtually impossible for electricity suppliers in both countries to avoid significant tariff increases, especially in the case of power generation plants run on thermal oil.
Gas as an alternative fuel could offer a far more feasible option.
Across equity markets, the time has probably come for analysts to begin vigorously tracking trends in energy and their future connectivity to raising capital through IPOs. For the moment, analysts on the Karachi stock exchange have practically ignored the meeting of Indian and Pakistani oil ministers in the past few days.
Another reminder of the pipeline project edging closer to reality is Iranian President Mahmoud Ahmedinejad's visit to Pakistan on Monday.
Pakistan's long-term future rests on success in embarking upon key new projects such as the Iran-Pakistan-India gas pipeline with a possible extension in to China in future.
- The writer is a journalist based in Pakistan.
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