FWO JV seeks guaranteed dollar-linked tariff for $432 million white oil pipeline

A joint venture of Frontier Works Organisation, Pakistan State Oil and Azerbaijan's Socar has asked the Oil and Gas Regulatory Authority to approve a tariff that would let it recover about $432 million of investment within four years, according to Dawn. The request covers the proposed 437 km Faisalabad-Thalian-Tarujabba white oil pipeline and depends on a guaranteed, dollar-linked transport charge. Under the 30-year structure, the tariff would start near $64 per tonne in 2029 and fall to roughly $14.5 per tonne by 2058.

The finance ministry proposed stretching the payback period to seven years and limiting dollar-based returns to foreign-financed funds, while Power Minister Awais Leghari asked for close scrutiny of costs and the internal rate of return. Socar also wanted a ship or pay arrangement. Even so, the ECC set aside those objections, arguing that changes could weaken the project's appeal and that it should be judged from a wider strategic angle.

Gatti in Faisalabad would serve as the starting point for supplying northern Punjab and Khyber Pakhtunkhwa with petrol and high-speed diesel, cutting reliance on road tankers that currently carry about 70% of fuel movements. Under the framework, oil marketers must pledge a yearly minimum volume, and any gap would be made up via the Inland Freight Equalisation Margin. OGRA is expected to approve the construction-stage tariff and will draft the rules for the arrangement.