Stakeholders challenge dollar-based returns for $432 million Faisalabad-Peshawar oil pipeline

Stakeholders have questioned dollar-linked returns, along with minimum throughput guarantees, for the $432 million Faisalabad-Peshawar oil pipeline, which seeks to recover its cost within four years. Dawn reported the objections came at an Oil and Gas Regulatory Authority (OGRA) hearing on a tariff petition from Frontier Works Organisation (FWO).

Under the proposal, moving fuel from Faisalabad through Thalian near Rawalpindi to Tarujabba near Peshawar would begin near $64 for every tonne in 2029 and decline to $14.5 per tonne by 2058 across the 30-year tariff period. FWO conceded the early charge may be higher than road freight, but argued the economics should be judged over the long run as rates ease later. Participants also asked whether any public-sector project had allowed a private backer to recover its full cost in four years, a point left unanswered at the hearing.

Several speakers backed shifting petroleum from roads to pipelines but warned the financial terms could erode those benefits. One participant likened the package to a "super IPP", as independent power producers were set up under a pre-approved policy. A senior Ogra executive said the regulator will test whether dollar-based returns are justified, and will weigh limiting ship or pay to a set period. Ogra will also check that charges do not go beyond the inland freight equalisation margin, the figure currently applied to keep petroleum prices uniform.