TAPI pipeline project to mandate banks Q1 2019
Sponsors of the $7 billion Turkmenistan-Afghanistan-Pakistan-India (TAPI) 1,635km gas pipeline – Turkmengaz, Afghan Gas Enterprise, Inter State Gas Systems (Pakistan) and GAIL (India) – are expected to mandate banks in early Q1 2019 with financial close expected early Q2 2019. The prospective 12-year Hermes and SACE-backed financing is said to have around $4 billion worth of German bank involvement with the likes of Siemens Bank and Helaba said to be interested in the deal. Italian banks are said to be providing around $400 million.
Alongside the ECA-backed facility, the ADB is providing over $1 billion of funding at a shareholder level. In phase one, the bank will provide a 15-year $500 million loan to the governments of Turkmenistan ($300 million), Afghanistan ($100 million) and Pakistan ($100 million). Pricing is rumoured to be below 200bp. The ICIEC are said to be providing $300 million with Turk Eximbank and Greece’s export credit agency ECIO potentially providing support for the project.
The project, which has an all-in cost of $8.1 billion, will transport up to 33 billion cubic metres of natural gas annually from Turkmenistan – which has the fourth largest gas reserves in the world – to Afghanistan, Pakistan and India, with the former offtaking 5% and the latter 47.5% each over a 30-year life.
Construction of the first 214km Turkmenistan section of the pipeline is almost complete, funded by a $700 million loan from the Islamic Development Bank. The remaining Afghanistan-Pakistan-India (API) pipeline section is split into two phases –construction of the pipeline (phase one) followed by the installation of six compressor stations to triple the capacity of the 11bcm pipeline to 33bcm (phase two).
Portland Advisors is financial advisor to TAPI Pipeline Company Limited (TPCL), which will build, own and operate the Afghanistan and Pakistan sections of the pipeline. TPCL is also being counselled by law firm Allen & Overy.
