The Frontier Works Organisation (FWO) has sought recovery of around $432 million for a proposed 437km Faisalabad-Peshawar white oil pipeline.
The project aims to secure investment from Azerbaijan’s state oil company Socar through a guaranteed transportation tariff. The pipeline would transport petrol and high-speed diesel from Faisalabad to Peshawar.
Under the proposed tariff, transportation costs would start at around $64 per tonne in 2029. The rate would gradually decline to $14.5 per tonne by 2058.
The Frontier Oil Company (FOC), a joint venture involving FWO, Pakistan State Oil and Socar, submitted the tariff petition to Ogra.
Pipeline to Strengthen Fuel Supply
The project would create a pipeline backbone from Karachi to Peshawar. It aims to meet rising petroleum demand in northern Pakistan while reducing dependence on road tankers.
The proposed network includes a 256km Faisalabad-Thalian section and a 172km Thalian-Tarujabba section. A nine-kilometre spur would also connect Thalian with Faqirabad.
The estimated costs stand at $320 million, $94 million and $17.5 million respectively. The project would operate under a proposed 30-year tariff period.
However, the Finance and Power ministries raised concerns over guaranteed dollar-based returns and the proposed four-year payback period.
The Finance Ministry suggested extending the recovery period to seven years to reduce the early tariff burden. Meanwhile, Socar sought a “ship or pay” mechanism to guarantee payments for committed pipeline capacity.
Despite these concerns, the Economic Coordination Committee supported the project on strategic grounds.
Currently, around 70% of petrol and diesel moves by road. The new pipeline could increase the share transported through pipelines by around 10%.
