Pakistan, Iran multi-billion dollar project faces huge setback
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The Senate Standing Committee on Cabinet Secretariat has called upon the Ministry of Foreign Affairs and the Attorney General for Pakistan (AGP) to provide information on the reported objections raised by the United States regarding the multi-billion-dollar Iran-Pakistan (IP) gas pipeline project.
Tehran has claimed to have finished its part of the 1,150-kilometer pipeline, with the groundbreaking ceremony conducted jointly by former Presidents Asif Ali Zardari and Dr. Mahmoud Ahmadinejad in Gabd, near Chahbahar, Iran, in March 2013, with an estimated cost of $7.5 billion at the time. Pakistan had committed to completing its side of the project by January 2015.
However, in February 2014, then-Petroleum Minister Shahid Khaqan Abbasi informed the parliament that the Iran-Pakistan project was halted due to international sanctions.
Earlier this year, former Petroleum Minister Musadik Malik explained that despite Pakistan's commitment to its contractual obligations under the Gas Sales and Purchase Agreement (GSPA), the project couldn't commence due to US sanctions on Iran. Officials stated that Pakistan had sought a solution from the United States earlier this year to address energy shortages related to the project but had not received a response.
In August, Pakistan issued a 'Force Majeure and Excusing Event' notice to Iran, indicating its inability to pursue the project while US sanctions on Iran were in place unless Washington allowed it. During the Senate panel discussion, Petroleum Additional Secretary Hassan Yousafzai informed the committee that Iran had set a 2024 deadline for pipeline completion, and failure to meet it could result in fines.
Efforts are underway to renegotiate the matter with Iran and explore alternative gas sources. The secretary expressed concerns about potential liabilities of up to $20 billion, including discussions with the US, and mentioned that laying the pipeline to Gwadar would cost $2 billion, with a potential $18 billion penalty if the deal with Iran was abandoned.
