*ISLAMABAD: * Iran threatened to take the country to The Hague forunilaterally shelving the Iran-Pakistan gas pipeline.
Iran is invoking the penalty clause of the gas sales purchase agreement(GSPA) signed between the two countries in 2009, reported *The News.*
Iran has sought $1.2 billion in damages as per the penalty clause fromJanuary 1, 2015. As per the agreement, if Pakistan doesn’t take gassupplies from Iran, it is bound to pay a fine of $1 million per day, a topofficial of Petroleum Division said.
Considering the sensitivity of the situation, Secretary Petroleum Divisionhas sent an internal note to Prime Minister Shahid Khaqan Abbasi warninghim that Iran is planning to move the arbitrating court seeking damages of$1.2 billion against Pakistan’s failure to execute the project.
The IP gas pipeline has been in the rocks for over three years, since Irancompleted its portion of the pipeline and in wake of news in late-2016 thatPakistan had shelved the IP project under pressure from a leading Gulfcountry.
Due to US and UN-led sanctions, Pakistan has been unable to raise anyfinancing for the IP project, which it cited as the reason for not beingable to go-ahead with the project.
As a result, Pakistan requested Iran for force majeure to avoid $1 millionpenalty per day as per GSPA. But Iran refused to listen to any reasons onwhich Pakistan had requested forced majeure, an official said.
As Iran’s patience faded over the persistent delays, Tehran has informedtheir Pakistani counterparts that it would be seeking a penalty of $1.2billion via the arbitration court, which is almost equal to the cost of theentire project.
But Pakistan showed its willingness to go-ahead with the project andinitiated Gwadar-Nawabshah LNG pipeline with the same specifications whichwere originally agreed with Iran and stated the pipeline would be named IPgas line.
The official shared after convincing Iran, it agreed to not charge thepenalty due from January 1st, 2015. He said Tehran had shown thewillingness to revise the gas price downward under IP gas pipeline sincethe last two years almost.
He said the Pakistan’s official team is still waiting for go-ahead to visitIran for negotiation of downward gas price revision for IP gas pipeline,but no permission has been given to officials of Ministry of Petroleum andNatural Resources.
He added that the government cowed down to pressure from one of the MiddleEast countries, due to which it shelved the IP gas pipeline project. Thisalso upset Beijing, as a Chinese entity had been given the contract of GNGPunder government to government agreement for which it had set aside 85percent funding