China offers Pakistan loan for IP project

China has offered Pakistan a USD-500-million loan to complete its joint gas pipeline project with Iran, despite threats by the United States to impose sanctions against Islamabad.

“In a major development, China has offered [the] loan,” an official at the Pakistan embassy in Iran told the Express Tribune.

The Tribune report added that the loan would be facilitated through the Gas Infrastructure Development Cess Act.

On March 11, the US Department of State threatened Islamabad with sanctions if Pakistan went through with its joint multi-billion-dollar gas pipeline project with Iran.

“We have serious concerns, if this project actually goes forward, that the Iran Sanctions Act would be triggered,” State Department spokeswoman Victoria Nuland said. “We’ve been straight up with the Pakistanis about these concerns.”

The 1996 Iran Sanctions Act allows the US government to ban imports from any non-American company that invests more than $20 million a year in the Iranian oil and natural gas sector.

Also on March 11, Iran and Pakistan inaugurated the final construction phase of the Iran-Pakistan (IP) gas pipeline, intended to carry natural gas from Iran to its eastern neighbor.

Iran’s President Mahmoud Ahmadinejad and his Pakistani counterpart Asif Ali Zardari attended the ceremony on the Iran-Pakistan border.

The pipeline is designed to help Pakistan overcome its growing energy needs at a time when the country of over 180 million people is grappling with serious energy shortages.