Iran Suspends IP Gas Pipeline Loan to Pakistan

Tehran suspended a $250mln loan to Islamabad for implementation of Iran-Pakistan (IP) gas pipeline project on its territory, and offered the Pakistani side to seek finance from the European investors who have recently voiced their enthusiasm for partnership in the fruitful IP project.
“Pakistani officials were told in recent talks that, given the sanctions, Iran is not in a position to finance the construction of a pipeline in another country and has no obligation to do so,” Iranian Deputy Oil Minister Ali Majedi said on Saturday.

Majedi said Iran has proposed Islamabad seek assistance from European firms to complete the Pakistani part of the pipeline project between the two neighbors.

“Iran’s Oil Minister Bijan Zanganeh has proposed Islamabad gets help from third-party companies to aid and accelerate the completion of the project on Pakistani soil,” he added.

On Saturday, Majedi said that several European states have thus far voiced their enthusiasm for participating in implementation of the IP gas pipeline project.

Majedi underlined that the IP gas pipeline is such a lucrative project that has attracted several European counties to invest in the plan.

On Friday, Adviser to the Pakistani Prime Minister on National Security and Foreign Affairs Sartaj Aziz said that Iran and Pakistan are discussing the technical aspects of the under-construction IP gas pipeline.

He went on to say that two sides are in talks over an extension of the December 2014 deadline for the construction of the IP pipeline as well as financing the project and gas pricing.

He said Tehran and Islamabad will hold ministerial level talks on the project when technical talks are over.

According to the original agreement sealed between Iran and Pakistan, the first Iranian gas delivery to Pakistan should start by December 31, 2014.

The two countries are also responsible for the completion of the pipeline project within their territories, and if Pakistan does not fulfill its obligation to complete the pipeline on its side by the end of 2014, it will have to pay a daily penalty of $1mln to Iran until completion.

Iran has agreed not to penalize Pakistan for missing the deadline.

The United States has been threatening Pakistan with economic sanctions if Islamabad goes ahead with the pipeline project.

However, the government of Prime Minister Nawaz Sharif has made it clear that addressing the country’s longstanding energy problems will be its top priority, and it has no plans to reverse the decision on the completion of the pipeline.

Iran has already built 900 kilometers of the pipeline on its own soil and is waiting for the 700-kilometer Pakistani side of the pipeline to be constructed.

The IP 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.