Pakistan in talks with Iran to renegotiate IP project GSPA

ISLAMABAD:  Pakistan is in contact with Iran to renegotiate gas rates signed under the multi-billion dollar gas pipeline deal as the new price would improve chances to complete the long delayed project in the extended period, a minister said on Wednesday.

Shahid Khaqan Abbasi, minister for petroleum and natural resources, told the upper house that the government has requested Iranian authorities to bring changes in the gas sale and purchase agreement (GSPA).  The price of natural gas, under GSPA, was agreed at $12 per million metric British thermal unit (MMBtu), if crude oil price stood at $100/bbl in the international market.

The Iranian authorities had already agreed to negotiate amendment in the GSPA with some other amendments, which are awaited.

“The government is eager to implement the Iran-Pakistan (IP) gas pipeline project and a draft amendment had been shared with Iran,” the minister, in a written reply, said at the Senate.  A revised timeline for completion of the project would be decided mutually in the forthcoming meetings between Pakistan and Iran and the details would be sorted out by the Experts Group, which would meet to discuss and decide on all outstanding matters.

 The government in 2014 shaved the project after the country failed to secure fund to build its section of the pipeline due to a lack of interest from financial institutions, international oil and gas companies on the US opposition of the Iran-Pakistan pipeline project, following sanctions imposed on Tehran.

The Iranian side of the $7.5bn project is almost complete, but Pakistan has been running into repeated problems paying for the 780 kilometres (485 miles) section to be built on its side of the border.

However, 2015 deal over Iran's nuclear program with the western powers rekindled the hope of project completion.  The government has planned to build a pipeline in the coastal city of Gwadar, which is the main part of Iran-Pakistan gas pipeline project and will later be extended to Nawabshah in Sindh.

The minister informed that the President Mamnoon Hussain, during his March 2016 visit to of Tehran discussed the project with the Iranian authorities.

“It was (then) agreed by both sides to revive discussions on the project in the wake of the removal of international sanctions on Iran,” he added. Pursuant to the meeting, the Iranian side has invited Pakistan for another meeting.

“A Pakistani delegation is expected to visit Iran shortly, for which necessary approval has been sought from the competent authority,” Abbasi said.

Abbasi said that an allocation of Rs25 billion has been made in the budget 2016-17 under the head GIDC for utilisation in connection with gas infrastructure development, which includes Iran-Pakistan Gas Pipeline Project.

The minister said that exploration and production companies were required to deposit social welfare fund in the joint account with the Deputy Commissioner in the concerned district.