ISLAMABAD: In a new development, the PTI government has decided to kick off parleys on Iran-Pakistan (I-P) gas line project that got shelved by the previous government in 2016, and, to this effect, Federal Minister for Petroleum Division Ghulam Sarwar Khan has written a letter to his Iranian counterpart seeking resumption of the talks on the said gas pipeline.
According to a top official, the petroleum minister on November 6 wrote a letter to his Iranian counterpart asking for initiation of the stalled talks on the project at a joint working group (JWG) level. The official said that Iranian delegation may visit either by end of current month of November or at the very outset of next month of December.
The JWG level talks that were to take place after five years would figure out the mechanism on how to advance on the project in the presence of more stern sanctions by the Trump administration.
Pakistan and Iran signed GSPA (gas sales purchase agreement) in 2009 under the IP gas pipeline project in era of Pakistan People’s Party. Since then the project could not get the shape, rather this mega project witnessed many upheavals in the shape of US sanctions first by the Obama administration, and under latest scenario more stern curbs by the Trump administration. Pakistan has failed to lay down pipeline of 781 kilometres in its territory on account of failure in arranging the findings mainly because of the sanctions imposed on Iran for its nuclear ambitions.
But in 2016, the Nawaz government had shelved the project apparently in the wake of pressure of one of the leading UAE countries, but the then Petroleum and Natural Resources Minister Shahid Khaqan Abbasi had confirmed saying: “The government has deferred the project as the government wants the private sector to invest in the LNG terminals and import LNG in the country and to this effect, both new LNG terminals are being erected. If private sector succeeds, then the government may abandon the project.” The then petroleum minister had further said reiterating: “We have deferred it as private sector is going to install more LNG terminals which will be enough to cater to future needs.”
Iran, however, got frustrated and, in February 2018 according to the official, threatened to move arbitration court against Pakistan for unilaterally shelving IP gas line project invoking penalty clause of the Gas Sales Purchase Agreement (GSPA). Tehran had asked for the payment of over $1.2 billion as under the penalty clause from January 1, 2015, as Pakistan is bound to give penalty of $1 million per day if it fails to have intake of gas from Iran under the IP project, top official of the Petroleum Division told The News.
The project was to be implemented under a segmented approach meaning by that Iran had to lay down the pipeline on its side and Pakistan had to build the pipeline in its territory. The project was to be completed by December 2014 and come on stream from January 1, 2015. Under the penalty clause it was agreed by both the sides that if Pakistan fails to have intake of Iranian gas from January 1, 2015, it will have to pay $1 million per day as penalty.
The official said that under the IP gas line, Pakistan could not arrange the funding for the project as US and UN had imposed sanctions on Iran and no international firm and donors were ready to finance the project, and owing to this very reason, Pakistan sought the forced majore to avoid $1 million per day penalty as per sale and gas purchase agreement inked with Iran. However, Iran did not buy the arguments on which Pakistan sought the forced majore so far.
Then Pakistan had made Iran satisfied that it is so serious towards the project, and, to this effect, it had started initiating the Gwadar-Nawabshah LNG Pipeline (GNGP) with the same specifications agreed with Iran and the said pipeline will later on be called as IP gas line.
The government had been pitching the argument before Iran that it has initiated working on Gwadar-Nawabshah pipeline of 700km and when it gets completed, 81 kilometres long pipeline will be laid down backwards from Gwadar to Iranian border to connect the Iran gas line, and, meanwhile, the sanction will also ease down.
“On this argument, Iran did not charge the penalty which was due from January 1, 2015,” the official said. But the government of Pakistan stayed unmoved on the offer of Iran. “The government in June 2016 failed to resist the pressure from one of the Middle East countries which is why it had abandoned the project,” the official insisted saying: “The decision had also annoyed Beijing as Chinese company was given the contract of GNGP under the government to government arrangement. China had earmarked the 85 percent of the funding for the project.
