Business

Pakistan asks US if sanctions on Iran will impact gas pipeline project

Published

2 years ago

Farwa

US hasn’t responded to Pakistan yet.
Iran terms US sanctions “illegal.”
It’s been almost 13 years since the agreement was signed.

ISLAMABAD: Pakistan has asked the United States if its sanctions on Iran will impact the much-delayed gas pipeline project, a senior official at the Energy Ministry told The News.

The official said the ministry has informally asked the authorities several times, while the State Minister for Petroleum Musadik Malik has also taken up the matter with US functionaries during his recent US visit.

“While coming back home, he also met US officials in Qatar and agitated the issue if the US sanctions imposed on Iran will impact Pakistan if it goes for IP gas line project,” the official added.

Earlier, Special Assistant to the Prime Minister on Foreign Affairs Syed Tariq Fatemi had also spoken to the US authorities about the issue.

“So far, the US has not responded to this effect,” the official said, adding that Pakistan needs a response from the American government to make the final decision on the very important project.

Pakistani authorities are now optimistic about the project, particularly keeping in view of the new era of friendship between Saudi Arabia and Iran backed by Beijing and new geo-strategic alignments. “In the past, there had also been opposition to the project from the Kingdom of Saudi Arabia.”

In the latest development, Tehran asked Islamabad in January 2023 to construct a portion of the Iran-Pakistan (IP) gas pipeline project in its territory till February-March 2024, or be ready to pay a penalty of $18 billion.

During the visit, Iranian authorities claimed that the US sanctions on Iran were illegal and that Pakistan, under the revised agreement, was bound to build the pipeline by February-March 2024. Iran had already completed part of the pipeline in its own territory from the gas field to the Pakistan border.

Prime Minister Shehbaz Sharif had formed a three-member committee headed by Fatemi on how to advance on the issue given the Iranian warning to move French arbitration against Pakistan.

The committee had proposed to engage Iran on the issue and also to launch diplomatic endeavours with US functionaries on various levels to know the impact of sanctions against Iran on Pakistan in case the project gets commissioned.

The IP gas pipeline project was to be completed by December 2014, and gas flow intake was to start from January 2015 but Pakistan could not initiate the pipeline from the Iranian border to Nawabshah.

The Gas Sales Purchase Agreement (GSPA) was signed in 2009 for 25 years. Almost 13 years have passed since the signing of the agreement, and the three-year construction period for the pipeline in Pakistani territory has been wasted. Under the agreement, Pakistan was supposed to lay down in its territory a 781-kilometre pipeline from the Iranian border to Nawabshah.

Under the original agreement, Pakistan is bound to pay $1 million per day to Iran from January 1, 2015, under the penalty clause. And in case Iran moves an arbitration court, Pakistan would have to pay billions of dollars as a penalty. But in Sept 2019, the Inter State Gas Systems of Pakistan (ISGSP) and the National Iranian Gas Company (NIGC) inked a revised agreement for the construction of the gas pipeline.

Under the revised accord, Iran would not approach any international court if there was a delay in the construction of the pipeline, and neither would Pakistan pay any fine to Iran till 2024.

However, after February-March 2024, Iran would be free to approach arbitration against Pakistan. The Islamic Republic reminded Pakistan about the completion deadline of the project, an official said.

The News broke the story in its edition of January 31, 2023, with the headline “Iran dangles the threat of $18 billion penalty over the pipeline project.” On completion, Pakistan would have an intake of 750 million cubic feet of gas from Iran daily.

In the meeting, the official said, it was decided that diplomatic efforts would also be initiated to convince Iran that Pakistan was quite serious about the project and would persuade the authorities not to seek a penalty in case Pakistan fails to meet the deadline of February-March 2024.

They said the country will be trying to get a waiver or relief from the US on the sanctions imposed on Iran.

“Now there are only US sanctions left as the UN curbs are no longer there on Iran for its nuclear programme,” the official said.

“Pakistan is an energy-starved country and it needs relief from the US sanctions so that it can erect the pipeline to ensure sustainable gas availability.”

Iran says the US sanctions are illegal. Experts say sanctions do not bar the construction of the pipeline, but only on gas flows from Iran. India also got a US waiver and has been getting crude oil from Iran since a long time.

Business

SFD and Pakistan Sign Two Deals Totaling $1.61BLN

Published

1 day ago

Farwa

Two agreements totaling $1.61 billion have been inked by Pakistan and the Saudi Fund for Development to improve their bilateral economic cooperation.

Business

Saudi Arabia and Pakistan sign an MOU to strengthen their auditing industry collaboration.

Published

1 day ago

Farwa

A spokesperson for the office of the Auditor-General of Pakistan (AGP) announced on Monday that the two countries have signed a Memorandum of Understanding (MoU) to strengthen cooperation in public sector auditing through improved cooperation between audit institutions of both countries, as well as training programs and the exchange of trainers.

This comes as a group from Saudi Arabia’s General Court of Audit (GCA), headed by GCA President Dr. Hussam bin Abdulmohsen Alangari, arrived in Pakistan on Sunday for a four-day visit.

The agreement was signed during AGP Muhammad Ajmal Gondal’s meeting with the Saudi delegates, aiming to strengthen audit cooperation, enhance knowledge-sharing, and improve governance, transparency and accountability in government spending.

Public relations officer Muhammad Raza Irfan of the AGP’s office told Arab News that the deal will further advance bilateral collaboration between Saudi Arabia and Pakistan in addition to enhancing professional ties between the two nations’ auditing institutions.

In a statement released from his office, AGP Gondal was cited as saying, “This collaboration marks a significant step toward fostering international cooperation in auditing.”

“The exchange of ideas and methodologies will undoubtedly strengthen our capacity to meet emerging challenges and set new benchmarks for public accountability.”

Discussions at Monday’s meeting focused on fostering closer ties between the Supreme Audit Institutions (SAIs) of Pakistan and Saudi Arabia, sharing innovative audit methodologies, and planning collaborative initiatives for the future, according to the AGP office.

The two parties decided to increase their knowledge of theme, environmental, and impact audits as well as to exchange best practices in audit standards, performance audits, and citizen participation audits.

The statement added, “It also agreed to exchange trainers, address new auditing challenges, plan cooperative audits, including a performance audit on the oil and gas sector in 2025, and work together on training programs.”

Both sides reaffirmed their shared commitment to promoting transparency, accountability and excellence in public sector auditing.

Business

The government chooses to continue the PIA privatization process.

Published

1 day ago

Farwa

The Pakistan International Airlines (PIA) privatization process will be restarted by the federal government, and expressions of interest would be requested within the month. Officials stated that the Prime Minister’s Committee on Privatization will convene to make the final decision.

Usman Bajwa, the secretary of the Privatization Commission, gave a briefing on the updated procedure to the National Assembly Standing Committee on Privatization. Additionally, he disclosed that airlines other than PIA are now able to compete with regional carriers thanks to IMF-approved aircraft tax concessions.

Farooq Sattar, the chairman of the privatization committee, underlined the importance of giving PIA workers at least five years of job security. Employee protection will continue to be a top priority and will be resolved prior to bidding, the Privatization Commission promised.

PIA’s liabilities totaling Rs650 billion have already been assumed by the government, and an additional Rs45 billion in outstanding debts must be paid before the privatization process can begin. As of the now, PIA has assets around Rs155 billion and liabilities worth Rs200 billion. It will be necessary for the new buyer to expand the fleet by 15 to 20 aircraft.

Additionally, the Privatization Committee has sought a timeline for the privatization of Faisalabad, Gujranwala, and Islamabad Electric Supply Companies. Officials stated that after the appointment of a financial advisor, the privatization process for these companies will accelerate.