Business

Pakistan mulls plan to complete Iran gas project sans US sanctions

Published

1 year ago

Farwa

“Iranian authorities are also on the board,” say officials.
Pakistan seeks to avoid $18 billion penalty sought by Tehran.
Pakistan failed to lay down pipeline amid US sanctions.

ISLAMABAD: The authorities have started formulating a plan to restructure the much-delayed Iran-Pakistan (IP) gas pipeline project to avoid US sanctions and the $18 billion penalty sought by Tehran, top officials in Law Division told The News.

“Under the new option, Pakistan may not purchase the gas directly from Iran, but through a third party or a powerful country to escape the US sanctions imposed against Iran for its nuclear ambitions. Iranian authorities are also on the board.”

The interim energy ministry was sent a question as to whether the authorities are working to restructure the project to avert the US curbs and penalty of $18 billion, but he gave no response till the filing of this story.

“Pakistan has so far failed to lay down the pipeline in its territory in the wake of US sanctions against Iran whereas Tehran has laid a pipeline from a gas field to the point bordering Pakistan. Pakistan has been very sensitive and careful in implementing the project as it never wanted to be the victim of US sanctions.”

Iran has been advocating that there are no sanctions on gas trade and more importantly on the construction of pipelines within Pakistan’s territory.

So in the latest scenario, in January 2023, Iran formally asked Pakistan to construct a portion of the gas line project in its territory till February-March 2024, or be ready to pay a penalty of $18 billion.

“When Pakistan’s delegation visited Tehran in November-December 2022, Iranian authorities had said that the US sanctions on Iran were illegal and Pakistan, and under the revised agreement, Pakistan was bound to erect the pipeline in its territory till February-March 2024. Iran had already completed part of the pipeline in its own territory from the gas field to the Pakistan border.”

The Gas Sales Purchase Agreement (GSPA) was signed in 2009 for 25 years, but the project could not take shape.

Almost 12 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 pipeline of 781 kilometers from the Iranian border to Nawabshah under the GSPA.

Under the original agreement, Pakistan was bound to pay Iran $1 million per day 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.

The project was to be implemented under a segmented approach meaning 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 become functional from January 1, 2015.

Pakistan has tried a lot to ascertain the status of the US sanctions impact if Pakistan goes for the gas pipeline through the US embassy, but no response was attained.

“Now the Attorney General’s Office (AGO) has been tasked to make contacts with US relevant departments to know what US sanctions would impact Pakistan if Islamabad decided to complete the project.”

However, top authorities in the Law Division and the Ministry of Energy, according to sources, have started working on the option to restructure the IP gas pipeline project in such a way that the project gets completed and the penalty of $18 billion is also averted.

The authorities are working to include in the project transaction a third party or a powerful country that does not care about the US sanctions.

“Pakistan will purchase the gas from a third party and this is how the project will be completed setting aside the sanctions and gas intake will also be ensured.”

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.