Pakistan and Iran Collaborate on Gas Pipeline Implementation Plan to Avert Penalty
In a significant development, Pakistan and Iran have reached an agreement to jointly devise an implementation plan for the Iran-Pakistan (IP) gas pipeline. This decision emerged following a meeting in Tehran, where Islamabad sought an extension beyond the looming February-March 2024 deadline to avoid potential penalties amounting to $18 billion for failing to complete the pipeline on its territory.
Karobar
Last year, Iran set a stringent deadline, insisting that Pakistan complete a section of the gas line project within its borders by February-March 2024, or face severe financial consequences.
Negotiations on the implementation plan are set to kick off in the next two to three weeks. Despite this collaborative move, Iran's deadline for international arbitration by September 2024 remains, allowing room for further bilateral discussions.
Muhammad Ali, Pakistan's Energy Minister, expressed optimism about the talks in Tehran, emphasizing Pakistan's unwavering commitment to the project. He highlighted Pakistan's energy deficit and underscored increased efforts on the TAPI gas line project. The Iranian side acknowledged Pakistan's concerns and expressed readiness to actively engage for the success of the IP project.
In addition to the gas pipeline discussions, Iran extended an offer to export more electricity to Pakistan, specifically for Gwadar and Chaman. Currently importing 104MW of electricity from Iran, Pakistan has signaled a willingness to consider the proposal. The minister noted that the additional electricity would prove beneficial for Gwadar, especially in anticipation of future energy needs once the national grid is established in the region.
Regarding the critical issue of the $18 billion penalties, both nations have committed to exploring strategies for successful project implementation. The Inter-State Gas Systems of Pakistan and the National Iranian Gas Company had previously signed a revised agreement in September 2019, allowing Iran to seek international arbitration for delays post-2024.
Responding to concerns about potential US sanctions, the Iranian side pointed to its ongoing gas exports to Azerbaijan and Turkmenistan, which have not faced sanctions. They suggested a similar principle would apply to Pakistan in a comparable scenario.
