ISLAMABAD - The Iran-Pakistan gas pipeline row has intensified as Tehran accuses Islamabad of violating the agreement.
Diplomatic sources told The Nation that Pakistan was making efforts to stop Iran from moving the arbitration court to seek damages worth over $1 billion.
A senior official at the foreign ministry said that Iran was “fed up” with Pakistan’s logic to delay the implementation of the Iran-Pakistan gas pipeline project. “We are trying to convince them (Iran) that we are still committed to the project and the delay is not due to any bad intention,” he said.
The official said Pakistan was optimistic the issue will be sorted out through talks. “There are only misunderstandings. The issue will be resolved,” he said.
Reports said Iran had threatened to move the arbitration court against Pakistan for allegedly shelving the IP project. Tehran had warned of invoking the penalty clause of the Gas Sales Purchase Agreement under which Pakistan has to pay $1 million per day if it fails to comply with the agreement. Tehran is seeking more than $1.2 billion under the GSPA.
Pakistan says that the IP project was still alive. Foreign Office spokesperson Dr Mohammed Faisal said that IP project had not been frozen. “To the best of my knowledge, the IP gas pipeline project is still on,” he said.
For years, Pakistan and Iran have been working to complete the gas pipeline project to resolve Pakistan’s energy crisis. The IP pipeline project - also called Peace Pipeline – is aimed at constructing a pipeline from Iran’s South Pars fields in the Persian Gulf to Pakistan's major cities of Karachi and Multan.
The pipeline can carry 110 million cubic meters of gas a day. Iran will initially transfer 30 million cubic meters of gas per day to Pakistan, but will eventually increase the gas transfer to 60 million cubic meters per day.
Another official at the foreign ministry said Iran had asked Pakistan “not to follow the United States” on the IP project. “They believe the US is stopping us (Pakistan) to move further on the project. We have tried to defuse this impression,” he said.
Senior Pakistan People’s Party leader Senator Sherry Rehman called the development another “huge foreign policy failure” of the Pakistan Muslim League-Nawaz-led government.
“The IP gas pipeline was ripe for completion from the PPP government’s active diplomacy especially via (former president) Asif Ali Zardari but they ignored it. Now Pakistan is deprived of nearby Gas but also has to pay $1.2 bill in fines to an angry Iran,” she contended.
She said that among a line of foreign policy failures by ousted premier Nawaz Sharif’s government is the fact that Pakistan had to now pay a staggering amount as fine on a pipeline that would have brought gas to an energy-starved Pakistan from Iran. “This is typical of how public interest is ignored by the PML-N as it pursues its own interests,” she said.
She said that Zardari had set it up with Iran in the last PPP-led government through diligent diplomacy with Tehran. “Had this vision been realized not only we would be getting gas from a neighbour but also creating a web of connectivity for an energy grid in the region,” she remarked.
Iran’s ambassador to Pakistan Mehdi Honardoost said Iran had fulfilled its commitments regarding construction of the gas pipeline in the Iranian section and was ready to start export of gas to Pakistan at the earliest in case of implementation of the commitments by Pakistan.
He said no energy source could be a replacement of the IP gas pipeline for growing gas requirements of Pakistan. “Especially in view of the implementation of China-Pakistan Economic Corridor project, Iranian gas will not only fulfill the gas requirements of Pakistan in the coming years rather its transit to China can also be considered,” he explained.