WITH a framework for a nuclear deal in place and with signs of rapprochement between Iran and the international community, now is the time to re-energise the Iran-Pakistan gas pipeline project.

Last December, the government made a half-hearted foray into the global financial markets to determine investor interest in the plan. It returned with the gloomy report that the sanctions on Iran were making investors wary of getting involved in the project.

That may be about to change as the world begins to eye the business opportunities that are about to open up. Pakistan should also start by at least verbally intimating its interest in pursuing the pipeline project energetically.

Take a look: Iran-Pakistan gas project to be completed in two phases

Much has been made of the LNG imports. The fact that the first consignment of LNG has already landed, and there has been much bragging about this feat, is an indicator of the high level of ownership that was given to this project by the government.

The high return on equity allowed to power producers who will use LNG is another signal that the government is moving fast to incentivise imports and create a constituency within the country for LNG.

Similar high-level ownership now needs to be given to the Iran-Pakistan pipeline, beginning with the government affirming its commitment to the project, followed by the homework necessary to start construction, creation of the relevant tariffs and policy software to manage injections of the gas into the national transmission system, and proper agreements to govern allocations.

Diversifying our fuel mix is an important priority of the government, and the pipeline project is the most promising avenue through which to pursue this goal.

Pipeline gas is much cheaper than LNG and more reliable as well. There is no longer any reason for the government to continue to drag its feet. Whatever decision is made regarding Saudi Arabia’s request for troops for the Yemen campaign, it is important to ensure that it does not adversely impact the Iranian pipeline project.

Our domestic energy security must take precedence. Thus far, the project has been held up by one specific sanctions law that prevents dealings with Iran’s central bank.

That law is amongst the sanctions that are about to be lifted. Beyond that, there is little in the sanctions regime that prevents Pakistan from moving ahead on the plan.

It might still take time to arrange an investor, but much of the homework on the ground, which was not done in the enthusiastic haste to complete the LNG project, can begin now and perhaps some PSDP allocations can be made in the forthcoming budget to add credibility to the government’s resolve. It is imperative that the government seize the moment and involve itself with determination in a scheme that can bring the people considerable relief at time of a serious energy crisis in the country.

Published in Dawn, April 6th, 2015

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