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Iran urged to build Pakistan side of gas pipeline

October 12, 2013
The Iranian side of the $7.5 billion project is almost complete, but Pakistan has run into repeated problems in paying for the 780-kilometre section to be built on its side of the border.  — File Photo by AFP
The Iranian side of the $7.5 billion project is almost complete, but Pakistan has run into repeated problems in paying for the 780-kilometre section to be built on its side of the border. — File Photo by AFP
The Iranian side of the $7.5 billion project is almost complete, but Pakistan has run into repeated problems in paying for the 780-kilometre section to be built on its side of the border. — File Photo by AFP
The Iranian side of the $7.5 billion project is almost complete, but Pakistan has run into repeated problems in paying for the 780-kilometre section to be built on its side of the border. — File Photo by AFP

WASHINGTON: Pakistan has asked Iran to construct the Pakistani side of the gas pipeline as well because international sanctions were preventing Islamabad from raising funds for this project, said an official statement issued on Friday.

Finance Minister Ishaq Dar, who conveyed this message to his Iranian counterpart Ali Tayyebnia at a meeting in Washington, also urged him to help remove the restrictions that prevented better trade ties between the two countries.

Mr Dar asked the Iranian finance minister to “look into the possibility of constructing the Iran-Pakistan pipeline on Pakistani side as well” because international sanctions were preventing Pakistan from raising finances on its own, said a statement issued by the Pakistan Embassy, Washington.

“International financial agencies are shying away from the project because of these sanctions,” the statement said. “Both sides agreed to explore financing options within the ambit of sanctions imposed on Iran.”

On Tuesday, Petroleum Minister Shahid Khaqan Abbasi told reporters in Islamabad that Pakistan had asked Iran for $2 billion in financing to build its side of the gas pipeline, which has drawn threats of US sanctions.

The Iranian side of the $7.5 billion project is almost complete, but Pakistan has run into repeated problems in paying for the 780-kilometre section to be built on its side of the border.

Experts say the Pakistani request is another setback to the long-delayed project.

US laws call for automatic sanctions on those states and financial organisations that invest in Iranian oil and gas projects. The threat of sanctions scared away international investors.

Mr Dar, who met the Iranian minister on the sidelines of the annual World Bank and IMF meetings in Washington, also discussed with him options for going around these sanctions for promoting bilateral trade.

Mr Dar also asked Mr Tayyebnia to address the issues that prevent “trade between the two neighbouring countries from flourishing,” the statement said.

He told his Iranian counterpart that Pakistan was following a liberal trade regime, but the “Iranian side has imposed restrictions that do not allow businesses to function independently”.

The Iranian finance minister agreed to review the causes that were preventing better trade ties between the two countries. He noted that currently, the two countries only had a $1 billion trade, which “can be increased manifolds”.

Afghan counterpart: Ishaq Dar also met Afghan Finance Minister Omar Zakhilwal and reviewed the decisions taken in their last meeting.

Mr Zakhilwal urged Pakistan to support road and railway projects in Afghanistan and to resolve the issues that were hampering Afghan transit trade.

Mr Dar said that some practical difficulties which Pakistan had identified in the last joint economic meeting in August had delayed progress in the transit trade.

He noted that the Afghan government had not responded to the proposals submitted in the last meetings. The two sides agreed to meet again early next month in Kabul to discuss these issues.

In a meeting with the head of the Japan International Cooperation Agency, Akihiko Tanaka, the finance minister sought early approval of concessional loan for major projects like the Karachi Circular Railway.

Mr Tanaka said his institution was keen to help Pakistan in building these projects. He noted that feasibility studies for the Karachi Circular Railway were also complete.

The finance minister also sought Japan’s support for coal projects and Mr Tanaka assured him that Japan will do so.

Mr Dar signed a loan agreement with the Opec Fund for International Development, under which the OFID would provide $50 million for the completion of Neelum-Jhelum Hydropower Plant Project.