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Project in jeopardy: Iran-Pakistan pipeline

November 01, 2013

DOUBTS have deepened even more over the uncertain future of the multi-billion-dollar pipeline being built to import Iranian gas, after Iran’s oil minister indicated that Tehran will probably not go ahead with the project. The $7.5bn project has run into many obstacles ever since it was conceived in the late 1990s to connect Iran’s South Pars gas fields to Pakistan and India. India quit the pipeline project in 2009 after signing a civil nuclear deal with the US, which has put immense pressure on Islamabad to abandon it or face the risk of international sanctions similar to those that are strangling the Iranian economy. The Iranian minister was brief in his remarks: “Given the current conditions, we do not have hope for exporting gas to Pakistan.” He did not give reasons but it would be unfortunate if the diminishing interest of Islamabad turns out to be a major factor behind Tehran’s own dimming expectations.

The pipeline’s collapse does not bode well for a country that is faced with a severe energy crisis. Industry and other consumers in Punjab and elsewhere are being advised by the government to brace themselves for record gas shortages in the coming winter. The supply gap is projected to soar to above 1400mmcfd in Punjab in January. It was being hoped that the 750mmcfd gas that Iran was supposed to supply to Pakistan (provided, of course, that Pakistan completed its part of the pipeline by December next year) would have partially helped in reducing the energy shortages in Pakistan — shortages that continue to pull down the country’s GDP by 3pc every year. If the present government is serious about implementing the project, as the prime minister and his ministers have repeatedly been vowing to do, it should not delay in pursuing the Iranian authorities and convincing them to not end the agreement. Maybe a commitment that Pakistan is ready to promptly start work on the construction of the pipeline on its side can still salvage the gas deal.