Pipeline progress

Published February 25, 2024

THE outgoing caretaker government has decided to move forward with the much-delayed Iran-Pakistan gas pipeline project, and the incoming administration will be required to take further diplomatic and legal steps so that the scheme is no longer hindered. The Cabinet Committee on Energy on Friday decided to construct an 80km stretch of the pipeline running from the Iranian border to Gwadar. The Iranians have built the pipeline at their end, but Pakistan has been unable to start work on its side of the border, apparently due to concerns of attracting US sanctions. The interim administration seems to have made the decision considering Iran’s option of moving the International Court of Arbitration, which could bring a $18bn penalty for Pakistan, as the state had issued a sovereign guarantee for the project.

The caretaker set-up’s move should bring some clarity regarding the project’s future. First agreed to in 2009, the scheme has been in limbo mainly because successive governments here have failed to take a concrete decision on its fate. The caretaker administration had consulted neutral foreign experts on the issue, who had said that while the scheme could attract US sanctions, Pakistan’s citing of force majeure to justify its inability to proceed with the scheme was a weak defence. Therefore, executing the project was preferable. With regard to the incoming rulers, the PML-N in its latest election manifesto has also cited its desire to “enhance economic and energy ties” with Iran, specifically mentioning the oil and gas sectors. Hence, there should be no contradictions between the caretaker administration’s decision and the new rulers’ policies.

The fact is that Pakistan needs regular and affordable access to natural gas. Dwindling local supplies cannot meet demand, as the gas load-shedding in both the domestic and industrial sectors, especially during the winter months, shows. Therefore, importing Iranian gas is a sensible economic decision; it is the geopolitics of the matter that have caused lengthy delays in the scheme’s implementation. The fear of US sanctions should be dispensed with. For example, both China and India have been importing Russian oil, despite the West’s displeasure with this trade in the context of the Ukraine war. The US has sanctioned hundreds of entities and individuals linked to Russia. This includes firms in China, Turkiye and the UAE. And while it can be argued that China and India have the economic heft to ignore American and European sanctions, Pakistan, if it plays its cards right, can also trade with Iran without attracting Washington’s ire. The state should go ahead with the pipeline, while the legal and diplomatic fronts need to be monitored to ensure that the project is protected from American sanctions. The new government must do what is in the country’s best interests.

Published in Dawn, February 25th, 2024

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