Despite strong opposition from Washington, top officials from Iran and Pakistan are moving forward to finalize plans for the construction of the initial 80-kilometer segment of the Iran-Pakistan (IP) gas pipeline. This development is expected to occur during the upcoming visit of Iranian President Ebrahim Raisi, tentatively scheduled for April 22-24.
The decision to proceed with the construction of this segment stems from the urgency to avoid potential penalties amounting to $18 billion, which could escalate to $26 billion if the project is not implemented. The Gas Sales Purchase Agreement (GSPA) between the two countries, governed by French law, leaves Pakistan vulnerable to penalties should the project fail to materialize.
The recent approval of the Ministerial Oversight Committee’s recommendations by the Cabinet Committee on Energy (CCoE) has paved the way for the commencement of work on the 80-kilometer pipeline section within Pakistan, from Gwadar to the Iranian border. This phase will be executed by Interstate Gas Systems (Pvt) Ltd. and financed through the Gas Infrastructure Development Cess.
While challenges remain, including potential sanctions from the US and funding issues, Pakistani authorities are determined to move forward with the project to ensure gas supplies for the nation. Initial imports are slated for 100 million cubic feet per day (mmcfd), with the potential for 750 mmcfd upon completion of the entire 781-kilometer pipeline to Nawabshah in Sindh.
As the deadline for the project extension looms until September 2024, both countries are under pressure to act swiftly to avoid costly repercussions and meet their energy needs.
