On Friday, Pakistan and Iran agreed to collaboratively formulate a consensus implementation plan for the Iran-Pakistan (IP) gas pipeline.
This decision follows a meeting between the two sides in Tehran, during which Islamabad sought an extension beyond the February-March 2024 deadline to avoid an $18 billion penalty for not completing the pipeline in its territory.
Last year, Iran had stipulated that Pakistan must complete a section of the gas line project in its territory by February-March 2024 or face an $18 billion penalty.
Negotiations on the implementation plan are scheduled to commence in the next two to three weeks. Despite this development, the Iranian deadline for international arbitration by September 2024 remains in effect, allowing room for further bilateral discussions.
Pakistan’s Energy Minister, Muhammad Ali, stated that constructive talks were held in Tehran, with Pakistan reiterating its commitment to the project. He mentioned that Pakistan has emphasized its energy deficit and highlighted increased efforts on the TAPI gas line project. The Iranian side acknowledged Pakistan’s concerns and expressed readiness to enhance active engagements for the success of the IP project.
During the discussions, Iran also offered to export more electricity to Pakistan for Gwadar and Chaman. Pakistan, which already imports 104MW of electricity from Iran, expressed a willingness to consider the proposal. The minister noted that additional electricity from Iran would be beneficial for Gwadar, especially considering future energy needs once the national grid is established in the region.
Addressing the gas project and the issue of the $18 billion penalties, the energy minister stated that both countries have decided to explore ways to implement the project. The Inter-State Gas Systems of Pakistan and the National Iranian Gas Company had signed a revised agreement in September 2019 for the pipeline, allowing Iran to approach international courts for delays after 2024.
When asked about the possibility of US sanctions, the Iranian side argued that it was already exporting gas to Azerbaijan and Turkmenistan, which had not faced sanctions. They suggested that the same principle would apply to Pakistan in such a scenario.
