Pakistan's Premier Multilingual News Agency

Pakistan and Iran agree to implement gas pipeline project

Islamabad,17 November 2023,(GNP): Pakistan and Iran have agreed to actively collaborate in formulating a consensus implementation plan for the Iran-Pakistan (IP) gas pipeline. Negotiations for this plan are set to commence in the next two to three weeks.

The deadline for Iran to initiate international arbitration by September 2024 stands, providing ample time for the exploration of bilateral options.

Energy Minister Muhammad Ali stated, “Constructive discussions took place in Tehran, and Pakistan has reaffirmed its dedication to the project.”

The Iranian side attentively considered our concerns and agreed to intensify collaborative efforts for the IP project,” explained Energy Minister Muhammad Ali.

In the discussions, Iran proposed an expanded export of electricity to Pakistan for Gwadar and Chaman. Pakistan agreed to assess this offer, acknowledging that it already imports 104 MW of electricity from Iran.

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Energy minister expressed the opinion that Pakistan requires additional electricity from Iran for Gwadar, subject to a more favorable negotiated tariff.

Despite the establishment of a 300MW coal-based power plant by China in Gwadar, it may not suffice for future demands. The minister highlighted the potential for using more Iranian electricity for national purposes once the national grid is established in Gwadar.

Regarding the gas project and the concerns about $18 billion penalties, the energy minister noted that both countries have jointly decided to explore avenues for project implementation.

In September 2019, the Inter-State Gas Systems of Pakistan and the National Iranian Gas Company signed a revised agreement for the pipeline. This agreement specified that Iran would refrain from approaching any international court for delays until 2024 but retained the option to do so afterward. The primary obstacle to Pakistan’s pipeline construction was the risk of US sanctions associated with any project involving Iran.

However, the Iranian side assured that the US sanctions are no longer an obstacle as Iran is already exporting gas to Azerbaijan and Turkmenistan, both unaffected by sanctions. This perspective was extended to Pakistan in the given scenario.