Connect with us

Business

Pakistan mulls plan to complete Iran gas project sans US sanctions

Published

1 year ago

on

  • “Iranian authorities are also on the board,” say officials.
  • Pakistan seeks to avoid $18 billion penalty sought by Tehran.
  • Pakistan failed to lay down pipeline amid US sanctions.

ISLAMABAD: The authorities have started formulating a plan to restructure the much-delayed Iran-Pakistan (IP) gas pipeline project to avoid US sanctions and the $18 billion penalty sought by Tehran, top officials in Law Division told The News.

“Under the new option, Pakistan may not purchase the gas directly from Iran, but through a third party or a powerful country to escape the US sanctions imposed against Iran for its nuclear ambitions. Iranian authorities are also on the board.”

The interim energy ministry was sent a question as to whether the authorities are working to restructure the project to avert the US curbs and penalty of $18 billion, but he gave no response till the filing of this story.

“Pakistan has so far failed to lay down the pipeline in its territory in the wake of US sanctions against Iran whereas Tehran has laid a pipeline from a gas field to the point bordering Pakistan. Pakistan has been very sensitive and careful in implementing the project as it never wanted to be the victim of US sanctions.”

Iran has been advocating that there are no sanctions on gas trade and more importantly on the construction of pipelines within Pakistan’s territory.

So in the latest scenario, in January 2023, Iran formally asked Pakistan to construct a portion of the gas line project in its territory till February-March 2024, or be ready to pay a penalty of $18 billion. 

“When Pakistan’s delegation visited Tehran in November-December 2022, Iranian authorities had said that the US sanctions on Iran were illegal and Pakistan, and under the revised agreement, Pakistan was bound to erect the pipeline in its territory till February-March 2024. Iran had already completed part of the pipeline in its own territory from the gas field to the Pakistan border.”

The Gas Sales Purchase Agreement (GSPA) was signed in 2009 for 25 years, but the project could not take shape. 

Almost 12 years have passed since the signing of the agreement, and the three-year construction period for the pipeline in Pakistani territory has been wasted. 

Under the agreement, Pakistan was supposed to lay down in its territory a pipeline of 781 kilometers from the Iranian border to Nawabshah under the GSPA.

Under the original agreement, Pakistan was bound to pay Iran $1 million per day from January 1, 2015, under the penalty clause. And in case Iran moves an arbitration court, Pakistan would have to pay billions of dollars as a penalty.

The project was to be implemented under a segmented approach meaning that Iran had to lay down the pipeline on its side and Pakistan had to build the pipeline in its territory. The project was to be completed by December 2014 and become functional from January 1, 2015.

Pakistan has tried a lot to ascertain the status of the US sanctions impact if Pakistan goes for the gas pipeline through the US embassy, but no response was attained. 

“Now the Attorney General’s Office (AGO) has been tasked to make contacts with US relevant departments to know what US sanctions would impact Pakistan if Islamabad decided to complete the project.”

However, top authorities in the Law Division and the Ministry of Energy, according to sources, have started working on the option to restructure the IP gas pipeline project in such a way that the project gets completed and the penalty of $18 billion is also averted.

The authorities are working to include in the project transaction a third party or a powerful country that does not care about the US sanctions.

“Pakistan will purchase the gas from a third party and this is how the project will be completed setting aside the sanctions and gas intake will also be ensured.”

Related Topics:
Continue Reading
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Business

Dar chairs the CCOP meeting; Blue World’s bid offer of Rs.10 billion is rejected.

Published

2 days ago

on

By

The Foreign Minister/Deputy Prime Minister chaired the Cabinet Committee on Privatization meeting.

Other committee members who attended the conference included the Federal Secretaries of several Divisions, the Ministers of Finance and Revenue, Industry and Food, Commerce, Power, and Privatization.

The CCOP took the PC Board’s recommendation into consideration and suggested that Blue World’s bid of 10 billion rupees for the sale of 60% of PIACL’s shares be rejected. The bid was rejected by the CCOP, who chose to follow the PC Board’s advice.

The government’s determination to sell out PIACL through government-to-government or privatization was reaffirmed by the CCOP.

The CCOP was pleased with the Aviation Division’s evaluation of PIACL’s sound financial standing.

Additionally, the CCOP established a committee, chaired by the Minister of State for Finance, to assess potential transaction possibilities for the privatization of the Roosevelt Hotel and the appropriate modes of adoption in light of existing legal rules.

Prior to its subsequent meeting, the CCOP also ordered that all difficulties be resolved and an agreement for the selling of services to an international hotel be concluded.

Continue Reading

Business

The KSE-100 Index has surged by 790 points, resulting in an all-time peak for the stock exchange.

Published

2 days ago

on

By

The benchmark KSE-100 Index increased by 790 points, marking a new all-time high for the Pakistan Stock Exchange (PSX) at 94,982 points.

The record-breaking performance underscores a surge of optimism and investor confidence in the stock market.

As investors responded to favorable economic signals, the market experienced a significant increase of over 500 points in early trading. Later, the KSE-100 Index reached another record level of 94,786 points after adding 594 points to its upward trajectory.

This positive development comes as the State Bank of Pakistan’s (SBP) foreign exchange reserves saw an increase of $84 million, reaching $11.26 billion during the week ending November 8, according to data released by the central bank on Thursday.

This represents an increase of 0.75% from the previous week. In addition, the nation’s total liquid foreign reserves experienced a modest increase, increasing by $33.7 million or 0.21% week-on-week to $15.97 billion.

In contrast, commercial banks’ reserves experienced a decline of $50.3 million or 1.06%, ultimately settling at $4.71 billion.

Furthermore, the economic team of Pakistan has expressed confidence in the discussions with the International Monetary Fund (IMF). Minister of State for Finance Ali Pervaiz Malik, in an exclusive conversation with Samaa TV, claimed talks were moving in a positive direction.

Highlighting improvements in Pakistan’s economic conditions, Malik noted substantial progress over the past six months to a year. He emphasized that Pakistan’s current economic situation has seen significant enhancement, with a reduced current account deficit of only $100 million in the first quarter, a reflection of the government’s strategy to increase remittances and boost exports.

Malik shared that discussions with the IMF are primarily focused on external financing, and while there have been speculations about a potential mini-budget or an increase in the petroleum levy, he clarified that these are currently premature considerations.

Continue Reading

Business

Positive IMF negotiations propel KSE-100 Index above 94,000 points

Published

3 days ago

on

By

As a result of investors’ optimism about the reported progress in the continuing talks with the International Monetary Fund (IMF), the Pakistan Stock Exchange (PSX) experienced a robust surge.

The benchmark KSE-100 Index of the PSX, which tracks market sentiment, rose 713 points to a new record high of 94,068 points, breaking above the 94,000-point barrier, as the trading session began.

Early in the day, the stock market began its upward trajectory as the KSE-100 Index steadily rose, gaining 574 points to reach 93,932 points. A possible agreement with the International Monetary Fund (IMF) might lead to more fiscal stability and back Pakistan’s economic reforms, which is why investors are so optimistic about the country’s future.

Officials from the Federal Board of Revenue (FBR) informed the International Monetary Fund (IMF) on Wednesday that the government would not be introducing a mini-budget and would instead continue to aim to collect Rs12,970 billion in taxes each year.

In line with continuing discussions with the Fund, FBR sources revealed that petroleum goods will not be subject to the General Sales Tax (GST).

The fact that Pakistan’s tax-to-GDP ratio has increased from 8.8% to 10.3%, a 1.5% gain viewed as a favorable sign of Pakistan’s fiscal policies, has reportedly pleased the IMF, who has voiced satisfaction at Pakistan’s recent economic performance.

Continue Reading

Trending