Pakistan to Talk with Iran to Evade Paying Fine for Failing to Construct IP Pipeline

Pakistani media outlets reported that Islamabad will hold talks with Iranian authorities to avoid paying a fine of $18 billion for failing to fulfil its commitment to construct a gas transmission pipeline in its territory to import Iranian gas.

News ID: ۸۰۸۱۷۷

14 November 2023

Pakistan will ask Iran on Tuesday to provide relaxation on the February-March 2024 deadline to avert the penalty of $18 billion for not laying down a pipeline in its territory, The News reported.

Iran called for Pakistan last year to construct a portion of the Iran-Pakistan (IP) gas line project in its territory by February-March 2024 or pay a $18 billion penalty.

Pakistan was supposed to lay down the 781-kilometer pipeline from the Iranian border to Nawabshah and start consuming 750 million cubic feet of gas daily. Tehran has already laid a pipeline from a gas field to the point bordering Pakistan.

“Pakistan’s delegation will hold talks in Tehran today (November 14, 2023) with Iranian authorities and request them not to move the international arbitration seeking the imposition of an $18 billion penalty. Energy Minister Muhammad Ali may reach Tehran today (Tuesday) but it depends upon the clearance by the PM office. However, relevant officials have reached Tehran. The Energy minister arrived back today (Monday) from Kyrgyzstan,” senior officials of the Energy Ministry told The News.

"Pakistan will also sensitize Iranian authorities of endeavoring to implement the IP gas line through a third party to avoid the US sanctions imposed against Iran. The government has also approached the relevant US departments to find out about the impact of curbs but they have not responded citing a lengthy process to analyse the impact. The French consultants are of the view that US sanctions will have no impact on Pakistan’s economy,” the officials said, geo.tv.com reported.

The Inter-State Gas Systems (ISGS) of Pakistan and the National Iranian Gas Company (NIGC) signed a revised agreement in September 2019 for the pipeline. Under this accord, Iran would not approach any international court for any delay till 2024. Afterwards, Iran would be free to move to France-based international arbitration and seek an $18 billion penalty. / Tasnim