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Pakistan to be fined $18bn if it fails to complete Iran gas project

May 18, 2023 at 1:27 pm

A view of the South Pars gas field facilities near the southern Iranian town of Kangan on the shore of the Gulf on January 22, 2014. [BEHROUZ MEHRI / AFP via Getty Images]

Pakistan faces a hefty $18 billion penalty if it fails to complete a gas pipeline project with Iran, Dawn has reported. Iran has already built its section of the pipeline, but Pakistan is yet to finish the one on its side of the border within the timeframe set out in the agreement.

The 25-year deal to export Iran’s natural gas through a pipeline to neighbouring Pakistan was signed between the two countries in 2009 and was supposed to be implemented by 2015. However, the project was stalled due to US sanctions against Tehran and pressure on Islamabad from Washington. According to a revised contract in September 2019, Iran agreed not to file a lawsuit if Pakistan completes the pipeline by March 2024.

Noor Alam Khan, head of the transparency watchdog the Public Accounts Committee (PAC), was quoted by Dawn as saying: “The US should pay the penalty if it does not approve of Pakistan and Iran going ahead with the gas pipeline project. The USA will have to do away with double standards — being lenient with India in meeting its energy needs while punishing Pakistan for the same.”

The comments were in response to a letter sent by Pakistan’s foreign ministry, following a meeting with PAC in March, who raised concerns over a possible fine.

The ministry said: “In view of great importance of the Iran-Pakistan (IP) gas pipeline project in the emerging regional situation, this ministry has been exploring all possible options, including close engagements and meaningful exchanges with relevant parties, including Iran and the USA.”

“Pakistan was committed to the Pak Stream Pipeline project. The two sides are negotiating outstanding issues,” the ministry added.

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