All-out help: Iran offers to finance entire gas pipeline

Published: June 5, 2012

US opposition has made it impossible for Pakistan to find a willing investor for its part of the pipeline. PHOTO: FILE

US opposition has made it impossible for Pakistan to find a willing investor for its part of the pipeline.  PHOTO: FILE US opposition has made it impossible for Pakistan to 
find a willing investor for its part of the pipeline. DESIGN: ALI DARAB
ISLAMABAD: 

With no country or company willing to take part in a project that the US opposes, Tehran has offered to lay the entire Iran-Pakistan (IP) gas pipeline project.

Pakistan has pitched investment proposals to China and Russia but no major progress has been made due to US pressure. Both countries had earlier offered to provide complete financing for the project in case the contract was awarded to them without a bidding process.

The project, if completed, will supply 750 million cubic feet gas per day (bcfd) of gas to the energy deficit country.

The US has warned Pakistan and companies assisting the project of possible sanctions if they go ahead.

State-owned National Bank of Pakistan (NBP) and Oil and Gas Development Company Limited (OGDC) walked away from the project last year. NBP feared branch closures in different countries while OGDC backed off after US-based investors threatened to withdraw its shares from the company if it associated itself with the project.

In March this year, the world’s largest bank Industrial and Commercial Bank of China Limited (ICBC) after agreeing to finance Pakistan’s side of the pipeline shied away after succumbing to US pressure.

Tehran offers to provide all the oil Pakistan needs

With a decline in supply of Iranian oil in the world market following ban imposed by US and European Union, Tehran has offered to provide all the oil Pakistan needs on a 90-day deferred payment.

“Iran has confirmed financing of $250 million on government-to-government basis and also expressed willingness to seek more finance from Iranian commercial banks,” a government official said quoting recent development made in Iran during negotiations between officials of both the countries. Pakistan seeks financing of over $500 million from Iran to finance IP gas pipeline project.

Modalities will be finalised during upcoming talks between the two countries scheduled in Islamabad.

“Pakistan is going to woo China again to help out with its finance constraints during the upcoming visit of President Asif Ali Zardari,” official said adding that Minister for Petroleum Dr Asim Hussain will accompany the head of state.

Iran is the second country to offer import in weeks as India recently agreed to meet Pakistan’s total import requirements, however, the deal did not go through as Pakistan is reluctant to over rely on its old foe and also rejected diesel import due to security reason.

“Pakistan may avail Iran’s offer to meet total oil requirements but there will be some hurdles like opening Letter of Credits (L/Cs) due to sanctions against the oil-rich country,” official said adding that oil imports from Iran could be possible through a third party. “Iran is ready to provide oil on a three-month deferred payment facility but it should be forward looking, otherwise the disparity between rupee and dollar could hurt us,” official said.

State-owned National Bank of Pakistan (NBP) and Oil and Gas Development Company Limited (OGDC) walked away from the project last year. NBP feared branch closures in different countries while OGDC backed off after US-based investors threatened to withdraw its shares from the company if it associates itself with the project.

Published in The Express Tribune, June 5th, 2012.

Reader Comments (32)

  • John B
    Jun 5, 2012 - 6:21AM

    PAK is always on the wrong side for wrong reasons.

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  • Fatah
    Jun 5, 2012 - 7:42AM

    Yes to Iran. No to India.

    Iran-Pakistan gas pipeline is a must; as well as road and rail connections between the two nations.

    There should be a Karachi to Tehran weekly passenger train.

    All trade between Iran and Pakistan should be in local currencies.

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  • Wtf?
    Jun 5, 2012 - 7:49AM

    This is a way for Pakistan to become independent, form closer ties with Iran, and the break the remaining chains of slavery.

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  • Singh
    Jun 5, 2012 - 8:20AM

    Wait and watch the show by defying world community on WOT.

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  • Rizwan
    Jun 5, 2012 - 8:56AM

    Thats what i call a friend in need IRAN has offered to finance the entire pipeline .Pakistan should have the courage to go a head with the project now .

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  • GhostRider
    Jun 5, 2012 - 10:30AM

    So now if Iran is offering to lay down the pipeline for us… still government will go ahead of gas development cess? Maybe it not about the pipeline, its about 10% commision.

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  • Raj - USA
    Jun 5, 2012 - 10:40AM

    If Iran is financing the entire pipeline, it would be like Iran investing in Pakistan. Investment by other countries in Iran may come under sanctions but as this will be Iran’s investment in Pakistan, will it also fall under the purview sanctions ? I am not sure. However, it is an offer that Pakistan can hardly ignore.

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  • faraz
    Jun 5, 2012 - 10:41AM

    Those who are commenting against, are definitely not from Pakistan, not friends of Pakistan.
    @John B: Pakistan should be looking after its own interests, whether that creates pain in the * of the so-called friends, you know what I mean!
    @Singh: Pardon me, but how do you define Indian atrocities in Jammu & Kashmir, isn’t that terrorism?

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  • khan
    Jun 5, 2012 - 10:54AM

    china backed out huh? wat happened to frenship? So now we r in same group as Ira n North Kor.

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  • Babur Irfani
    Jun 5, 2012 - 10:57AM

    Iran has offered to finance the entire project because it needs to trade and now a days no one else wants to trade with them- In Pakistan people are calling Iran a true friend

    US has freaken paid for your army, navy, airforce, paid for the Orion replacements. Provides billions in aid every freakin year, paid for the green revolution, paid for the mangla and tarbela, built universities, designed the education system, provided all the higher education, military and civilian training. Till the 1980s- as part of the PL-480 program provided food as grant so people wont go hungry- and in Pakistan that is considered an Enemy.
    What a thankless people

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  • Babur Irfani
    Jun 5, 2012 - 11:01AM

    Iran and Iraq are helping Syria to crush the rebellion… News flash for Pakistanis– Iran is doing so because the regime in Syria are Salafi (form of Shiaiites). The rebels in Syria are Sunnis.

    The Iranians are helping the Syrians only because it is killing Sunnis

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  • Freedom Seeker
    Jun 5, 2012 - 11:15AM

    Good news when nation is surrounded by nightmares. At least there is someone who can weather hard time with us. All our old friends and allies left us when we need them the most.

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  • Faysal
    Jun 5, 2012 - 11:39AM

    Pakistan should go ahead with the pipeline project for a number of reasons. First, It needs energy, second US’s sanctions against Iran are un-prinicpled. Same sanctions need to be imposed on Isreal because it has developed nukes as well. Pakistan needs to strengthen its relations with all of its neighbours including India and afghanistan

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  • Ordinary Villager
    Jun 5, 2012 - 12:42PM

    ET is now a place for Indian Trolls and none of my friends visit ET anymore. Iran is the first country in the world who recognized Pakistan. Iran always supported Pakistan’s Kashmir stance. Iran is the only country which helped us in 1965 with free oil when there was war. Iran helped Pakistan militarily in 1965 as well. What else we want from Iran??. Whenever need arises they helped us. Pakistan should break shackles of Slavery and dont please Saudia as our national interest comes first and we must complete this project at all costs. Pakistan should accept this Offer immediately.

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  • faraz
    Jun 5, 2012 - 1:01PM

    @Babur Irfani: Yep, we are reaping the fruits of this friendship right now, in the form of hyper-inflation and acute power shortage!

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  • Syed Hasan Rizvi
    Jun 5, 2012 - 1:17PM

    @ Babur Irfani: get a life Syrian president is an Alawite and Salafis are not Shia’s, for your clarification Salafi’sm is practiced in KSA. Secondly going by your logic, Iran should not be helping/ financing Hamas, which is a Salafi organization. And FYI Khalid Meshal (leader of Hamas) lives in Syria. Think before commenting!

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  • Alu_Anday
    Jun 5, 2012 - 2:23PM

    Oh and where is the saviour of Pakistan? I mean Saudia, the favorite of the establishment! How cud i forget; of course it has to abide by the rules set by its patriarch!
    It is time the establishment/state/government should now realize the importance and benefits of our relationship with another brotherly muslim country as Iran and stop looking towards the Saudi Clergy for good!
    If for once we do realize this, time is not far away, the west will have to put up with another embargo like it had to in 1973! Only this time, we shud act less emotionally and more pragmatically!

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  • Rajendra Kalkhande
    Jun 5, 2012 - 4:22PM

    Pakistan’s relations with Iran should always be analysed by keeping in mind the Saudi-Pakistan relations. It should not be difficult to judge who holds the long stick.

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  • yASIR
    Jun 5, 2012 - 4:47PM

    @Babur Irfani
    Hahahahaha salafi is a shia sect????????? Hahahahahahahaha. Check out buddy. Straighten ur facts before u tok.

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  • Ordinary Villager
    Jun 5, 2012 - 4:48PM

    Now let us see what will be the stance of PMLN as Mr Shahbaz is whining for energy crisis and this project could be completed in two years but on one side we have PMLN’s master Saudia Arabia and on the other side we have a Master America and a party who want to come in power will stay away from Supporting pipe line and that is why PTI and Imran Khan are silent and PMLN who wants energy crisis to be over is also silent on this issue. This is a real test of Opposition to lobby for this project and if PTI and PMLN will not lobby for it then we can safely say that All Pro Gov and Opposition parties are in Noora Kushti with each other.

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  • Concerned Citizen
    Jun 5, 2012 - 5:35PM

    Just to please other countries we should abandoned this gas project when we are facing 12-16 hours of load shedding, gas shortages. Businesses on the brink of bankruptcy due to no electricity. The country will not exist if we do not avail any opportunity to facilitate us increase our Energy Production and decrease the shortages we are facing

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  • Ali Wali
    Jun 5, 2012 - 5:57PM

    For an ordinary Pakistani it is a good deal, damn politics.Recommend

  • Cautious
    Jun 5, 2012 - 7:20PM

    “Pakistan is going to woo China again
    to help out with its finance
    constraints during the upcoming visit
    of President Asif Ali Zardari,”
    official said adding that Minister for
    Petroleum Dr Asim Hussain will
    accompany the head of state.

    If Iran is going to finance the entire pipeline then why do you need to “woo china”?

    Recommend

  • Waiting
    Jun 5, 2012 - 7:41PM

    @khan:
    Once again. There are no friends or enemies – only interests.

    Recommend

  • Waiting
    Jun 5, 2012 - 7:42PM

    @Babur Irfani:
    You mean Alawite, not Salafi. Seriously do some research before posting.

    Recommend

  • Shaikh Saadi
    Jun 5, 2012 - 8:31PM

    Our Iranian brothers should have a good design against sabotage. In the Haber Process, the original scientists used an automatic shutdown valve which in the case of explosion in any part would shut off and keep the gas in other segments of the pipe from flowing out. It should be a technological improvement and learning experience.

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  • Pollack
    Jun 5, 2012 - 9:32PM

    The most important factor in Iran Pakistan relations is Saudi Arabia and not the US. I have total confidence that Pakistan can never go against the Saudis. This deal is dead unless the Saudis agree which probably they won’t.

    It will be a significant development if Pakistan can act independent and go against the saudis but the resulting consequence will be very nasty. I doubt if Pakistan establishment has the stomach to face the consequences of such an action.

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  • Yousaf Hyat
    Jun 6, 2012 - 2:38AM

    @khan: I guess the fireworks in China’s Western Province were too much for them….Chini Paki no longer Bhai bhai …??

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  • Pakistani
    Jun 6, 2012 - 3:48AM

    Pakistan is in dire need of energy, if we can get it through this route than be it. Pakistani industry is collapsing due to this acute energy crisis. If something isn’t done, I am afraid consequences won’t be good.

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  • Pakistani
    Jun 6, 2012 - 3:50AM

    The biggest cities of Pakistan are experiencing almost 12 hours of energy blackouts everyday, do you really think denying a energy is an option for Pakistan?@Singh:

    Recommend

  • Navaid
    Jun 6, 2012 - 5:54AM

    @Babur Irfani:
    Hey jew boy, go back to Tel Aviv, and get a nose job.

    Recommend

  • True Muslim Paki
    Jun 7, 2012 - 1:09AM

    It’s a golden opportunity for Pakistan. We should accept without a second thought. But, am disappointed with china, who has shown their colors. The lesson is you can only rely on the ummah & no one else.

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