Gas pipeline: Iranian firm offers to finance Pakistan’s side

Published: December 17, 2013

According to sources, Pakistan has got the offer from Jahanpars Engineering and Construction, which could undertake entire engineering, procurement and construction work and provide $1.8 billion for the Iran-Pakistan (IP) gas pipeline project. PHOTO: FILE

ISLAMABAD: 

An Iranian firm has expressed interest in completely financing and constructing Pakistan’s segment of a gas pipeline that will come from Iran, an offer that comes after cancellation of a $500 million loan by Tehran earlier.

According to sources, Pakistan has got the offer from Jahanpars Engineering and Construction, which could undertake entire engineering, procurement and construction work and provide $1.8 billion for the Iran-Pakistan (IP) gas pipeline project.

The company has expertise in engineering works and has the capacity and reputation to engage in mega infrastructure projects.

However, the gas pipeline is a project between governments of the two countries, which will be implemented through their nominated entities. Therefore, Pakistan has asked the management of Jahanpars to contact government authorities in Tehran to press on with the plan.

“Working groups of the two countries will consider the financing and construction offer from the company,” a source said.

Earlier, the two sides had agreed to give the pipeline construction contract to Tadbir Energy of Iran, which in response would provide a $500m loan for laying the pipeline in Pakistan.

However, Pakistan insisted that the contract price negotiated with Tadbir was higher and the contract could not be awarded to it.

During a visit of a Pakistani delegation to Tehran last week, Iran also refused to provide the $500 million loan.

When approached, former adviser to prime minister on petroleum and natural resources Dr Asim Hussain, who had pursued the project, said they had convinced the Iranian government to provide $500 million for the pipeline.

“We had also left $470 million in the national exchequer to fund the project,” he said, adding now the new government should develop required infrastructure.

“Although the contract price was higher, there was no other option. This is not a time to scrap the deal,” Hussain remarked.

In the long term, the deal would have a positive impact on the country’s economy when compared to consumption of furnace oil, he added.

According to a report prepared by the Ministry of Petroleum and Natural Resources, if furnace oil-based power generation is replaced with imported gas, it will lead to annual savings of $2.4 billion.

It said IP gas would cause just 20% increase in the average gas basket price in the country if 750 million cubic feet per day (mmcfd) is imported.

Under the project, Pakistan will import 750 mmcfd, which could be increased to one billion cubic feet. The Balochistan government seeks 250 mmcfd for consumption at the Gwadar Port and the Centre can go for increased supplies to meet the needs of the province.

Published in The Express Tribune, December 17th, 2013.

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Reader Comments (29)

  • Parvez
    Dec 17, 2013 - 1:18AM

    …..ok, this is turning into a comedy show.

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  • pulseller
    Dec 17, 2013 - 1:37AM

    These Iranian firms want to lose their money. As they say about fools and their money.

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  • azmat khan
    Dec 17, 2013 - 1:51AM

    I am very hopeful.This project will see completion in the near future.We will take great benefits of it and our closed industries will star rolling again.

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  • Abacond
    Dec 17, 2013 - 1:59AM

    ET, what are Jahanpar Engineering asking for in return? Obviously it takes two to tango.

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  • Grace
    Dec 17, 2013 - 3:06AM

    @pulseller: The Iranian firms are not foolish. They are all hurting under sanctions as is all of Iran. Talk to expatriate Iranians who tell you how the currency there is becoming worthless under U|S sanctions. The real losers in this pipeline deal will be Pakistan until there are assurances that the US won’t slap sanctions on it. Why do you think all Asian countries including Japan are following US sanctions on Iran? Pakistan cannot afford sanctions or pressure on the economy – what makes people think that Pakistan can stand up to US pressure on this issue when even China and Japan caved in? We all know the pipeline will help Pakistan’s energy problems which were ignored during 10 years of Musharraf but the country simply cannot afford US sanctions. Pakistan has to get behind the scenes approval from the US before it moves ahead because the economy is only starting to improve slowly now according to most world economic analysts. It would be shame to see things regress.

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  • unbelievable
    Dec 17, 2013 - 3:17AM

    If true this would be a Billion dollar “no bid” construction deal – likely ruled illegal by Pakistan SC.

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  • polpot
    Dec 17, 2013 - 4:43AM

    Jahanpars Engineering and Construction must also be held responsible for any delays….
    +++++++++++++++++++++++++++++++++++++++++++
    Why did they delay their offer of 1.8 Bn USD ? Why?

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  • polpot
    Dec 17, 2013 - 4:50AM

    “Therefore, Pakistan has asked the management of Jahanpars to contact government authorities in Tehran ”
    +++++++++++++++++++++++++++++++++++++++++++++++++++
    Shows the level of distrust……..It cannot be that Iran will select the Contractor that will work in Pakistan and be paid by Pakistan!

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  • shah
    Dec 17, 2013 - 6:15AM

    Iranians want to lose further billions on this fools pipedream.

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  • The Economist
    Dec 17, 2013 - 9:02AM

    On first instance my opinion was that india made a mistake by getting out of this project but now i think that was correct decision,any ways best of luck to pakistan.

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  • SKChadha
    Dec 17, 2013 - 9:05AM

    What happened to contracts with Tadbir Energy?

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  • Pmahmud
    Dec 17, 2013 - 9:40AM

    Oh yes but they love to invest billion more more in undersea pipeline to India.

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  • objective observer
    Dec 17, 2013 - 10:31AM

    @Pmahmud:

    India will actually buy and pay for the gas.

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  • polpot
    Dec 17, 2013 - 11:54AM

    According to the PM the Pakistani economy has already jumped to a growth rate of 5.1%
    +++++++++++++++++++++++++++++++++++++++++++++++++
    With the flow of gas from this pipeline it will aim skywards.

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  • Indignant
    Dec 17, 2013 - 1:21PM

    Isn’t it amazing that there is not a single quote in the entire article from Jahanpars Engineering and Construction?

    Hope seriously that someday Pakistanis would live in a realistic world. The Pakistani government lies wilfully to the public and I have seen it happen multiple times. So what do we have here, an Iranian company which will set up the pipeline in Pakistan costing $2 billion plus for free? The only thing missing is free gas on this pipeline.

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  • joy
    Dec 17, 2013 - 1:44PM

    Sometime ago this very newspaper carried a news item that an anonymous donor had promised to finance the Pakistan part of the pipeline project.
    Could anyone please tell me what exactly is going on?

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  • Dec 17, 2013 - 2:39PM

    This deserves a big LOL

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  • Imran
    Dec 17, 2013 - 3:58PM

    Kidding me? Give Money to PML(N), Some would be in the pockets and rest would be in building more underpasses. RIP Pipeline project.

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  • Aakashvaani
    Dec 17, 2013 - 4:25PM

    Pakistan is reaping the benefit of keeping the begging bowl ready at all times. Finally, someone took notice and decided to tossed a coin.

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  • Dec 17, 2013 - 4:47PM

    well think about it rationally … does USA want anther failed state on their books.Pakistan is already on it knees with power shortages, unemployment is at its highest ,,breeding ground for extremism.Can you imagine what the country will be like say another 10 years from now if the purposed sanctions are carried out , if the pipe line goes ahead……. totally unthinkable

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  • Maula Jatt
    Dec 17, 2013 - 6:39PM

    Almost all the negative comments are Indians. How jealous can you guys be? Wow… If you are against it, I’m sure its in the interest of Pakistan.

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  • Dec 17, 2013 - 8:00PM

    This offer shows that Pakistan is financially and technically incapable to complete this project through its own resources. Then, why do we claim of nuclear power, Asian tiger, bullet trains etc??

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  • Zarb e Hanood 02
    Dec 17, 2013 - 8:43PM

    @ Joy : Sometime ago this very newspaper carried a news item that an anonymous donor had promised to finance the Pakistan part of the pipeline project.
    Could anyone please tell me what exactly is going on?

    +++++++++++++++++++++++++++++++++++

    The threat of purchasing Iranian gas is just drama by Pakistan to extract the best deal from its Sunni Arab and American patrons. Problem for Pakistan is that her Sunni Arab and American patrons are in no mood to either call off the threat of punishment if Pakistan purchases Shia Persian gas nor are there prepared to succumb to Pakistani blackmail and pay out a ransom to have Pakistan renege on the deal.

    The story of the anonymous “friendly country” willing to finance the project with a billion dollars should be seen in the above light.

    http://tribune.com.pk/story/638053/anonymous-donor-friendly-country-offers-1b-for-iran-pakistan-pipeline-business/

    Recommend

  • Zarb e Hanood 03
    Dec 17, 2013 - 8:44PM

    @ Joy : Sometime ago this very newspaper carried a news item that an anonymous donor had promised to finance the Pakistan part of the pipeline project.
    Could anyone please tell me what exactly is going on?

    +++++++++++++++++++++++++++++++++++

    The threat of purchasing Iranian gas is just drama by Pakistan to extract the best deal from its Sunni Arab and American patrons. Problem for Pakistan is that her Sunni Arab and American patrons are in no mood to either call off the threat of punishment if Pakistan purchases Shia Persian gas nor are there prepared to succumb to Pakistani blackmail and pay out a ransom to have Pakistan renege on the deal.

    The story of the anonymous “friendly country” willing to finance the project with a billion dollars should be seen in the above light.

    http://tribune.com.pk/story/638053/anonymous-donor-friendly-country-offers-1b-for-iran-pakistan-pipeline-business/

    Recommend

  • Alann
    Dec 17, 2013 - 9:41PM

    @Maula Jatt: “Almost all the negative comments are Indians. How jealous can you guys be? Wow… If you are against it, I’m sure its in the interest of Pakistan.”

    Ok, I did not wanted to comment on this article, but since you said that, I’d like you to tell you there’s a big difference between “being jealous” and “laughing at someone’s stupidity”. What the Indians (and actually, more than half of the commentators on this article are Pakistanis) are doing is, they are pointing fingers and laughing, because they know it is another attempt by Pakistan’s highly-efficient Government to fool the public once again. I don’t see whats there to be jealous about for the Indians, especially when India itself pulled out from this pipeline project owing to the security concerns in the Madina-e-Sani.

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  • shujath
    Dec 17, 2013 - 10:19PM

    Like it happened with a Chinese Coal Company, who were ready to finance the Thar Coal Project, but the corrupt Ministers, after getting commission from Oil Mafia Lobby, were responsible for Chinese going from Pakistan. Now also, Corrupt Ministers, on behalf of Oil Mafia Lobby, who are against Iran Pak pipeline, will unnecessarily insist on a lower gas price , and at the end , Iran Pak pipeline project will be cancelled.
    Also , the Tiger of PML N , cannot stand in front of US pressure, and He cannot say face to face to US that, IP pipeline is in Pakistan’s interest and Pakistan will go ahead with the project.
    If Pakistanis don’t want load shedding , the businessmen of Pakistan should put pressure on PML N to complete Iran Pak pipeline as early as possible..

    Recommend

  • Dec 18, 2013 - 12:33AM

    @Aakashvaani:
    you indians are speaking against it,it means it is in our favour.Recommend

  • shahid
    Dec 18, 2013 - 1:32AM

    Grab this offer and run before it is withdrawn.

    Recommend

  • Maula Jatt
    Dec 18, 2013 - 7:19PM

    @Alann: No, its jealousy as I correctly observed. That same jealousy is burning you inside, but by the grace of God almighty, we are safe from your hatred. We have our own country where we can live in peace and security, despite your machinations. Get a life and post somewhere else.

    Recommend

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