Pakistan, Iran to sign 3,000MW power supply deals

Published: March 10, 2016
If Pakistan did not implement the IP project, it would have to pay penalties running into millions of dollars, which would strain relations between the two countries. PHOTO: FILE

If Pakistan did not implement the IP project, it would have to pay penalties running into millions of dollars, which would strain relations between the two countries. PHOTO: FILE


Pakistan and Iran are set to sign deals for supply of over 3,000 megawatts of electricity to meet energy needs of the former during Iranian President Hasan Rouhani’s visit to Islamabad, beginning March 25.

“Three power import deals are expected to be inked by the two countries including supply of 100MW, 75MW and 1,000MW,” a diplomatic source said while talking to The Express Tribune. The 1,000MW agreement could be extended to 3,000MW of electricity.

Iran-Pakistan gas pipeline under shadow of politics

Pakistan is already importing 73MW to meet the requirement of Gwadar but payments could not be made since 2011. Now that sanctions have been removed from Iran, officials believe banking channels will be opened, paving the way for payment of outstanding bills.

The schedule of Iranian head of state’s two-day trip was disclosed during a meeting between Water and Power Minister Khawaja Muhammad Asif and Iranian Ambassador Mehdi Honardoost on Wednesday.

Rouhani’s arrival here holds great significance in the backdrop of lifting of global restrictions and current visit of Prime Minister Nawaz Sharif and Army Chief General Raheel Sharif to Saudi Arabia, which has tense relations with Iran. According to a statement issued by the Ministry of Water and Power, Minister Khawaja Asif assured the Iranian envoy that Pakistan would play a positive role in bringing peace in the region.

The two dignitaries discussed all areas of mutual interest and bilateral cooperation in the field of energy, trade, business and defence. They agreed that due to lack of economic activities in the region, incidents of terrorism were growing.

Stressing that Pakistan and Iran were enjoying close and cordial relations in different fields, Asif said Pakistan was looking forward to the visit of Iranian president with great interest in the hope that it would lead to further deepening of bilateral ties.

Iran deal fuels tussle for gas pipelines in Pakistan

CPEC participation

Asif also highlighted the significance of the China-Pakistan Economic Corridor (CPEC), saying it was the most important artery in the region and all countries in the area should draw up plans for extracting maximum benefits out of the project.

According to officials, Pakistan will formally offer Iran during Rouhani’s visit to participate in the CPEC programme, which would bring peace and ensure vital connections among regional states.

The Iranian envoy pointed out that as curbs had been withdrawn, Tehran had a great potential for attracting investment and priority would be given to the neighbouring nations.

IP gas pipeline

The ambassador insisted that friendship between Islamabad and Tehran would be reflected in joint projects and the Iran-Pakistan (IP) gas pipeline was one of the best schemes in this regard.

Officials of the Ministry of Petroleum and Natural Resources said the Iranian president would push Pakistan to implement the IP pipeline project, which had earlier been stalled by the sanctions on Tehran.

The pipeline was to start running in December 2014 but work could not kick off. Pakistan had tried to engage China and Russia to help implement and finance the pipeline but to no avail. Even Iran offered to finance the project but after formation of the new government there the plan was shelved.

Four countries ink deal for $10 billion TAPI gas pipeline project

Now, hopes are high that the two countries will be able to press on with the plan. Pakistan has already awarded a contract for laying a liquefied natural gas pipeline and building a terminal in Gwadar to a Chinese company. This pipeline will be extended to the Iranian border to connect to the IP pipeline.

Officials said the Iranian president would take up the issue with Pakistan as the government had earlier given a commitment to starting work on the project after removal of sanctions.

If Pakistan did not push ahead with the project, it would have to pay penalties running into millions of dollars, which could strain ties between the two countries.

Published in The Express Tribune, March 10th, 2016.

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Reader Comments (5)

  • Mar 10, 2016 - 10:29AM

    Iran is a fast emerging economic tiger with far reaching connections. Having a border with it is fortunate for us. And as soon as we settle down to making frozen payments and start cross border economic transactions, the better for both countries. Salams Recommend

  • Sodomite
    Mar 10, 2016 - 11:08AM

    About time too. Iran and Pakistan are natural allies.Those with blinders need to know that SA is spent nation that will amount to nothing within next 15-20 years. Iran will be dominant in the Middle East and beyond. Recommend

  • NHA
    Mar 10, 2016 - 2:50PM

    It is good that Iran is warming up to Pakistan and there is possibility for deeper economic cooperation. But Pak should not undertake projectt which are likely to complicate relations like the IP Gas Pipeline and now the electricity supply.

    The price and terms of supply should be clearly spelled out as is done in a commercial deal. It is better to be tough at the negotiations stage than feel and say soorry later. Recommend

  • buga
    Mar 10, 2016 - 11:41PM

    @NKAli: Iran is broke and their only significant asset is oil/gas which is now selling at 1/3 of per-sanction value. How’s that equate to a an “economic powerhouse”? Toss in opposition from Saudi Arabia and the USA and the outlook gets even bleaker. Wishful thinking?Recommend

  • Javad
    Mar 14, 2016 - 2:58AM

    @buga: I hope Pakistan policy makers listen to you and not to follow through with any political and economical agreements with Iran. Iran is afraid of USA just like a …! Iran receives 30,000
    barrels of oil a day from her neighboring country and can not pay it’s debt. Weekly explosion of suicidal bombers that shows insecurity and its governments inability to provide good image of it’s people! Iranian are BROKE in every aspect. Please search google and read what Mr. Bernard Lewis and Robin Wright have plan for Iran and Saudi Arabia and ME and Pakistan and other ….tans.Recommend

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