In the pipeline?: Zardari visit delay raises questions over gas deal

Officials deny Tehran visit has been cancelled.

ISLAMABAD:

President Asif Ali Zardari has delayed a visit to Iran to discuss the Iran-Pakistan (IP) gas pipeline deal despite Tehran’s offer of a loan to help finance the project which the US opposes, officials said on Tuesday.

The $7.5 billion pipeline project has run into repeated difficulties – over US opposition because of Iran’s nuclear activities and Pakistan’s difficulty in finding funds. Earlier it was reported that President Zardari would visit Iran last Friday and that the final agreement would be likely signed during the visit.

Government officials denied that the visit had been cancelled, claiming it had never been officially scheduled due to Zardari’s engagements in London and Paris.

“The visit may materialise on his way back from the ongoing foreign tour or he may visit Tehran after coming back home,” a petroleum ministry official told AFP.

Iranian officials said the visit had been postponed at Pakistan’s request and would happen “soon”.

“It has been agreed that the visit would take place with a bit of change. Iranian assistance to build the peace pipeline in Pakistan will be one of the issues on the visit’s agenda,” said foreign ministry spokesman Ramin Mahmanparast.

Negotiations are reaching a critical point, the Financial Times said, because it will take two years to build Pakistan’s sections of the pipeline and Islamabad would have to start paying Tehran for the gas two years from now.



The newspaper said an increasingly desperate Pakistan is struggling to overcome strong opposition to the project from the United States, which has clamped economic sanctions on Iran because of its nuclear programme.

In 2010, Iran and Pakistan agreed that Tehran would supply between 750 million cubic feet and one billion cubic feet per day of natural gas by mid-2015.

Islamabad has said it will pursue the project regardless of US pressure, calling it vital to overcome the country’s energy crisis that has led to debilitating blackouts and suffocated industry. But in March, it was forced to review sources of funding after newspapers said a Chinese bank pulled out over fears that firms involved will face sanctions.

Pakistani officials said on Tuesday that Iran had promised a $500 million loan and that Islamabad would meet the rest of its $1.6 billion share.

“There are impediments in view of the US opposition to the project but we are determined to complete it to meet our fast-growing energy requirements,” said one government official, requesting anonymity.

But the Iranian foreign ministry spokesman said Iran has confirmed it can finance at least $250 million, despite Pakistan asking for $500 million. “This is a technical issue,” Mahmanparast said.

Published in The Express Tribune, December 12^th, 2012.