It might appear controversial to some, for the final agreement was finalised in the last few weeks of the tenure of the government and its construction work ceremony is to be performed just five days before it leaves office. Furthermore, it has been argued that the PPP government is leaving a lot of burden on the next government, in terms of facing pressure and possible sanctions from the United States. Neither of these two views appears to me sensible or convincing. In the hyper-politicised environment of Pakistan, anything can be made contentious. Good things to a country can happen anytime. Perhaps, we should have done this much earlier, but better now than later or never.
Why do I believe this to be a good project? Let me confine myself to two arguments. First, a good number of our industries are closed, the workforce unemployed and the tax-base of the country shrinking. While the emerging economies are exploring opportunities to access energy resources in far-off regions of the world, Pakistan has an abundance of these just across the border. Even if one argues that we invest in and develop our own energy resources, a view I would support, at the moment, we need an energy breather. This pipeline, in a very short time frame of about 15 months, can ease pressure on Pakistan’s energy shortages and substitute the use of expensive furnace oil for power generation. A gas flow of 21.5 million cubic metres daily will have multiple positive gains for Pakistan’s economy.
Second, we have not sufficiently realised the benefits of regional trade, investments and economic connectivity. Our markets for whatever we produce are in distant places. This is against the global trend of regional economic integration. We have made changes during the past decade but the potential for Pakistan’s economy is far greater in regionalisation than we have been able to realise. Both through the framework of regional organisations and at a bilateral level, we need to move towards Iran, India and Afghanistan and through Afghanistan to Central Asia. This is the region that is going to be the hub of economic growth and prosperity for the next half century. We shouldn’t miss any opportunity that opens up for us. Bringing in China in our infrastructural projects and building of the gas pipeline are steps in the right direction for a future full of positive gains.
True, there will be pressures on Pakistan for we have a dependency syndrome and many internal vulnerabilities that external powers exploit to keep us in line. This project is in our national interest and we can make a convincing argument to our traditional friends in Washington and Riyadh that, as we explore other alternatives, time is not on our side and we will need more energy in the coming decades. National interest comes first, friends later.
COMMENTS (15)
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@ss: "PSO is an autonomous body, and if it defaults it does not mean State of Pakistan has defaulted." 1. You are correct that it does not mean that the State of PAkistan has defaulted. However, PSO is state owned i.e. Pakistan government holds 54% of the equity. This default thus could impact credit worthiness of Pakistan. 2. The people who owed PSO and did not pay - leading to the international default are - PIA, Pakistan Railway, WAPDA etc. 3. IT had been desperately asking for a fraction of its dues to be cleared and had gone to the Prime Minister for the purpose. http://tribune.com.pk/story/514526/teetering-on-the-edge-pso-defaults-on-payments-to-international-suppliers/
I hope this project comes through and Pakistan follows a look-west policy and thus the powers that be there will have new places to send their strategic assets to.
@gp65: PSO is an autonomous body, and if it defaults it does not mean State of Pakistan has defaulted.
@naeem khan Manhattan,Ks: US needs Pakistan as much as Pakistan needs the US is an absolute myth. I'd love for the list of things Pakistan provides, though, beyond a supply route and cheaper way to remove equipment due to the fact that has an expiration date and it most certainly is not equal to what Pakistan gets from the US.
Pakistan badly needs the Gas but its benefactors would rather it not buy the same from Iran. Pakistan has been a client state from independence pursuing policies to cuddle favours from from one or other benefactor. It is natural that if it now claims "I am now a 66 year old adult capable of making my own decisions", it will be treated with scepticism. Secondly, the pipeline has to pass through Baluchistan which means that security concerns have to be addressed. This is a game of posturing and blackmail being played between Pakistan, Saudi Arabia and USA, welfare of citizens is only a secondary consideration. Damned if you do, damned if you don not is how I will put it.
I believe this pipeline is a waste of time and resources as the project is not economically feasible in the long run. The truth of the matter is that "Pakistan needs a complete overhaul in its mindset", right now as the country is already living beyond its means of income. I believe it should set up some five year plans if it is actually looking for growth that is sustainable including some of the following points: 1. Eliminate political appointments in the state PSU's 2. Start focusing on Renewable energy projects (Hydel/Wind) 3. Eliminate the criminal & jihadists from its society. The first can be immediately done the second will take about 6 years and the third one will take probably 2 decades, but the end result would be a better & stronger Pakistan, that is not entirely dependent on begging for money from the West or the Arabs or even the Chinese !!!
"National interest comes first, friends later" - couldn't agree more.
Yes, Pakistan's security and prosperity comes first, by the way they (US and Saudi Arabia) needs Pakistan as much Pakistan needs them. Iranians has stood up to the exploiters and Pakistanis could do it too by making sure that those who are liable to pay their share of taxes do so and if they don't then the roads to jails should be paved and lighted.
Building the pipeline is one of the best thing happening to Pakistan. Okay, it may take years but its a start and one day it will end successfully. No, the pipeline cannot be extended to China. It can only be extended to India. Prices? With America and China importing less gas due to advances in shale technology prices will fall. The next idea will be to have a pipeline from Oman to Pakistan to lessen dependence on Iran. This pipeline will bring more security to Pakistan than all the nuclear warheads put together.
“Fearing that Pakistan will realign itself, from pro-West Arab states like Saudi Arabia to an Iran-Afghanistan-centred strategic outlook, the masters of the old strategic game, inside and outside, have placed Pakistani decision-makers under a lot of pressure.”
Wrong. .....No not quite. The author is alluding to Shia Iran v Wahabi Arab schism and how coupled with Arab spring, loss of a large sunni, nuclear nation like Pakistan to Iran is causing great distress among GCC, plus US is moving towards self-reliance in energy. So that is more than strategic..it is tectonic my friend.
Your last point about cost to Pakistan. Well Geo-Strategics revolving around energy have their own momentum and governing laws of nature. This pipeline will lead to an couple of other parallel pipelines that may carry oil to a mega-refinery at Gwadar port. Then refined products may find their way into international markets, back into Iran or even distant China. Such Petro-economy will cast a dark shadow upon the puny Gulf shiekdoms. You get it?
Also remember, by 2015-17 Pakistan may get a cheaper counter offer from a new global gas supplier, i.e. USA!
Things a changin'.. Better Pakistan change too.
One more thing, Turkey and Iraq also import or plan to import Iranian gas. No sanctions for Turkey should mean no sanctions for Pakistan.
If this was such a feasible and workable project ppp would have started it soon after it came in power to get huge credit for solving energy crisis in Pakistan but it didn't.Signing this project few weeks before its tenure ends shows nothing but hollownes.Looking at ppp's over forty years record it can easily be rejected as politicle stunt.
There is no question that we need more sources of power. The question ought to be, 'will this pipeline' ever get built?
Can it survive a government change in Pakistan?
Can it survive mounting, crippling sanctions on Iran's economy? (implication is will they be willing to partially finance the Pakistani part one/two year(s) from now?)
The answers are of course more negative than the author might wish for.
Given that, is it wise to pursue this course, or would it be better to pursue some other means to acquire power sources at home? Should we even focus on traditional thermal sources of energy when their prices are hard to predict and the pollution they cause have higher moral implications not too long from today. We don't want to build this pipeline for next 10 years, we want to build it and use for next 25? Should Pakistan's energy consumption mix have natural gas 25 years from today?
It makes a lot of sense to have a source close to our border than importing LPG from far across. Probably the terminals that need to be constructed to handle LPG may cost us a fortune too. US and Saudia will go to any length to isolate Iran to serve their best interests and it is about time that we look at our best interest as well.
"Fearing that Pakistan will realign itself, from pro-West Arab states like Saudi Arabia to an Iran-Afghanistan-centred strategic outlook, the masters of the old strategic game, inside and outside, have placed Pakistani decision-makers under a lot of pressure."
Wrong. The pressure has everything to do with the fact that US and EU have sanctioned Iran due to its nuclear program and nothing to do with fear of Pakistan's strategic outlook. In any event, as you yourself say, the project has not moved forwad in 20 years. 4-5 years back there were no sanctions, why did it not move ahead?
Today the project cost is 1.5 b dollars of which Iran will give a loan of 500 million. Pakistan does not have a way to pay for the remaining billon since neither China nor Russia are willing to fund it and of course getting an ADB or WB loan for this project is out of the question.
Just 2-3 days back PSO defaulted on its international obligations to Kuwait Power Company. If Pakistan does not have money to pay for its oil, how will it pay for its gas? Also is this project truly in Pakistan's national interest - particularly when the price of gas in the contract is much higher than global norms?
If Pakistan is able to fund the project and it is truly viable economically, Pakistan should go ahead with it, but this does not seem to be the case.
The author gives the impression that we may be calling America's bluff. But why no one is telling us what the US might do to punish Pakistan for hobnobbing with the most sanctioned country? If Iran is going to charge us the international price, what is the big advantage? Why not import compressed or liquified gas and avoid annoying the country that is a big source of aid, trade and may be investment?