Iran-Pakistan gas pipeline: In snub to US, China offers $500m loan

Chinese, Iranian firms to help with construction.

Zafar Bhutta March 13, 2013
Pakistan is in the middle of procuring compressors and pipelines from a Chinese company and Iranian company Tadbir will do the construction, says official. PHOTO: AFP


The United States has made clear its strong stand against the Iran-Pakistan gas pipeline – but the first world power will perhaps be further irritated to hear that China is backing it with a $500 million loan to Pakistan.

“In a major development, China has offered [the] loan,” an official at the Pakistan Embassy in Iran told The Express Tribune. The remaining $500 million would be generated through the Gas Infrastructure Development Cess from gas consumers.

Pakistan had earlier planned to generate the billion dollars through the tax and Iran will be putting in $500 million.

The geopolitical sands appear to be shifting on more than one front as this development comes days after Pakistan handed over to China control of its key Gwadar port in Balochistan.

In one of the boldest snubs of consistent US pressure and warnings, Islamabad and Tehran formally launched the project on Monday in an elaborate groundbreaking ceremony held at the Pakistan-Iran border.

Petroleum ministry officials confirmed that Pakistan is in the middle of procuring compressors and pipelines from a Chinese company and Iranian company Tadbir will do the construction. Pakistani companies such as Sui Northern Pipeline Limited, Sui Southern Gas Company Limited and Frontier Works Organisation would be involved.

The board of directors at the Interstate Gas Systems met March 8 to consider awarding the contract for the pipelines and compressors to Chinese company Panyn Chu King Steel Limited that will provide the pipeline at the rate of $1,650 per tonne, including compressors. The board will be negotiating for discounts with the Chinese firm.

Meanwhile, an Iranian company had quoted the price of $1,980 per tonne. An official said that Iranian contract prices would be turned down because they are higher.

The 1,600-kilometre pipeline, projected to cost a whopping $1.5 billion would enable the export of 21.5 million cubic meters of Iranian natural gas to Pakistan daily. The country hopes to overcome its energy crisis with the 4,000 Megawatts capacity of this project.


Published in The Express Tribune, March 13th, 2013.


Usman | 9 years ago | Reply

@neil: It's a small price to pay to gain more independence from the Westerners.

Usman | 9 years ago | Reply

@stevenson: If that were truly the case, why has the US been lobbying so hard to prevent Pakistan from going through with this deal? Hillary made a statement only a few months ago that implied that Pakistan could be sanctioned if it proceeds with the pipeline. The US understands only one thing..."might is right" and everyone else can jump off a bridge.

Replying to X

Comments are moderated and generally will be posted if they are on-topic and not abusive.

For more information, please see our Comments FAQ

Most Read