Iran cancels $500m loan to Pakistan

Ali Majedi says Tehran has no obligation to finance Pakistani side of pipeline and also did not have the money.

Iran said on Saturday that it has cancelled a planned $500 million loan to Pakistan to build part of a multibillion-dollar pipeline to bring natural gas from Iran, its deputy oil minister said.

Ali Majedi said Tehran has no obligation to finance the Pakistani side of the pipeline and also did not have the money, according to the Associated Press.

“Pakistani officials were told in recent talks that, given the sanctions, Iran is not able to finance construction of the pipeline (in Pakistan) and has no obligation to do so,” Majedi said in comments posted on Iranian oil ministry’s website, shana.ir.

He said Tehran will demand compensation if Islamabad failed to take Iranian gas by the end of next year.

Under a valid contract, Pakistan is required to finish construction of the pipeline on its territory by the end of 2014.

“If a contractor is chosen today and pipeline construction begins today, it will take four years to complete it. Should Pakistan fail to take gas by the end of next year, Iran will demand compensation under the terms of the contract,” Majedi said.

Published in The Express Tribune, December 15^th, 2013.