ISLAMABAD: Iran has suggested that Pakistan should hire a third party for making payments for energy supplies to the Middle Eastern country as international banks are reluctant to process transactions due to economic sanctions slapped by the United States and the European Union.

Iran has come up with a revised agreement on a gas pipeline project between the two countries, proposing that Pakistan should engage a third party to pay for gas to be transported from Iran’s South Pars field, sources say.

Iranian Minister of Economic Affairs and Finance Dr Ali Taieb Nia took up the proposal when he met Petroleum and Natural Resources Minister Shahid Khaqan Abbasi on December 8 in Islamabad.

“An Iranian team is expected to pay a visit to Pakistan soon to finalise the alternative plan for the pipeline project and the proposal for payments via third party,” an official said.

Nia stressed the importance of brotherly relations with Pakistan and pointed out that people of the two countries had the same religion and culture. “No country could create hurdles in the way of forging better ties and we will continue to enjoy the same relations,” he said. Iran has already completed its part of the pipeline and expects Pakistan to meet the commitment and finish work in its territory swiftly. Nia expressed the desire that gas flow to Pakistan should start soon so that the South Asian country could be able to tackle the energy shortfall.

Discussing the negotiations over the nuclear programme, the Iranian minister told Abbasi that talks with the international community had been successful and sanctions would be removed very soon. With the removal of restrictions, Iran’s trade volume and economic relations with its neighbours would improve further, he hoped. Iran has great potential to export petro-chemicals, electricity and fertilisers and asked Pakistan to capitalise on the opportunities available in its neighbourhood.

However, Pakistan insists that Iranian negotiators should seek special exemption for the project from the sanctions while reaching a nuclear deal with the US and other world powers.

Abbasi suggested that the international embargo on Iran had prevented Pakistan from pushing ahead with the pipeline project on its territory. Despite the best efforts, he said, international contractors and equipment suppliers were not willing to be part of the scheme. He said the government was now planning to complete the project in two phases – first, a liquefied natural gas (LNG) terminal would be built at the Gwadar Port and then a 42-inch pipeline spread over 700 kilometres would be laid from Gwadar to Nawabshah for onward transmission of gas to northern parts of the country.

The government is engaged in negotiations with Chinese companies for construction of the pipeline and work on a 70km stretch of the pipeline from Gwadar to the Iranian border will be undertaken by Pakistani companies. “This project is expected to start in the near future,” he said.

According to Abbasi, Pakistan desires to deepen trade and economic ties with Iran not only in the oil and gas sector including trade in liquefied petroleum gas (LPG) and petro-chemicals, it also wants to forge partnerships in other fields of the economy, including fertilisers.

Published in The Express Tribune, December 30th,  2014.

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