Iranian president’s visit aims to push IP gas pipeline project
ISLAMABAD: Following the lifting of sanctions, Iran President Hassan Rouhani is set to visit Pakistan by the end of this month to push for the Iran-Pakistan (IP) gas pipeline project. The project was to be commissioned in December 2014, but work was stalled after sanctions were placed on Tehran.
Officials now say that there are hopes that the project could be implemented. The Iranian president will take up the issue during his visit to Islamabad, said an official, adding that Pakistan had committed to completing the project after sanctions are lifted. Any delay on part of Pakistan in the post-sanction scenario would result in millions of dollars being imposed as penalty, besides upsetting diplomatic relations between the two countries. Iran had wanted some form of commitment from Pakistan, which was given in the form of awarding the LNG pipeline contract. Officials say the standalone project of LNG Gwadar pipeline was feasible as the country required the pipeline capacity to pump LNG. A terminal at Gwadar would also help to import LNG.
But the petroleum ministry was facing problems in implementing the project as the Ministry of Finance appears to have spent the entire cess collection from gas consumers in bridging the budget deficit and is reluctant to provide $300 million for executing the $2 billion Gwadar LNG pipeline project, an official said. This comes despite the Ministry of Petroleum and Natural Resources having approached the finance ministry to seek the release of gas infrastructure development cess (GIDC) collection for spending on planned gas import projects.
The finance ministry instead suggested to borrow around Rs100 billion from commercial banks. Earlier, gas utilities were working on enhancing the capacity of their pipeline networks to create room for LNG transportation. So far, Rs183.86 billion has been received from consumers in shape of GIDC, which was imposed in January 2012 to finance gas import projects. However, nothing has been left as the finance ministry has consumed the entire amount.