ISLAMABAD — Iran has rejected Pakistan’s request to halt the multibillion-dollar Iran-Pakistan (IP) gas pipeline project due to a declared state of force majeure.
By issuing the notice, Pakistan made clear that it would be unable to move forward with the project so long as US sanctions against Iran remained in place, unless Washington gave Islamabad a green light to do so. This was despite the fact that the South Asian nation of 240 million people was experiencing severe energy shortages.
At a press conference, State Minister for Petroleum Musadik Malik said that Pakistan had given Iran two 5-year extensions to fulfill their responsibilities under the IP project after the latter rejected Pakistan’s force majeure declaration under the Gas Sales and Purchase Agreement (GSPA).
The state minister stated that Pakistan “10 years ago” issued the forced majeure notice that Iran had failed to acknowledge.
He flatly rejected as “incorrect” a recent written answer presented in the National Assembly that claimed Pakistan had issued the forced majeure notice at this time.
According to Malik, Pakistan and the Iranian government have been working together to find a satisfactory resolution to the project’s financial commitments, which have been extended until March 2024.
He also said that Pakistan had been talking to international bodies in an effort to get sanctions lifted so that the country could continue to import electricity from Iran.
“The Pakistani government is engaged with the US authorities through diplomatic channels to seek an exemption from sanctions for the gas project,” he said.
According to Malik, the pipeline’s construction has been delayed because the United States has imposed sanctions on Iran and has not granted a waiver to allow the purchase of petroleum products from Tehran.
He went on to say that if the sanctions were lifted, work could resume on the project.
The state minister insisted that unlike China, India, Japan, South Korea, and several other countries, the United States had not granted Pakistan a waiver to import petroleum products from Iran.
From January 1, 2015, Pakistan must pay Iran $1 million every day until the pipeline is built on Pakistani soil, per the terms of a penalty clause.
However, Malik dismissed this change, insisting that the GSPA’s take-and-pay structure meant there was no penalty for violating it.
He also said that if Pakistan did not fulfill its duties, Iran’s legal system would decide how much of a fine to impose.
The state minister elaborated, saying that the United States and the United Nations have imposed two distinct types of sanctions on Iran.
He explained that Pakistan was afraid of the US sanctions because of how severe they were.
‘We are currently actively engaged with Iran and all other players to find the correct way,’ he continued.
During a trip to Islamabad earlier this month, Iranian Foreign Minister Hossein Amirabdollahian pressed for a speedy end to the protracted IP project.
Amirabdollahian and his Pakistani counterpart, Bilawal Bhutto Zardari, held what Amirabdollahian described at a joint news conference as fruitful discussions about the IP project.
He continued by saying that Tehran was prepared to finish the pipeline as soon as possible because it was in Iran’s and Iraq’s best interests to do so.
By December of 2014, we were meant to have this project wrapped up.
At an estimated cost of $7.5 billion, the groundbreaking ceremony for the 1,150-kilometer pipeline was held in March 2013 on the Iranian site of Gabd, near Chahbahar, and was jointly handled by then presidents Asif Ali Zardari and Dr. Mahmoud Ahmadinejad.
However, Pakistan has failed to begin its end of the work that was expected to be finished by January 2015.
Fear of international sanctions and other geo-strategic compulsions have kept Pakistan from moving forward with the project.
