Resume gas pipeline negotiations: Pakistan

Pakistan and Iran had signed the Gas Sales Purchase Agreement (GSPA) in 2009, according to which Pakistan was liable to pay a fine of $1 million per day if it was unable to take gas supplies from Iran. With the gas pipeline project hitting the roadblocks, Iran sought $1.2 billion in damages from Pakistan in February this year as per the penalty clause from January 1, 2015. The Iranian government has threatened to file an international arbitration case against Pakistan at The Hague for unilaterally shelving the two-country gas pipeline project.

Pakistan’s Prime Minister Shahid Khaqan Abbasi recently instructed the Petroleum Division to invite the Iranian authorities to visit Pakistan for negotiations over the Gas Pipeline Project. The directives were issued after Secretary Petroleum Division dispatched an internal note to the country’s premier about Iran’s endeavours to involve international arbitration court seeking damages worth $1.2 billion. The Iran-Pakistan Gas Pipeline Project has been in the peril for more than three years. Iranian government has already completed construction of the pipeline on its side of the project. It was reported during late months of 2016 that Pakistan has put an end to the pipeline project owing to political pressure from a Gulf country. Pakistan said it failed to raise funds for the gas pipeline project largely due to the sanctions on Iran by the United States and the United Nations. Islamabad requested Tehran for force majeure to avoid penalty worth $1 million per day but the neighbouring country refused to pay heed to the request. Iran’s demand for $1.2 billion in damages is almost equal to the total cost of the project. (IANS)