Iran refuses to finance Pakistan in IP gas pipeline project

Eurasia News

TEHRAN: The Iranian government will not provide $500 million loan to Pakistan as a part of its assistant to help Islamabad complete multi-billion-dollar pipeline project, saying it has no obligation to finance the Pakistani side of the project and also doesn’t have the money, Dispatch News Desk reported.

The Iranian Deputy Oil Minister Ali Majedi said in a statement posted on the oil ministry’s website.

Majedi further said that Iran will demand compensation if Pakistan fails to take Iranian gas by end of next year.

Iran, which has almost completed the work on its side of the $7.5 billion project, had been asked by Islamabad to construct the Pakistani side of the gas pipeline as well because international sanctions were preventing Islamabad from raising funds for the 780-kilometre section to be built on its side of the border.

On Thursday, Pakistan’s Federal Minister Shahid Khaqan Abbasi had said that Iran expressed its inability to provide $500 million supplier’s credit to Pakistan for the Iran-Pakistan gas pipeline as it was facing acute financial constraints but both countries remain committed to completing the project.

The minister, who had recently visited Iran and held talks on the IP gas pipeline, had told a press briefing that keeping in view the new ground realities both countries decided to revise the parameters to materialise the project as the commitment to complete the project was very much there on both sides.

Moreover, both sides had decided to constitute a working group which would re-establish in two months the new parameters for the projects, including a new time-frame and other important issues involving financing of pipeline to be laid down in the territory of Pakistan, construction period and appointment of EPC contractor and compressor equipment from international companies.