Pakistan scraps multi-billion gas pipeline project with Iran under pressure from US

Pakistan has temporarily shelved the multi-billion dollar gas pipeline project to import cheap energy from neighbouring Iran, apparently under pressure from the US which has imposed sanctions against Tehran over its nuclear programme, according to a media report on Monday. The development comes as Pakistan struggles to put its cash-strapped economy in order with the help of the International Monetary Fund, which agreed to provide USD 3 billion in loan.
The project was initially conceived as an India-Pakistan-Iran gas pipeline, but later, India left it and became a bilateral project between Pakistan and Iran.
The sanctions imposed by the US on Iran over its nuclear programme have deterred Pakistan from constructing the pipeline. The Dawn newspaper reported that Pakistan had issued a notice of ‘Force Majeure and Excusing Event’ to Iran to suspend its contractual obligation on completion of the multi-billion-dollar Iran-Pakistan (IP) gas pipeline project because of external factors outside Islamabad’s control. Pakistan has expressed its inability to pursue the project as long as US sanctions on Iran remain in place or Washington tacitly green-lights Islamabad to go ahead with the project that has been in cold storage for almost a decade despite acute energy shortages in the South Asian nation of 240 million people, the paper reported.
“Pakistan has issued a Force Majeure and Excusing Event notice to Iran under the Gas Sales and Purchase Agreement (GSPA), which resultantly suspends Pakistan’s obligations under the GSPA,” according to a written testimony Minister of State for Petroleum Musadik Malik has given to the National Assembly.
In a policy statement placed on the floor of the lower house of Parliament, the minister also put on record that Iran disputed the notice of force majeure and excusing event. The statement came in response to questions from lawmaker Muhammad Jamal-ud-Din from Muttahida Majlis-e-Amal party, who wanted to know if the government of Pakistan had a target completion date for the cross-border energy project and whether fines were due in case of delays and if other regional nations were enhancing trade relations despite UN sanctions.