The National Iranian Gas Company’s decision to appeal to the International Court of Arbitration over Pakistan’s procrastination to complete the Iran-Pakistan Gas Pipeline Project — aka Peace Pipeline — is a wise measure, a board member at the Iran International Energy Studies Institute, affiliated to the Oil Ministry, said.
“Islamabad has long been providing NIGC with lame excuses in breach of the terms of a gas import contract it signed with Iran in 2009. Enough is enough and filing a formal complaint against Pakistan should be a priority,” ILNA also quoted Mehran Amir-Moeini as saying.
“Tehran has asked Islamabad to carry out a segment of the IP gas pipeline project on its territory by February-March 2024, or pay a penalty of $18 billion,” he added, noting that the momentous decision is totally right as the neighbor has no intention to import gas from Iran.
Talks are underway between Pakistan and Russia to extend a pipeline to replace IP gas pipeline, meaning Islamabad has misused cordial relations with Iran to buy time not to be sued internationally.
“They are determined to violate the terms of the agreement. Hence, they must be sued and brought before ICA in less than a year; otherwise, the National Iranian Gas Company will be deprived of all its legal rights,” he said.
Iran and Pakistan signed an agreement in 2009 to lay a pipeline to deliver 22 million cubic meters per day of gas from the South Pars Gas Field in the Persian Gulf to Pakistan's Balochistan and Sindh provinces.
The pipeline's construction was to commence in 2012 and be completed in two years. However, Islamabad failed to show sufficient determination to complete the pipeline on its territory, blaming financial constraints.
According to reports, about 900 kilometers of the pipeline have been laid in Iran, but Pakistan has dithered over constructing 700 kilometers of the pipeline on its territory.
Penalty Clause
NIGC should invoke the penalty clause of Gas Sales Purchase Agreement (GSPA) stipulated in the contract, Amir-Moeini said, noting that under the original agreement, Pakistan is bound to pay $1 million per day to Iran from January 1, 2015, under the penalty clause.
In case Iran moves an arbitration court, Pakistan would have to pay billions of dollars as penalty.
The project was to be implemented under a segmented approach, meaning that Iran had to lay down the pipeline on its side and Pakistan had to build the pipeline on its territory. The project was to be completed by December 2014 and become operational from Jan. 1, 2015.
The Peace Pipeline is a 1,957-km pipeline intended to supply much-needed natural gas from Iran’s South Pars fields to Pakistan's two major cities: Karachi and Multan.
Earlier, it was reported that Pakistan was in talks with China and Russia to invest on building the major pipeline, but nothing happened.
If it were not for sanctions, Pakistan would have implemented the project, the NIGEC chief said.
Analysts and experts in Pakistan have concurred that the pipeline is very much in the interest of that country and its energy security.
Tehran has completed building the 1,172 km of pipeline from Asalouyeh in the south to the joint border in the east and awaits Islamabad to build its share of the pipeline (785 km).
However, Pakistan could have put an end to its procrastination and completed the pipeline on its territory in the 17-month period it had after Iran's nuclear deal took effect in early 2016 and before the US abandoned the international agreement and imposed new restrictions on Tehran.
However, not even a kilometer of pipeline was laid which, some claim, has been delayed due to US pressure.
Energy-Hungry Nation
The long-delayed gas pipeline project is crucial for the energy-hungry country of 213 million people.
Pakistan's officials have promised many times to take measures to implement the long-delayed energy project, yet nothing has happened.
The country needs gas to feed its power plants and help improve its power sector that is long struggling with chronic electricity shortages.
Regarding the Turkmenistan-Afghanistan-Pakistan-India gas pipeline project, Amir-Moeini said it is unlikely to pose a challenge to the IP project.
TAPI is a planned 1,800-kilometer stretch of pipeline planned for transferring natural gas from Turkmenistan to India.
It is extremely difficult, if not impossible, to expect Pakistan and India to normalize ties, he said, playing down the prospect of energy collaboration between the two rivals whose ties are overshadowed for decades by border disputes, mistrust and past military conflicts.
Moreover, the pipeline also faces security risks in Pakistan and Afghanistan, a hotbed of militant groups.
“In the current situation, we are not worried about TAPI. It is a much longer pipeline than the Peace Pipeline. While we have a contract with Pakistan and our pipeline has reached the Pakistani border, no contract has been signed for TAPI and construction has not started yet,” he said.
According to Pakistan's Dawn newspaper, over 140 million Pakistanis either have no access to the already overstretched power grid or suffer over 12 hours of load shedding daily.
The average power deficit is 4,000 megawatts and nearly 57 million cubic meters per day in the natural gas sector.
