Pakistan-Iran gas project hit by Chinese reluctance
AFP ISLAMABAD A MULTI-BILLION dollar gas pipeline project between Iran and Pakistan has run into difficulty over reluctance by a Chinese bank to sign up as an investor, officials said Wednesday.
Foreign Minister Hina Rabbani Khar said the government was reviewing sources of funding for Pakistan’s $1.5 billion share of the project that the United States has called on Islamabad to drop because of sanctions against Iran.
“A committee has been set up to look at all available resources for funding the Iran- Pakistan project,” she told reporters at a news conference.
Local newspapers on Wednesday reported that the Industrial and Commercial Bank of China (ICBC) has declined to be part of a consortium to finance the project following reports that firms involved will face sanctions.
Pakistan has said repeatedly that it will pursue the project regardless of US pressure exerted over Iran’s controversial nuclear programme, calling it vital in helping to overcome the country’s debilitating energy crisis.
The petroleum ministry on Tuesday recommended that the government pursue “other options” because “existing parties of ICBC and Pakistan’s Habib Bank Limited (HBL) are showing less interest in the Iran-Pakistan Gas pipeline”.
It suggested finding a second consortium with other companies, or government to government arrangements with China, or Russia, or an arrangement with the Iranian government to complete the project, an official statement said. But on Wednesday, the ministry suggested the matter was not final. It said Inter State Gas Services (ISGS), set up in 1996 to implement the project and which selected a consortium which included ICBC and HBL, was still “in the process of soliciting requisite internal and regulatory approvals”.
Pakistan considers China its closest foreign ally and the ministry said it “views Chinese cooperation with great respect and would pursue the economic cooperation with the ICBC which has shown keen interest in the project”.
Pakistan and Iran signed a deal in 2010 in which Iran is to supply natural gas to its eastern neighbour from 2014, with sales to reach 750 million cubic feet (21 million cubic metres) to one billion cubic feet per day by mid-2015.
Pakistan, which produces just 80 percent of its electricity needs, has presented the $7.5 billion gas project as a partial answer to a crippling energy crisis which has led to debilitating blackouts and suffocated industry. Washington slapping new sanctions on Iran’s central bank in an effort to force it to reverse course on its nuclear programme, has voiced strong objections to the pipeline project.