Pakistan has decided to go ahead with a
controversial $1.5bn pipeline to import Iranian
gas, a senior government official has said, in a
move that risks alienating the US. A decision has been made that we cant delay
this project for any longer. This is Pakistans
essential lifeline. We are going ahead with this
project, the official told the Financial Times on
Thursday.
sif Ali Zardari, Pakistans president,
unexpectedly cancelled a trip to Iran at the last minute in December, amid concerns in Islamabad
over stiff US opposition to a project considered
essential for tackling mounting energy shortages.
Some Pakistani officials had expected Mr Zardari
to consent to the project during the trip. The plan would see Pakistan build a pipeline
connecting its national gas supply grid in the
southern Sindh province to the Iranian border in
southwest Baluchistan. Iranian officials say they
have already built the pipeline on their side of the
border to within 100km of Pakistan. The US has opposed the pipeline on the grounds
it would inject foreign exchange into the Iranian
economy at a time when western countries have
imposed a number of ever tighter sanctions in an
effort to prevent Tehran from advancing its
nuclear weapons programme. Independent economists said it was too early to
predict whether the project would go ahead.
The companies involved from Pakistan may face
the danger of being exposed to US-led western
sanctions, warned Sakib Sherani, an economist.
There are also technical issues in undertaking such a large project. However, Islamabad has become all too aware of
the political and economic risks posed by chronic
electricity shortages after people took to the
streets in cities across the country last summer in protest at power cuts up to 20 hours long. Pakistan appeared confident the US would not hit
it with tough sanctions, according to a senior
western diplomat in Islamabad. In their
[Pakistans] calculus, they believe that the US
needs Pakistan to ensure a successful drawdown
from Afghanistan by December next year, the diplomat said. The Pakistanis probably believe there will be a
lot of huff and puff but no painful sanctions. In all
honesty, Pakistan has a terrible situation on
energy and these [energy] shortages can
undermine the countrys stability. Iran has offered its neighbour at least $500m to
help finance the project. The money was just the
beginning, the Pakistani official said. The
Iranians have said they will provide more
funding for this project if there is a need. The Iranian pipeline offers Pakistan the shortest
supply route from any gas surplus country,
officials say. Asim Hussain, chief adviser on oil
and natural resources to the government, told the
FT last December: Its a feasible project for
Pakistan. Its the quickest route, the cheapest route where we can fulfil our energy needs.
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