ISLAMABAD: A Chinese firm which offered financing of $500m for Iran-Pakistan (IP) gas pipeline has pulled out of the project after Pakistan government expressed its unwillingness to extend the bid validity period.
“After the Chinese firm’s exit from the project, the government is now banking on Iran to fully fund the laying of Pakistan’s portion of the pipeline,” a source said.
According to sources, transition of power in both Pakistan and Iran in recent months has delayed engagements between the two sides, which have to discuss the crucial financing issue for the project.
“We have asked the new Iranian government to provide more than $500m, which has already been committed, to finance the construction of pipeline in Pakistan,” an official said.
Tehran has already expressed its willingness to increase the credit limit. “The two sides are expected to meet this month to take up the proposal that Iran gives the entire financing,” the official said.
The Chinese firm, Panyn Chu King Steel Limited, which has pulled out, had been selected during bidding by Interstate Gas Systems (ISGS) as a qualified bidder, which would provide the pipeline at $1,650 per tonne including compressors.
The company, which also offered to arrange $500m for the project, sought extension in bid validity but the government refused.