ISLAMABAD: While Pakistani Prime Minister Nawaz Sharif has announced in New York that his government will proceed with the Pak-Iran gas pipeline despite US pressure, the fact remains that Islamabad is set to miss the deadline for the 250km portion which must be completed by December 2014.
This is feared mainly because the Pakistan Muslim League-N government led by Sharif did not make any allocation for the project in the Federal Budget for the fiscal year 2013-14, which began on July 1. Though Rs126bn were earmarked for 12 ongoing and six new gas projects, the Iran-Pakistan pipeline project was not included.
Conceding that the government did not make any allocation for the gas pipeline project in the budget, a senior Petroleum Ministry official in Islamabad said on condition of anonymity that the project was still on despite the pressure.
He said the gas pipeline could not be dropped altogether, largely because that would invoke a penalty payment to Iran. Instead, he said, the government was delaying the project in a bid to bargain lower prices from Tehran, based on comparison with coal.
According to the ministry official, while trying to renegotiate the already-signed deal, Pakistan has already asked the new Iranian government to completely finance the $1.8bn bilateral gas pipeline project in view of fears that the US sanctions could hit funding for the venture.
Federal Petroleum Minister Shahid Khaqan has already stated last month that the government would continue work on the pipeline and discuss the project with the new Iranian cabinet for seeking the entire financing.
Iran is facing sanctions and the Foreign Office has been asked by the government to assess the impact of the US curbs on the pipeline project, Abbasi added.