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Pakistan initiates work on IP gas pipeline ahead of Iranian president’s visit
The project, with an estimated cost of Rs44 billion, is expected to be completed within two years
profit.pakistantoday.com.pk
The Ministry of Energy has initiated work on the Pakistan-Iran Gas Pipeline Project, coinciding with the anticipated visit of Iranian President Ebrahim Raisi to Pakistan on April 22.
This project, entailing the construction of an 80-km pipeline from Gwadar to the Iranian border, aims to strengthen bilateral relations and energy cooperation between the two countries.
The project, with an estimated cost of Rs44 billion, is expected to be completed within 24 months.
It will require substantial financial support from the 2024-25 budget under the Public Sector Development Programme (PSDP), as allocations from the Gas Infrastructure Development Cess (GIDC) are deemed insufficient by the Finance Ministry.
The initiative has progressed with the Inter-State Gas Company (ISGS) issuing tenders for the re-validation of surveys and Front-End Engineering Design (FEED), marking an end to a long delay in the project’s progress.
Despite facing opposition from the United States and the threat of potential sanctions, Pakistan and Iran are moving forward with the pipeline that was initially set to be completed by December 2014.
The delay, attributed by Pakistan to US sanctions on Iran, has led to Tehran issuing a final notice for the completion of Pakistan’s portion of the pipeline by February-March 2024, under the threat of an $18 billion penalty as per the Gas Sales Purchase Agreement (GSPA) for the 781-kilometer project.
To avoid arbitration in France and the consequential penalty, Pakistan is urgently laying the 80-kilometer section of the pipeline, which will initially transport 100 million cubic feet per day (mmcfd) of gas.
This volume is expected to increase to 750 mmcfd over the 25-year project duration.
Following the completion of the current phase, the next steps will include land acquisition and the awarding of Engineering, Procurement, and Construction (EPC) contracts.
