Pakistan sends a delegation to Iran to work on a gas pipeline, avoiding a $18 billion fine.

According to sources, Pakistan will shortly send a delegation to Iran for negotiations on the Iran-Pakistan Gas Pipeline (IPGP) project.

According to diplomatic sources who spoke with ProPakistani, the group will primarily be made up of representatives from the Ministry of Energy, while representatives from the Ministries of Finance and Foreign Affairs are also anticipated to join.

According to sources, the group will speak with Iranian authorities about the punishment for the gas pipeline project’s delay. Relevantly, Pakistan must finish its portion of the IPGP project on its borders by February or March 2024, failing which it will be fined $18 billion.

Iran retains the right to take action by enforcing the Gas Sales Purchase Agreement’s penalty clause in the event that implementation is not made (GSPA). A 781-kilometer pipeline from the Iranian border to Nawabshah was to be built by Pakistan over a three-year construction period as per the 2009 deal, which was originally signed for a 25-year term.

The project was planned to be finished by the end of 2014, with operations set to start on January 1st, 2015, after Iran and Pakistan had built their respective portions.

The arbitration clause in the original deal required Pakistan to pay Iran $1 million every day starting on January 1, 2015. However, Tehran has pledged not to take the matter to any international court if construction is delayed under the 2019 modified agreement between the Inter-State Gas Systems (ISGS) of Pakistan and the National Iranian Gas Corporation (NIGC), and Pakistan will not make up the difference until 2024.

Inside its boundaries, Iran has already finished building the pipeline from the gas field to the Pakistani border. The pipeline will enable Pakistan to start receiving 750 million cubic feet of gas per day from Iran once it is finished and operational on both sides.

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