As Iranian President Ibrahim Raisi set to visit to Pakistan later this month, construction has begun on the Iran-Pakistan Gas Pipeline project.
The relevant authorities have begun construction of an 80-kilometer pipeline that will go from Gwadar to a location where it will link to another pipeline in Iranian territory.
The Pakistan-Iran Gas Pipeline Project is expected to cost Rs44 billion and be completed in 24 months. It will require a sizable allocation from the Public Sector Development Programme (PSDP) in the 2024–25 budget, as the Finance Ministry is not expected to be able to provide the funds from the head of the Gas Infrastructure Development Cess (GIDC).
A senior official from the Energy Ministry revealed that the Inter-State Gas Company (ISGS) has initiated tender processes to re-validate surveys and conduct Front-End Engineering Design (FEED) with consultants. This step, which has been significantly delayed, marks a crucial development in the progress of the project.
The announcement comes amidst explicit opposition from the United States towards the bilateral project, coupled with warnings of potential sanctions. Originally slated for completion in December 2014 with operationalization in January 2015, the project has been marred by nearly a decade-long delay.
While Pakistan cites US sanctions on Iran as the primary hindrance to project advancement, Tehran maintains that these sanctions are unjustified. Tehran issued a final ultimatum to Pakistan in January, urging the completion of its portion of the pipeline by February-March 2024, or face an $18 billion penalty as per the penalty clause outlined in the Gas Sales Purchase Agreement (GSPA) for the 781-kilometer project.
Initially, the 80-kilometer pipeline section is projected to accommodate 100 million cubic feet per day (mmcfd) of gas, a fraction of the anticipated 750 mmcfd over the project’s 25-year lifespan.
