Pakistan notifies Iran to suspend gas pipeline project

Pakistan expresses inability as long as US sanctions on Iran remain or US gives Islamabad positive signal to go ahead

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Pakistan has issued a notice to Iran to suspend its obligation under the agreement to complete the multi-billion dollar Iran-Pakistan gas pipeline project, citing external factors beyond Pakistan’s control.

Pakistan has expressed its inability to go ahead with the project as long as US sanctions on Iran remain in place or the US gives Islamabad a positive signal to go ahead with the project.

The project has been lying in cold storage for nearly a decade despite severe energy shortages in the South Asian nation of 240 million people.

According to a written reply submitted by Minister of State for Petroleum Dr. Musaddiq Malik in the National Assembly, Pakistan has issued a notice to Iran under the Gas Sales and Purchase Agreement (GSPA), resulting in suspension of Pakistan’s obligations under the GSPA.

Malik’s statement came in response to questions from MNA Jamaluddin, who asked if the Government of Pakistan has a fixed date for the completion of the cross-border energy project. Is Pakistan liable for delays and are other regional countries expanding trade ties despite UN sanctions?

Musaddiq Malik clarified that the Iran-Pakistan gas pipeline project is stalled due to international sanctions on Iran, the project activities will start after the removal of sanctions on Iran, there is no risk that state-owned enterprises (SOEs) will face sanctions, adding that in this situation the completion of the Iran-Pakistan gas pipeline project will be completed.

At the same time, the Minister of State for Petroleum also acknowledged that the issue of notice by Pakistan and Iran’s controversial decision to make its validity controversial can only be settled through international arbitration, if Iran takes the matter to arbitration, as a result of which the exact amount of penalty, if any penalty is imposed, subject to the outcome of the arbitration. It will be determined by arbitrators.