Iran withdraws US$ 500 million IP funding offer

Pakistan's Minister for Petroleum and Natural Resources, Shahid Khaqan Abbasi told reporters that Iran is unable to finance the Iran-Pakistan (IP) gas pipeline project.

Following his visit to Tehran earlier this month, Abbasi said Iran expressed its inability to provide the US$ 500 million funding to build Pakistan's portion of the IP gas pipeline, facing acute financial constraints due to US sanctions.

"The compressor equipment required for the pipeline would not be available due to sanctions against Iran," he was quoted as saying. "However, we are committed and will make the Iran-Pakistan gas pipeline."

Under the Gas-Sale Purchase Agreement, the first gas delivery to Pakistan should start by 31^st December 2014, with the two countries being responsible for the completion of the pipeline within their territories. The agreement included a daily penalty of US$ 1.1 million until completion.

Despite this prior agreement, the Iranian side has agreed not to penalize Pakistan for failing to meet the deadline, but agreed to fix a new deadline based on realities.

Both countries have decided to meet this month to constitute a working group that will re-establish new parameters in order to keep the project going, creating a new time-frame and construction period.

Edited from various sources by Hannah Priestley-Eaton

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