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Iran pipeline work to begin March 11: Pakistan officials

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(Globalpost/GlobalPost)

A consortium will start work next week on a much delayed $7.5 billion gas pipeline from Pakistan to Iran despite American warnings of possible sanctions, Pakistani officials said Friday.

The date was announced after Pakistani President Asif Ali Zardari held talks in Tehran with Iranian counterpart Mahmoud Ahmadinejad and supreme leader Ayatollah Ali Khamenei, who urged Islamabad to press ahead with the project.

"The groundbreaking is going to be performed on March 11 on the Pakistani side of border and we hope that the presidents of the two countries will be present on the occasion," a senior Pakistani official told AFP, requesting anonymity.

He said the ceremony would mark the start of work by an Iranian-Pakistani consortium on the 780-kilometre (485-mile) pipeline earmarked for the Pakistani side of the border, which is said to cost some $1.5 billion.

A second Pakistani official also confirmed March 11 as the start date.

Although the pipeline on the Iranian side has almost been completed, Pakistan has run into repeated difficulties, both in financing the project and over a US threat of possible sanctions due to Iran's nuclear activities.

Sanctions-hit Iran eventually agreed to finance a third of the costs of laying the pipeline through Pakistani territory to Nawabshah, north of Karachi, with the work to be carried out by an Iranian company.

Pakistani officials said in mid-December that Iran had promised a $500 million loan and that Islamabad would meet the rest of the cost.

"The government has assured us that they will arrange this money through different sources including international financial institutions," a Pakistani official told AFP on Friday.

Pakistan suffers from a crushing energy crisis, but the United States says it is providing Islamabad with alternative means to help avoid sanctions.

"It's in their best interests to avoid any sanctionable activity, and we think that we provide and are providing... a better way to meet their energy needs," State Department deputy acting spokesman Patrick Ventrell said Wednesday.

Ventrell said the United States was supporting large-scale energy projects, including one that will add 900 megawatts to the power grid by 2013, which would help supply electricity to an estimated two million Pakistanis.

But Islamabad says it will pursue the gas pipeline project regardless and that it plans to produce 20 percent of its electricity from Iranian gas.

The country's energy crisis was most recently illustrated by a more than two-hour, nationwide blackout last Sunday.

The HUBCO plant in southwestern Baluchistan province, which generates 1,200 megawatts of electricity a day, developed a technical fault, prompting a "cascading effect" which caused plants across the country to shut down.

Iran has the second largest gas reserves in the world, but has been strangled by a Western oil embargo that has seen its crude exports halve in the past year.

It currently produces around 600 million cubic metres a day, almost all of which is consumed domestically due to lack of exports means. Its only foreign client is Turkey, which buys about 30 million cubic metres of gas a day.

There is considerable support in Pakistan for the Iranian pipeline.

"On Pakistan's end, the power crisis is such that urgent solutions are needed," wrote daily The News in an editorial on Friday.

"It is going to be difficult and painful but our foreign policy needs to evolve in a regional context and if in the short-to-medium term that gives Uncle Sam a headache then so be it."

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http://www.globalpost.com/dispatch/news/afp/130301/iran-pipeline-work-begin-march-11-pakistan-officials-0