Iran seeks Pak's commitment to IP gas pipeline project
Iran has assured of extending a 500 million-dollar loan to Pakistan for the Iran-Pakistan (IP) gas pipeline project on the condition that Islamabad will not turn its back on the project.
Iranian President Mahmoud Ahmadinejad, during a recent visit to Islamabad, pledged 500 million dollar financing for the 1.5 billion dollar IP gas pipeline project, while seeking commitment from Pakistan that it will not back out and complete the project within the scheduled timeframe, reports The Express Tribune.
Islamabad plans to avail this financing to acquire engineering and construction materials to lay its portion of the pipeline, which will be carried out in a joint venture with Iranian companies and local gas utilities including Sui Northern Gas Pipelines (SNGPL) and Sui Southern Gas Company (SSGC).
In addition to Iranian financing, Islamabad seeks to avail the buyer's credit facility to pay for the import of building materials. The government will also raise Rs 30 billion during the current financial year through the gas infrastructure development cess (GIDC) - a tax levied on domestic gas consumers.
Sources said that Pakistani and Iranian teams had finalised the draft of the Inter-Governmental Cooperation Agreement (IGCA).
"We will sign the agreement next week. We have assured the Iranian president that the funds will be utilised for construction of the gas pipeline in Pakistan and will be completed in time," sources said, adding that all issues have been settled to move ahead on the project.
The agreement says that 250 million dollars will be provided by Iran on a government-to-government basis, while the remaining 250 million dollars will be wired by Iranian commercial banks.
Pakistan wanted Iran's signatures on the funding agreement during the visit, but delays in finalisation of the draft resulted in a bottleneck because of the late arrival of the delegation from Tehran.
Under the project, Pakistan will import 750 million cubic feet gas per day (mmcfd) extendable to one billion cubic feet gas per day.