Islamabad: Pakistan, facing financial constraints, has officially notified Iran of “force majeure” and an excusing event to suspend its contractual obligations on the completion of the multi-billion dollar Iran-Pakistan (IP) gas pipeline project. The decision comes as external factors beyond Islamabad’s control, such as US sanctions on Iran, continue to obstruct progress on the project that has remained dormant for almost a decade, despite a severe energy shortage in the South Asian nation with a population of 240 million.
The “force majeure” and excusing event notice were issued under the Gas Sales and Purchase Agreement (GSPA), effectively suspending Pakistan’s obligations. Minister of State for Petroleum, Dr. Musadik Malik, submitted a written testimony to Pakistan’s National Assembly, confirming the issuance of the notice.
In response to queries from Members of the National Assembly (MNAs) about the completion date of the cross-border energy project and potential fines for delays, Minister Malik clarified that the Iran-Pakistan gas pipeline project remains stalled due to international sanctions on Iran. He emphasized that project activities would commence once the sanctions on Iran are lifted, but he refrained from providing a specific completion date due to the uncertainties caused by the sanctions.
The issue of Pakistan’s notice of “force majeure” and Iran’s dispute over its validity could be resolved through international arbitration if Iran chooses to pursue this course of action. The exact amount of any penalty, if applicable, would be subject to the outcome of the arbitration process determined by the arbitrators, according to Minister Malik.
Last week, during a three-day visit to Islamabad, Iran’s Foreign Minister, Hossein Amir Abdollahian, stressed the importance of completing the project, emphasizing its benefits for both nations. Iran claims to have completed its side of the 1150-kilometer pipeline, with a groundbreaking ceremony conducted jointly by Pakistan’s former President Asif Ali Zardari and Iran’s Dr. Mahmoud Ahmadinejad near Chabahar in March 2015. However, in 2015, the then Pakistan petroleum minister informed the parliament that the Iran-Pakistan project was off the table due to international sanctions on Iran.
Pakistan is currently engaged in diplomatic discussions with US authorities to seek exemption for the project. Earlier this year, Pakistan requested Washington’s assistance to overcome energy shortages, but has yet to receive a response.
The proposed Iranian pipeline was designed to supply 750 million cubic feet per day (MMCFD) of gas. Despite opposition from US authorities when the framework agreements and GSPA were signed in 2009 and 2010, respectively, Pakistan and Iran sought to pursue the project.
