IPI gas pipeline: project falls prey to procrastination
ISLAMABAD (November 08 2007): Despite tall claims of going ahead on multi-billion-dollar Iran-Pak-India (IPI) gas pipeline project, even without India, the government has now decided to follow 'wait and see' policy, and formulation of a steering committee under the Minister for Petroleum, Aman Ullah Jadoon, was also part of delaying tactics in the face of strong opposition by some of the ECC members, sources close to this development told Business Recorder.
The Petroleum Ministry had placed the gas sale/purchase agreement before the Economic Coordination Committee (ECC) of the Cabinet on October 31 for approval, but it was not cleared due to strong opposition by some of the participants, sources said.
Dr Ashfaque Hasan Khan, Special Secretary, Finance Ministry, had claimed in his press conference after the meeting that the ECC had approved the recommendations of Petroleum Ministry, in principle, but constituted a steering committee under the chairmanship of Minister for Petroleum, comprising Deputy Chairman Planning Commission, Chairman CBR and Secretaries of Finance and Foreign Affairs to further review the documents.
"There was a clear division in the ECC meeting, as one group was of the view that negotiated gas price was high on the one hand and US sanctions on Iran would complicate the situation, on the other, thus asking for adoption of wait and see policy," sources said. They said that Prime Minister Shaukat Aziz wanted ECC to clear the gas sale/purchase agreement, but when he witnessed opposition by some members, he also voted in favour of deferment of the pact between Pakistan and Iran.
However, the Prime Minister was also of the view that if Pakistan did not go ahead with the project, he should be given alternatives to meet future energy needs as Pakistan's gas reserves could only meet 40 percent of requirements.
Sources said that when the proposal was not approved by the ECC in clear words, the Petroleum Ministry took back the summary from the ministers and other officials and when they found one summary missing, the Prime Minister waved the concerned official, saying that it was with him come, "and collect it".
Since the discovery of natural gas reserves in Iran's South Pars fields in 1988, the Iranian government began increasing efforts to promote gas export. The prospects for profit are especially high in South Asian countries like India and Pakistan, where natural gas reserves are low and energy demand is exceeding supply with every passing day.
In 1995, Pakistan and Iran signed a preliminary agreement for construction of a natural gas pipeline linking the Iranian South Pars natural gas field in the Persian Gulf with Karachi, Pakistan's main industrial port located at the Arabian Sea.
Iran later proposed extension of the pipeline from Pakistan to India. Not only would Pakistan benefit from Iranian natural gas exports, but Pakistan territory would be used as a transit route for exporting natural gas to India.
Initially, the Indian government was reluctant to enter into any agreement with Pakistan due to the historically tense relationship between the two neighbours. As an alternative, India suggested the development of a deep sea pipeline where no threat to security of resources could exist.
At present, Indian, Iranian, and Pakistan government officials continue to negotiate the possible routes, modes of transport, and geo-politics of Iran. It may be noted that Petroleum Ministry had submitted its summary to the ECC after final negotiations with the Iranian delegation in Islamabad.
Business Recorder [Pakistan's First Financial Daily]
