Economic Coordination Committee seeks new funding options for Pak-Iran gas pipeline

Economic Coordination Committee seeks new funding options for Pak-Iran gas pipeline

Wednesday, March 14, 2012: Pak-Iran gas pipeline has received yet another setback, as the Chinese bank (Industrial and Commercial Bank of China) backed off from financing for the project due to increasing pressure from the United
States of America (USA). For the very reason, Economic Coordination Committee (ECC) constituted a committee the purpose of which will be to arrange funds for the construction of the pipeline.

Three federal secretaries will assist the ministerial committee, who will review options of a possible deal with China, Russia or Iran with regards to the construction of the 800 kilometre (KM) pipeline from the Iranian border
to Nawabshah.

Dr Abdul Hafeez Sheikh, Finance Minister, headed a meeting in which the ECC directed the ministerial committee to finalise its recommendations as early as possible, to meet the project completion deadline.

The committee will consist of Minister for Petroleum and Natural Resources, Minister for Water and Power, Governor State Bank of Pakistan, Secretaries Economic Affairs Division, Petroleum, Finance and Deputy Chairman Planning Commission.

Pakistan government took a bold step and decided to go forth with the Gas pipeline project despite the US “warning” to look for alternate options and abandon the Iran project. The US has threatened to impose sanctions on companies
that deal with Iran.

According to a summary tabled by the Ministry of Petroleum, the Industrial and Commercial Bank of China (ICBC) was backing off from signing the pipeline construction deal. It said that the delay in signing may result in an overall
delay of the project.

“The possible reason for not signing the agreement could be the changing geo-political situation in the region,” the official documents read.

The petroleum ministry has sought ECC permission to cancel the contract with the ICBC and sign a new one with the second lowest bidder.

The ministry also recommended that the governments of China and Russia should be approached for project funding. But to go with this option, a waiver from public procurement regulatory authority rules will be required, ministry
officials said.

According to another option, Iran could also be approached for the construction of the Pakistani portion of the pipeline.

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Posted by Wajahat Javed on Mar 15 2012. Filed under Business, Pakistan, USA. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry