Gas pipeline project: Senior government officials report that Iran has extended the deadline for Pakistan to demonstrate commitment to the Iran-Pakistan (IP) gas line project until September 2024. If Pakistan doesn’t respond positively, Iran may file a claim of $18 billion in an international arbitration forum based in Paris.

Iran, however, is offering technical and legal support to Pakistan to find a mutually beneficial solution and avoid international arbitration, along with preventing sanctions from affecting Pakistan.

A team from Iran, providing expertise, was set to visit Pakistan from January 21 to 24, but due to tensions, this visit was postponed. Diplomatic relations between the two countries were briefly severed due to border and international law violations, but they have since been restored.

In the second week of February, an Iranian team of experts will visit Pakistan for bilateral talks on the gas line project. The project, delayed since 2014, received a notice 25 days ago, urging Pakistan to construct its part by February or March 2024, or face an $18 billion penalty.

The Gas Sales Purchase Agreement (GSPA) was signed in 2009 for 25 years. Despite Pakistan citing US sanctions as a hindrance, Iran sees it differently. Pakistan is considering starting work on an 81-km portion of the pipeline from Gwadar to the Iranian border to avoid the penalty.

There’s ongoing communication between high-level leaders of Pakistan and Iran, and Pakistan’s Special Investment Facilitation Council (SIFC) has been briefed on the project. SIFC officials emphasize the need for Pakistan to demonstrate seriousness or face fines.

Funds are available through the Inter State Gas System (ISGS) for laying the 81 km pipeline, with the Ministry of Finance allocating 3.5 billion rupees (1.2 billion dollars) from the Gas Infrastructure Development Cess (GIDC) for this purpose.

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