Pakistan wants Iran to suspend gas obligations
Pakistan has issued a notice of ‘Force Majeure and Excusing Event’ to Iran to suspend its contractual obligation on completion of the multi-billion-dollar Iran-Pakistan (IP) gas pipeline project because of external factors outside Islamabad’s control.
Simply put, Pakistan has expressed its inability to pursue the project as long as Iran sanctions remain in place or Washington tacitly green-lights Islamabad to go ahead with the project that has been in cold storage for almost a decade despite acute energy shortages in the South Asian nation of 240 million.
“Pakistan has issued a Force Majeure and Excusing Event notice to Iran under the Gas Sales and Purchase Agreement (GSPA), which resultantly suspends Pakistan’s obligations under the GSPA,” according to a written testimony Minister of State for Petroleum Dr Musadik Malik has given to the National Assembly.
In a policy statement placed on the floor of the National Assembly, the minister also put on record that Iran disputed the notice of force majeure and excusing event. The statement came in response to questions from Jamal-ud-Din, MNA, who wanted to know if the government of Pakistan had a target completion date for the cross-border energy project and whether fines were due in case of delays and if other regional nations were enhancing trade relations despite UN sanctions.
Citing US sanctions for its inability to pursue project, Islamabad issues Force Majeure and Excusing Event to Tehran, NA told
“The Iran Pakistan Gas Pipeline Project is stalled due to international sanctions on Iran,” said Mr Malik clarifying the project activities will begin once sanctions on Iran are removed and there is no threat that State Owned Entities (SOEs) would be hit by sanctions. “Given that, no date and deadline can be given for the completion of the Iran-Pakistan Gas Pipeline Project,” he added.
At the same time, the petroleum minister also conceded that Pakistan’s notice of force majeure and excusing event and Iran disputing its validity could only be finally settled through international arbitration, should Iran takes this matter to arbitration. As a consequence, “the exact amount of penalty, if any, is subject to the outcome of the arbitration to be determined by the arbitrators”, he said.