Pakistan Looks to Renegotiate Iran Gas Price

Pakistan has asked Iran to reduce gas price for Iran-Pakistan pipeline under price renegotiation clause of the bilateral sales and purchase agreement (GSPA) to bring it at par with the rates finalised with Turkmenistan, Dawn newspaper has reported.

“We are activating the price renegotiation clause of the agreement,” Prime Minister’s Adviser on Petroleum Dr Asim Hussain told Dawn on Friday. “Iran has to reduce gas prices and come down to TAPI ((Turkmenistan-Afghanistan-Pakistan-India pipeline) rate.”

If prices come down to TAPI pipeline level, Pakistan would save about $1.5 billion over the life of the project as compared with the price finalised under the IP-GSPA.

Hussain confirmed that Iran’s Tadbir Energy and Pakistan’s Interstate Gas Company could not sign an agreement for the construction of 781-km pipeline by the Iranian firm inside Pakistan because discussions required further consultations. “The agreement will be signed before Feb 27,” Dr Hussain said.

Under the proposed agreement, Tadbir Energy has to lay the pipeline inside Pakistan and provide $500m loan, which is repaid as part of gas price, involving an interest rate of about two per cent plus London Interbank Offered Rate, Dawn said.

Pakistan’s engineering and pipeline companies will provide advisory service and the Frontier Works Organisation will handle the civil works.