The Hindu: Iran-Pakistan pipeline unviable

While Pakistan is demanding that the U.S. pave the way for its long pending natural gas pipeline from Iran by easing sanctions, a new report claims that the gas purchase agreement and pricing should be renegotiated or else the project could be a death sentence for the country’s economy.

The report by Sustainable Policy Development Institute (SDPI), titled “Rethinking Pakistan’s Energy Equation: Iran-Pakistan Gas Pipeline”, indicated that since the price of the gas purchased under the Iran-Pakistan pipeline project is linked to crude oil prices, it is unfortunate that the country blatantly ignored the energy dynamics and its pricing while going for this deal.

The authors’ calculations reveal that the Iran-Pakistan gas pipeline project is not the panacea for Pakistan’s energy problem, but more of a bailout plan. The country will have to look at creative options that are not limited to unconventional and alternate energy sources. Almost 50 per cent energy needs are met through natural gas. Trashing claims that the pipeline is the only solution for Pakistan’s energy crisis, the report said it becomes crucial to re-negotiate the import price of natural gas at earliest.

Pakistan has a combined power generation capacity of 24000 MW which it is unable to meet due to scarcity of natural gas supply.

Iran has already offered $500 million but Pakistan says it would need a total of $2 billion to complete its share . The issue of sanctions was raised by Prime Minister Nawaz Sharif when he met President Obama recently but officials did not confirm if the U.S. had softened its stand. MORE

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