Published Date: Nov 12, 2013
Pakistan should advance after re-evaluating fuel price
At a press conference regarding the pricing of Iran–Pakistan (IP) gas
on Tuesday, speakers suggested the government to go ahead with the IP
gas pipeline project after re-evaluating the gas price.
Dr Abid Suleri, the executive director of the Sustainable Development
Policy Institute (SDPI), said Pakistan could escape the UN Security
Council sanctions on trading with Iran through various means.
Firstly, he said Pakistan could opt for a waiver just like the one sought by Turkey and Turkmenistan.
"These countries had asked the Security Council for a waiver stating
that they needed to trade with Iran based on their energy needs," Dr
The second method was to sign a bilateral investment treaty with Iran
as the sanctions would not be effective in this case, he said.
Dr Suleri maintained that Pakistan’s growing energy needs could be
substantially met by importing gas from Iran through the pipeline
project, but added that there was a need to re-evaluate the gas pricing
"The current formula allows Pakistan to have gas at around 87 per
cent of the crude oil prices, but the price can be lowered and the
government should do so," he said.
He also highlighted that Iran was selling gas to Turkey and Armenia at a much lower price.
The press conference was arranged as a follow-up to the recent
statement by Hamid Raza, the managing director of the National Iranian
Gas Company (NIGC). Mr Raza had suggested that the gas price had not
been fixed yet and could be changed.
“This is an indication that Iran will be flexible but the government should play its cards effectively now,” he added.
The speakers said the attitude of the West over the Iran issue was
changing and if Pakistan did not act fast, there was a chance that some
other country would negotiate with Iran leaving Pakistan behind.
Shaukat Hameed Khan, Vice Chancellor Centre for Advanced Studies in
Engineering (CASE), said policy makers in the country had not been
"Iran was offering $2 per MMBTU in 2002 but now the gas costs around
$14 per MMBTU," Mr Khan said, adding that if Pakistan decided to move
ahead with the gas pipeline, ground work should also start.
"Ground work is not granting contract to some company. The real work
is to start training Baloch youth for the project at a suitable place
such as the Welding Institute of Pakistan in Islamabad," he added.
Mr Khan said the IP project could also generate economic activity in the less privileged areas of Balochistan.
Stressing the SDPI point of view, Arshad Abbasi, the SDPI energy
advisor, said gas production in the world was increasing and many
countries would have excess gas in the coming years mainly due to the
input of ‘Shale’ gas. Regarding the funds for the pipeline project, Mr
Abbasi said this was not the most serious issue for Pakistan – lack of
political will was.
"How did we clear around Rs500 billion in circular debt? Where is the
money generated from Gas Infrastructure Development Surcharge going?”
Mr Abbasi maintained that there were other options to generate
finances but these would be explored once the project materialised.
He however emphasised the need to de-link the price of gas from oil
prices in the international markets particularly as Iran was willing to
reconsider gas pricing for Pakistan.
Regarding concerns that India could block an Iran-Pakistan gas deal,
the experts said India was an emerging economy with higher energy needs
They said if a gas pipeline materialised between Iran and Pakistan, India might also join it in the future.