Pakistan stung by Iran pipeline blow

[unhappycamper]

http://atimes.com/atimes/South_Asia/SOU-01-171213.html



Pakistan stung by Iran pipeline blow
By Syed Fazl-e-Haider
Dec 17, '13

KARACHI - Iran has not only canceled a US$500 million loan promised to Pakistan last year to help fund its construction of pipeline to bring natural gas from Iran; it has also said it will demand compensation if Islamabad fails to build its side of the pipeline by the end of next year. The announcement came just days after Islamabad had agreed to speed up work on the US$7.5 billion project.

Reasons for Tehran's drastic and sudden u-turn decision could range from the dismal state of its own economy to understandings reached with the US last month on the future of its nuclear-development project. Complicating matters, Pakistan was reported last month to have built nuclear weapons for Saudi Arabia, Iran's arch-rival in the region, and that these were ready for shipping. Whatever the case, it turns the pipeline, once considered an energy lifeline for Pakistan's economy, into a liability for the cash-strapped South Asian country.

Iran's Deputy Oil Minister Ali Majedi, announcing the cancelation of the planned $500 million loan, said Tehran had no obligation to finance the Pakistani side of the pipeline project and warned that compensation would be demanded on failure to complete the Pakistan end of the pipeline on schedule within the next 12 months.

"Pakistani officials were told in recent talks that, given the sanctions (on Iran), Iran is not able to finance construction of the pipeline (in Pakistan) and has no obligation to do so," Associated Press reported Majedi as saying. "If a contractor is chosen today and pipeline construction begins today, it will take four years to complete it. Should Pakistan fail to take gas by the end of next year, Iran will demand compensation under the terms of the contract."