Work on First Phase of Iran-Pakistan Gas Pipeline approved by Pakistani Government

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Work on First Phase of Iran-Pakistan Gas Pipeline approved by Pakistani Government

Flags of Iran & Pakistan (© Shutterstock/esfera)
Flags of Iran & Pakistan (© Shutterstock/esfera)

Pakistan on Friday approved construction of the first phase of the long-delayed Iran-Pakistan gas pipeline project within its borders, aiming to avoid a potential $20 billion penalty.

The Cabinet Committee on Energy gave the green light to the 80-kilometer (49-mile) stretch, which will run from the Iranian border to the strategic port of Gwadar in southwestern Balochistan province. 

Expected to cost roughly $158 million, the project will be carried out by the private company Inter State Gas Systems and funded by the Gas Infrastructure Development Cess.

The Iran-Pakistan gas pipeline, originally conceived in 2013, has faced repeated delays due to U.S. sanctions on Iran, making it hard for Islamabad to carry out the project according to its agreement with Iran. 

Last year, Pakistani officials warned they were facing potential liabilities of $20 billion in arbitration by Iran as the project's deadline approached. Islamabad also reportedly sought a sanctions waiver from Washington but received no response.

Local media reports indicate Pakistani authorities intend to renew their request for a U.S. waiver. Iran, meanwhile, claims to have completed its portion of the pipeline.

The project, estimated to cost $7.5 billion in 2013, was launched with a groundbreaking ceremony attended by the then-presidents of both countries.

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