Iran Declines Pakistan's Request to Waive Off Penalty for Pipeline Construction Delay

Iran has declined Pakistan’s request to waive off penalty for delay in completing the Iran-Pakistan gas pipeline project, reports a Pakistani newspaper.

“Pakistan submitted its request to Iran some six months back seeking to invoke the clauses pertaining to force majeure in view of the US sanctions that have factually impeded Pakistan from initiating the laying down of the pipeline. Pakistan requires foreign funding and foreign companies’ consortium mainly because of financial constraints,” Minister of Petroleum and Natural Resources Shahid Khaqan Abbasi said told The News.

Khaqan Abbasi said no international company was ready to join the project because of the US economic curbs and this was the very reason due to which the required funds could not be arranged to complete the project.

With Iran declining the request, Pakistan will have to pay a penalty of $2 million a day to be effective from January 1, 2015.

Under the Gas Sales Purchase Agreement (GSPA) with Iran, Pakistan is bound to complete the pipeline by December 31, 2014.