IP gas pipeline: US sanctions still a hurdle

LAHORE – The work on Iran-Pakistan gas pipeline cannot be restored yet due to the US sanctions on Iran, which are being lifted in phases.

The banks are not still allowed to finance the Pak-Iran gas pipeline due to the US sanctions and as soon as the restrictions are withdrawn the work on pipleline will be started, said federal petroleum minister Shahid Khaqan Abbasi while addressing a press conference here at APTMA house.

“We have to build the pipeline as it’s a contractual requirement,” he said and added that Pakistan’s deal with Iran requires us to pay penalty if we fail to import Iranian gas.
The government will be able to take bank loans to finance the pipeline in Pakistani portion of which could cost up to $2b.
The Iranian section is almost complete.
The minister said Pakistan plans to begin importing at least 250m cu ft of Iranian gas by 2017, rising to 750m by 2019.

Federal Minister for Petroleum and Natural Resources Shahid Khaqan Abbasi said that the govt will start providing new gas connections within six months as summary in this regard has been submitted to the cabinet which had put the ban on new connections due to shortage of gas in Punjab.
He said that the government is committed to overcoming the energy shortages persisting in the country before 2018.

The federal minister claimed that the energy crisis in Pakistan will end by 2018.
The minister insisted that the federal government is dedicated towards ending the energy crisis in Pakistan for which the import of Liquefied Natural Gas (LNG) from Qatar was the intelligent option.
“The solution to the energy crisis lies in gas addition,” said the minister.

He added that the government will ensure more relief in terms of petrol prices if the international prices of crude oil come down again.
He also stated that Liquefied Petroleum Gas (LPG) is costing the consumers 10 percent more than that of the gas that comes through the pipelines.

He said that Pakistan provides an investment-friendly regime to foreign investors by offering lucrative fiscal incentives and conducive business environment, the minster said.
Promoting the exploration of indigenous hydrocarbons is a priority for the government in overcoming the energy crisis of the country.

He said that foreign investors should come to Pakistan because lucrative opportunities.

The minister said that after the arrival of first liquefied natural gas (LNG) shipment from Qatar in Pakistan, the Sui Northern Gas Pipeline Limited had started supplying gas to the textile industry in Punjab for 24 hours after a long period of about six years.
Punjab textile mills, which were earlier receiving gas just for four-six hours a day, started getting re-gasified liquid natural gas (RNLG) at a cost of $6.
66 per Million British Thermal Unit (MMBTU).

APTMA former chairman and patron-in-chief Gohar Ejaz said that with the supply of RLNG, the Punjab industry’s problem of disparity, affordability and viability has been resolved to a large extent, which the industry was facing for the last six years.

He said that the industry had been asking for availability of energy at affordable price to compete regionally.
Earlier, the government was supplying the RLNG at $9.8 per MMBTU, which has been reduced to $6.
66 per MMBTU now.Gohar Ejaz said that a regular supply of RLNG on 24/7 would clear the production scenario ahead.
Gohar Ejaz was of the view that injection of 400 mmcfd LNG into Pakistan’s gas transmission and distribution system will immediately stimulate economy, particularly the large scale manufacturing (LSM).
He said that the textile industry is vying to reduce its cost of doing business, particularly the cost of energy, which is almost 60 percent higher as compared to the regional competitors.
“Electricity to the textile industry in the region is not more than 9 cents per kilowatt hour against 14.
5 cents per kilowatt hour in Pakistan at present,” he added.

APTMA Punjab chairman Amir Fayyaz said that only the continuity of textile industry operations can ensure exports and employment in the country.
“If the government properly patronised the industry, we have the potential to convert our current value added exports of Rs 5 billion into Rs 15 billion per year.


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