Pakistan-Iran Gas Pipeline Agreement Signed
We have been discussing the meetings regarding the Pak-Iran gas pipeline and now it has been reported that the government has made a decision and signed the accrod. Federal cabinet, without taking the matter to parliament or getting the consent of the government and people of Balochistan, agreed to allow the import of one billion cubic feet of gas from Iran at the rate of 80 per cent of the price of crude oil. However, Iran, desperate to export its gas and other energy resources to regional countries, held a detailed debate on the deal in its parliament. Dawn adds:
Officials from the newly formed Inter State Gas System (ISGS) signed the controversial gas sale-purchase agreement silently in Istanbul. According to the price accord, Pakistan will purchase Iranian gas on various prices; there isn’t a fixed rate, which clearly extends great leverage and benefit to Iran to procure a high price for its exported gas. Iran will sell its gas to Pakistan for $7 per MMBTU, if the Japanese Crude Cocktail (JCC) price is $50 per barrel, $9.4 per MMBTU and $13 per MMBTU if the JCC price touches $70 and $100 per barrel respectively. The price does not include infrastructure, security and other costs.
The imported gas price would be 10 to 20 times more costly than the gas being extracted from Balochistan and Sindh by the central government. Pakistan Petroleum Limited is currently paying only 63 cents per MMBTU for Balochistan’s high heating value gas. However, those 63 cents go straight to the kitty of the central government and Balochistan receives only 12.5 per cent royalty against the gas produced. The level of discrimination and exploitation of Baloch wealth can only be gauged by these figures — Balochistan produces $1.4bn worth of gas annually but receives only $116m in royalties.
There are concerns about the pricing and if Pakistan paid too much.
The price formula and the gas deal with Tehran indicate a great level of injustice as well as the inability of the political and official leadership of the country to negotiate a reasonable price formula with Iran; a country faced with immense global and economic pressures caused by international sanctions.
ISGS officials have said that this rather costly gas will be used for power generation. If this is true, then instead of placing thousands of kilometres of pipelines, the Pakistani establishment could save billions of dollars by simply importing cheap and surplus electricity from Iran which has been offered by the Iranian government. Pakistan could also encourage electricity-generating units to be installed within Balochistan near the border towns and supply the produced electricity through the existing power transmission system to the rest of the country.
There are several other unresolved issues which have been ignored and which will minimise the chances of success for the gas pipeline project. These include Balochistan’s unresolved political conflict in Pakistan and Iran, Tehran and Islamabad’s uneasy relations with the Baloch and Balochistan’s role in the overall gas pipeline project.
Via: Dawn
