TEHRAN: Iran has issued a final warning to Pakistan, notifying that it will take the issue to the Paris Arbitration Court in September 2024 due to Pakistan’s failure to construct its portion of the pipeline for the Iran-Pakistan (IP) gas project within the extended 180-day deadline.
The project, which has faced a decade-long delay since 2014 due to concerns over potential US sanctions, originally stemmed from a Gas Sales Purchase Agreement (GSPA) signed in 2009 under French law. The Paris-based Arbitration Court, designated to resolve disputes between the two nations, does not acknowledge US sanctions as a valid reason for the delay.
According to senior officials, Pakistan’s Inter-State Gas Systems (ISGS) and Iran’s National Iranian Gas Company (NIGC) signed a revised agreement in September 2019. Under this new contract, Pakistan was obligated to complete the pipeline on its territory by 2024. However, despite Iran granting an extension, Pakistan has failed to meet this deadline.
Top Pakistani government officials are reportedly frustrated by the final notice from Iran. In response, the government is now hiring a foreign law firm to prepare Pakistan’s defense for the Arbitration Court.
“We are unable to proceed with the project due to US sanctions,” senior government officials told The News. “We made considerable efforts to secure a waiver from the Americans, but the Biden administration opposes the IP gas line project.”
The original agreement stipulated that Pakistan would incur a penalty of $1 million per day starting January 1, 2015, if the project was not completed on time. Should Iran proceed with arbitration, Pakistan could face a substantial financial penalty potentially amounting to billions of dollars.
The project, intended to be completed by December 2014 and operational by January 1, 2015, involved Iran constructing the pipeline on its side and Pakistan doing the same within its territory. However, the 10-year delay has cast the entire venture into uncertainty.
