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Iran cancels Pakistan gas pipeline loan

15 December, 2013

TEHRAN: Iran has cancelled a planned $500 million loan to Pakistan to build part of a pipeline to bring natural gas from the Islamic Republic.

Deputy Oil Minister Ali Majedi said Iran has no obligation to finance the Pakistani side of the project and also does not have the money.

Iran has already invested over $2 billion to construct the Iranian side of the pipeline. But there are serious doubts about how Pakistan could finance the $2 billion needed to construct the pipeline on its territory.

Iran's former president Mahmoud Ahmadinejad had pledged the loan.

"Pakistani officials were told in recent talks that, given the sanctions, Iran is not able to finance construction of the pipeline (in Pakistan) and has no obligation to do so," he said. His comments were posted on the oil ministry's website, shana.ir, Saturday.

Majedi complained that Pakistan has done little to construct its own section of the project. Under a valid contract, Pakistan is required to finish construction of the pipeline on its territory by the end of 2014.

"If a contractor is chosen today and pipeline construction begins today, it will take four years to complete it. Should Pakistan fail to take gas by the end of next year, Iran will demand compensation under the terms of the contract," he said.

End.

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