Energy problem & IP gas pipeline

The stance taken by the US government vis-à-vis the project is undeniably very bold and clear. Stance of the government of Pakistan on the issue, widely projected in Pakistan’s print and electronic media lately, is equally strong and comprehensible. None less than the stature of the President of Pakistan, Mr. Asif Ali Zardari has categorically stated that no power in the world can halt the $7.5 billion project, dismissing mounting US opposition to the venture that will be formally inaugurated on March 11, 2013.
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Though the ground-breaking ceremony of the Pakistan-Iran Gas Pipeline Project is about 18 years late, the national consensus is in favour of the project. The idea of the ‘Persian pipeline’ has been in circulation since the early 1950s, but the preliminary agreement was signed between Pakistan and Iran in 1995. And there onwards a criminal neglect of this crucial energy project delayed both pipeline import of gas and LNG import from Iran. Result: the country is faced with a serious energy deficiency causing economic slowdown and ‘gas riots’ by domestic consumers, who are users of this cheap source of energy.

At present almost 48 percent of the country’s energy needs are met by the indigenous natural gas resources. But years of lopsided energy policies have resulted in creating a huge demand and supply of natural gas. Pakistan’s present natural gas demand is about 7.27 bcfd, while the supply is only 4.45 bcfd, thus leaving a huge gap of around 2.8 bcfd. This gap in demand and supply is likely to further expand to around 8 bcfd by 2022, depending on the rate of GDP growth. As Pakistan has one of the largest natural gas pipeline distribution systems, there is a considerable percentage of unaccounted for gas (UFG) because of pilferage, leakages and non-payment of gas bills by the people in the remote areas.

According to the project proposal, the pipeline will begin from Iran’s Assalouyeh Energy Zone in the south and stretch over 1,100 kilometres through Iran. In Pakistan, the 785-kilometre pipeline will pass through Balochistan and Sindh, but officials now say the route may be changed if China agrees to the project. The total cost of the Pakistan section of the pipeline is $ 1.5 billion of which Iran has offered a loan of $ 500 million.

The natural question is why the project was delayed for 18 years when it was so crucial for the country. One of the major reasons for this delay was that the post-1995 governments did not want to annoy the US and Saudi governments who were against expanding relations with Iran. The project was revived in General Pervez Musharraf’s era with the assumption that the pipeline would be extended to India; it was even named by optimists as ‘the peace pipeline’. But India used it as a ploy to get a nuclear agreement with the US and backed out from the project. On the other hand, the US kept pushing Pakistan that the Turkmenistan-Afghanistan-Pakistan gas pipeline would be a better option. This project had the backing of some leading American companies too. In 1995, at the Economist Roundtable with the government of Pakistan in Islamabad, I had maintained that as Afghanistan was not going to settle, at least for the next 15 years, the Turkmenistan pipeline project would not be possible. (I had underestimated the timeframe.) My apprehensions were brushed aside by the then Interior Minister General Babar. The huge cost of indecision and delay of this project is that now it would be subjected to the UN and many bilateral economic sanctions against Iran.

The Zardari government revived the project when it became clear that shortage of gas was dragging the economy down. The political side of speeding up this project is that President Asif Zardari wants to take the credit of standing up to the US-Saudi pressure and exploit this in favour of his party, which has the image of toeing the US agenda. His critics say that he is leaving this hot potato for his successor if the PPP loses the election. The diplomatic reason is that Islamabad policymakers think as the US needs Pakistan for finding a solution to the Afghan conundrum and exit of its forces by end 2014, they will not enforce harsh sanctions on the country. On the other hand, Pakistan has managed to get a deal from Iran because they are suffering from an acute fall in revenue. Almost 70 percent of Iran’s $ 358 billion GDP is dependent on its energy exports. Because of sanctions the major importers of Iranian oil are gradually cutting down their imports from Iran. In the last couple of months Iran’s energy exports revenue has dropped by almost 42 percent. That is the reason Iran has agreed to finance the Pakistani sector of the pipeline as they know no foreign or Pakistani domestic bank will touch this project with a ten foot barge pole fearing international financial sanctions. To reassure Pakistan, Iran’s supreme leader Ayatollah Ali Khamenei recently told the visiting Pakistani delegation that the much-delayed $ 7.5 billion gas pipeline project must go ahead despite US opposition. “The Iran-Pakistan gas pipeline is an important example of Tehran-Islamabad cooperation, and despite hostilities towards the expansion of ties, we must overcome this opposition decisively,” Khamenei told Zardari, foreign news agencies reported. The pipeline also symbolises that Iran is not completely isolated.

Zardari is now trying to impress upon the US administration that gas is needed to overcome its energy crisis, hence they should appreciate Pakistan’s position. The new UN and bilateral sanctions against Iran broadly include: measures to impose an assets-freeze and dealings, and prohibition on 98 new entities of proliferation concern. They also prohibit the export to Iran of: different types of goods used in shipbuilding, mineral exploration, mining, metal production, and telecommunications industries; vessels designed to transport or store crude oil or its products; hard currency totalling $ 40,000 or more in value; and new goods of proliferation concern. The expanded measures also prohibit the import of natural gas, oil, and petroleum or petrochemical products from Iran; the provision of marketing and other financial or related services in respect of certain prohibited goods; the provision of flagging or classification services to Iranian oil tankers or cargo vessels; and the provision of insurance and reinsurance to Iran or any entity in Iran. It is the shipping insurance clause that is pushing traditional Iranian oil importers to back off.

A billion dollar question for Pakistan policy makers is how violation of the sanction, “the expanded measures also prohibit the import of natural gas, oil, and petroleum or petrochemical products from Iran” would be invoked against Pakistan. So far no country has been penalised for importing oil from Iran. China and India, who opposed the expansion of sanctions on Iran, continue to import Iranian oil under the exemptions that they have taken from the UN and US. However, reports are that all oil importers from Iran are gradually tapering off their imports from Iran, but the process is expected to stretch over 15-18 months. Pakistan’s agreement with Iran is to lay down the gas pipeline within 15 months, which incidentally also coincides with the timeframe of US forces’ withdrawal from Afghanistan. Pakistan is banking on the 1980s experience when because of its strategic importance to continue insurgency in Afghanistan the US administration turned a blind eye towards Pakistan’s nuclear programme. Pakistan is also hoping that the recent Iran and big five negotiations in Almaty will bear some fruit and sanctions may be eased if some progress is made in further talks.

The good news is that in spite of their political differences and the coming elections where political parties are usually miserly in supporting the ruling party’s initiatives, the major political parties are supporting this project. Pakistan Tehreek-e-Insaf’s star economist Asad Omar says, “Pakistan-Iran Gas pipeline is the best energy option for Pakistan.” He thinks that Pakistan should go ahead with the project in spite of opposition of the US administration as the gas import is critical for the economic growth of the country. The Pakistan Muslim League-Nawaz is also supporting the project, Zubair Omar, who is a member of Nawaz Sharif’s manifesto committee, told me on the phone. Who ever imagined that Zardari would stand up against US dictates; politics is indeed full of surprises!
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By  Babar Ayaz

The writer can be reached at ayazbabar@gmail.com

Daily Times 

 
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Iran-Pakistan pipeline

It is quite understandable that Mr Zardari felt the project to be of great benefit to Pakistan; for the Iranian gas would go a long way towards meeting the energy requirements of Pakistan where the people have to go through a trying experience of loadshedding lasting for hours on end every day. Mr Zardari was also received by Iran’s spiritual leader Ayatollah Ali Khamenei who stressed that the project must go ahead despite the US opposition.
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Taking her usual pro-America line, in her latest article ‘Not a perfect world’ published in a daily, the writer airs her depressing views about Iran-Pakistan pipeline, saying it is in the headlines again, but for the wrong reasons, and wrong reason, according to her, is that the United States and its pack of hunting dogs, the western countries, are after Iran.

In her self-assured manner, she declares signing of the agreement a political gimmick by the Peoples Party, just to gain some extra votes which the defiance of the United States in the prevailing anti-America public mood will bring. However, further down in her article, she says “The pipeline could also help Pakistan pursue an independent foreign policy, rather than base all decisions around the contours of its relationships with China and the US. The ability to prioritize domestic concerns is a strong sign of political maturity and stability.”

She agrees that the construction of pipeline could generate some employment in Balochistan while it could also help us generate another 4,000 mw of power the absence of which is increasing unemployment. She also declares that IP pipeline is more feasible than the Turkmenistan-Afghanistan-Pakistan-India pipeline, and later says “the IP pipeline seems unfeasible for the same reasons as Tapi.” I think she should make up her mind as to what she wants to say instead of just contradicting herself, and confusing the readers as to what message she wants to convey.

Her statement “Western opinion is turning against sanctioning rogue nations” while indicating an opposition to sanctions in the West, is highly objectionable as it implies that the nations subject to sanctions now or before are rogues while the Western nations are all angels. She seems to have completely forgotten imperial history of the Western nations, what Western invaders did to the indigenous population of United States, Canada, Australia, New Zealand, in short wherever they set their foot. Even in recent times, their conduct in Vietnam and Iraq is right before us, qualifies them as nothing but thugs, scoundrels and murderers of the worst kind. As a matter of fact, two of the oldest disputes, Kashmir and Palestine, which have remained unsolved for more than half a century, and which are responsible for major terrorist activity around the world, including 9/11, are creations of these Western angels. It was Britain that gave the Muslim-majority areas with access to Kashmir to India and established Israel as a thorn in the flesh of Palestinians.

It is also the unqualified support of US and the West that has made Israel the monster it has become which continues treating Palestinians with contempt, subjecting them to ridicule, humiliation and worst forms of human rights violations in their own land illegally occupied by Israel. On the basis of their conduct, these Western nations hardly qualify for the high regard in which she seems to hold them.
Her opposition to Iran-Pakistan pipeline is mainly due to the threat of sanctions but she herself admits that opinion in the West is turning against sanctions because it creates ill-feelings against them. We also know that the US has given exemption to some countries from sanctions and since the US and NATO countries need economical, short supply route through Pakistan for getting most of their supplies in Afghanistan and they will need this just as much while evacuating from there, Pakistan is in a strong position. She could also have suggested that if Pakistan stood firm, there is every possibility that the US would give Pakistan a waiver. However, she feels more comfortable pleading Americans’ case with us, as well as trying to frighten us of disastrous consequences that could follow through defying the US.

The writer says “Finally, Pakistan can’t be sure that the US won’t impose tough sanctions, which could lead to a reorientation of US-Pakistan relations from engagement to isolation, with Washington simultaneously taking a zero-tolerance stance against Pakistani militancy. In response, Pakistan would likely take on a spoiler role in Afghanistan. Such policy shifts would undermine regional stability and forever snuff out the possibility of Islamabad and Washington having anything more than a transactional relationship.

She forgets that our relations with the US have always been nothing but transactional and most of the time, the US ditched us at times of our extreme need, and the pattern is likely to continue, rather get worse in future. In the present round, Americans apologized for their conduct earlier and promised to be different this time but actually proved worse than before. The Abbottabad raid and the killings at Salala post, with refusal even to offer a proper apology hardly show an inclination to ‘engage.’

This time, the whole western gang came up with a promise to help us. The ‘friends of democratic Pakistan forum was launched with great fanfare but fizzled out and we do not even hear of it any more. It was the same with the US. During meetings with the US, various sub-committees were formed to provide us specialist help in various fields, but the committees never progressed beyond promises and in due course, died their natural death. 

Even the project ‘reconstruction opportunity zones’ which was supposed to provide $ 150 million a year for five years for development in FATA was cancelled. Abandoning us, the US is busy courting India which it wants to prop up as a leader in the region, and as a US partner in its ultimate war with China.

This naturally puts us in the enemy camp, based on America’s ‘with us, or against us’ policy. I am rather surprised that despite America’s past and present conduct with us, anyone could even dream that we could have anything but purely transactional relationship with the US: a transaction in which we are sure to end up as overall losers. The $ 70 billion loss which we have incurred due to our association with the US war on terror is far greater than the total aid we received from the US from 1947 up till now and the nearly 40,000 soldiers and civilians killed come on top of that.

Declaring Pakistan’s recent strong moves on the Pipeline project as election stunt, she says “The problem with pre-election stunts is that they are often shelved the moment elections are successfully contested. And that is especially true in this case since Pakistan can’t afford to build the pipeline. Sadly, this counterproductive stunt will distract from more viable domestic measures to address the energy crisis, including reducing energy theft, improving infrastructure to prevent inefficiencies and developing Pakistan’s local gas fields.”

She has completely ignored the strong possibility that the badly-bruised Peoples Party, which could not manage to get simple majority while it had the benefit of ‘sympathy’ votes is unlikely to fare any better due to its worst performance during the last five years. Moreover, some other parties, which boycotted elections last time, like Jamaat-e-Islami and a much strengthened Tehreek-e-Insaf are also in the field now, while MQM is also planning to field its candidates throughout Pakistan. Dr. Tahirul Qadri is also expected to announce participation in the general election by his Pakistan Awami Tehreek, about which he has promised to make a definitive statement in his address in Rawalpindi on March 17. So, even if announced as an election gimmick, Pakistan Iran pipeline project is likely to be pursued vigorously by other parties which are likely to form the next government.

Our partnership with Iran could also speed up additional projects like 1,000 mw Taftan-Quetta transmission line, 400 mw Gawadar power supply project, Noshki-Dalbandin highway and up-gradation of Quetta-Taftan track in addition to establishment of a refinery in Gwadar.

Also, going for the IP pipeline and pursuing other ‘ viable domestic measures’ suggested by the writer are not mutually exclusive options act both have to be pursued to meet the ever-increasing energy needs.

As for the unrest in Balochistan, it is a threat not only to IP pipeline, but also to continued existence of Pakistan as a viable state and has got to be dealt with in a coordinated manner along with law and order problem elsewhere in the country. With Chinese coming to Gwadar, more employment opportunities will be created in the province, and the two countries together will bring the Balochistan situation under control, and soon: this has got to be done, and will be done. With so many new, enthusiastic entrants in the political field now, things can not remain the same like they they did in the past.
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By S.R.H. Hashmi

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