Unfazed by the threat of US sanctions, Pakistan and Iran will start work on the USD 7.5 billion gas pipeline on March 11.

The groundbreaking will be performed by the Presidents of the two countries at the Pakistan-Iran border and agreements for opening two more border crossings at Gabd and Pasni and for setting up an oil refinery in Gwadar will be signed after the ceremony.

The ceremony will be held at Gabd zero point on the border from where the Pakistani section of the pipeline will start, an official of the Pakistan embassy in Tehran was quoted as saying by Dawn.

President Asif Ali Zardari yesterday returned to Pakistan after a two-day visit to Iran for finalising the pipeline deal and sorting out financing and technical issues.

“We have successfully completed all negotiations,” the official said.

The two sides have set up a joint contracting company to build the pipeline in the next 15 months and Foreign Minister Hina Rabbani Khar told The News daily: “Pakistan has to do what it deems fit and what is in its national interest. Lack of economic growth has also seen peace stalled in the region.”

Ms. Khar said any other government would have done what the Pakistan People’s Party-led coalition has done.

“Pakistan continues to suffer from huge energy deficiency and this directly affects our industry and GDP growth. Gas is the cheapest commodity to generate electricity,” she said.

“We need to look at all possible sources of energy, including the proposed Turkmenistan-Afghanistan-Pakistan-India gas pipeline. The Iran-Pakistan gas pipeline will meet only half the shortfall of energy needs of Pakistan and not our full demand.”

The pipeline is likely to bring Pakistan-US ties under renewed stress as Washington has been staunchly opposing the project.

“It’s in their best interests to avoid any sanctionable activity, and we think that we provide and are providing... a better way to meet their energy needs in some of the assistance we’re providing,” US State Department spokesman Patrick Ventrell said on Wednesday.

On Wednesday, Iran’s supreme leader Ayatollah Ali Khamenei had said during a meeting with Zardari that the much—delayed 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 said.

Zardari, while rejecting the US pressure, had said: “The international and regional players have tried in vain to prevent expansion of Iran—Pakistan ties but the people have learnt how to act against the enemies of Islam.”

The project initially started in 1994 as a Iran—Pakistan—India pipeline but New Delhi separated itself from the venture some years ago, largely due to concerns about the Pakistani section of the pipeline.

There have also been disputes over tariff between Iran and Pakistan.

Pakistan has faced difficulties in finding financing for its section of the pipeline because of the threat of US sanctions.

The US pressure has been so intense that a Chinese—led consortium pulled out of the project.

Iran has agreed to provide a USD 500 million loan to partially finance construction of the 785—km Pakistani section of the pipeline, which will cost USD 1.5 billion. Pakistan will generate the remaining amount from its own resources.

Pakistan and Iran plan to complete the project in 15 months. Iran has already completed its section of the pipeline. Pakistan plans to import 21.5 million cubic metres of gas daily from Iran via the pipeline.

Over the past few months, Pakistani leaders, including Zardari, have said they intend to press ahead with the pipeline despite opposition from the US as the Iranian gas will help the country overcome a crippling energy crisis.

Referring to the energy crisis, Ms.Khar said: “All our friends understand the huge energy crisis that we face today.

Pakistan is a responsible country and is mindful of its international obligations. Also all our friends realise that Pakistan is looking for alternative energy sources and to them we simply say, ‘Please help us!’”