After Iran stated that it was not going ahead with a loan of $500 million to build Pakistan’s part of the natural gas pipeline, the country is now exploring other funding options. Shahid Khaqan Abbasi, Federal Minister for Petroleum and Natural Resources told The Hindu on Monday that Pakistan was considering third party options from companies which can build the pipeline and provide gas.

Iran Deputy Oil Minister Ali Majedi was quoted as saying last Saturday that Iran had no funds or obligation to finance Pakistan’s share of the project. However, his statement comes days after Mr. Abbasi visited Tehran to discuss the pipeline and other issues.

Mr. Abbasi said that in view of the U.S. sanctions on Iran, there were few funding options for the pipeline. In his meetings with the Iranian Petroleum minister, it was already stated that the company which was to build the pipeline for Pakistan could not do so because it was blacklisted under the U.S. sanctions.

Initial offer

Iran had initially made an offer of two loans of $250 million tied to a company Tadbir Energy, which was to execute the project here. That is no longer a possibility. A few months ago the Petroleum Ministry had written to the Iran government demanding $two billion to finance Pakistan’s share of the project. However, that too seems out of the question now.

What is also of concern to Pakistan is that the pipeline agreement provides for heavy penalties if the project is not completed by December 2014. The government has been saying that the design for the pipeline is ready and all it needed were the finances.