While Pakistan maintains that the U.S. sanctions do not apply to the Iran gas pipeline project and the government remains committed to it, an official delegation visited Washington as part of the revived strategic dialogue between the two countries to discuss increased support for power policy and investment.
After the meeting earlier this week, the U.S. has committed to assist Pakistan’s effort to privatize at least two power distribution companies by 2015 and also announced technical assistance to help Pakistan increase production and maximize recovery from existing gas fields as well as to identify new areas for conventional gas development to help meet the country’s increasing energy demand, especially for power generation, a U.S. department of state press release said. The U.S. has already helped Pakistan meet its critical energy needs, including adding 1,000 megawatts since 2009 to the national grid. Additionally, the Overseas Private Investment Corporation, the U.S. Government’s development finance institution, is in the process of negotiating a $95 million loan for a 50 MW wind power plant in southeastern Pakistan’s Gharo-Keti Bandar Wind Corridor, the press release said.
The Pakistani delegation also met with Secretary of Energy Ernest Moniz, to discuss potential collaboration in grid resiliency and the energy-water nexus. The U.S.-Pakistan Energy Working Group, part of the Strategic Dialogue framework reenergized during Secretary John Kerry’s August visit to Pakistan, met in Washington at the U.S. Institute of Peace. Pakistan’s delegation was led by Minister of Petroleum and Natural Resources Shahid Khaqan Abbasi and Minister for Water and Power Khwaja Asif. U.S. Special Envoy for International Energy Affairs Ambassador Carlos Pascual led the U.S. delegation. This is the first Working Group meeting to be held since the announcement of the resumption of the U.S.-Pakistan Strategic Dialogue, though the fifth time it met since 2010. Energy issues were also a core topic of discussion during Mr. Sharif’s recent official visit to Washington, the release said.
Ministry of foreign affairs spokesperson Aizaz Ahmad Chaudhry said that in Pakistan’s view the U.S. sanctions don’t apply to the Iran pipeline project and this has been conveyed to the U.S. government. Given the acute energy requirements in the country the government was open to all options to address its energy needs.
Pakistan hopes to get substantial U.S. support in the energy sector after this visit. The United States has organized a Pakistani trade delegation this week to Houston, Texas to meet with major U.S. oil and gas companies, facilitating investment from the private sector in addressing Pakistan’s energy needs, the press release said. Mr. Abbasi highlighted the need to attract private-sector investment to catalyze domestic gas exploration and production in Pakistan. The U.S. in turn welcomed the Pakistan’s commitment to undertake necessary reforms to improve efficiency in gas development, acquire liquefied natural gas (LNG), and increase domestic natural gas production.
There was no mention of the Iran pipeline in the statement though the issue was to be raised by the Pakistani delegation. While Pakistan’s growing energy needs can be substantially met through import of gas from Iran through the Iran-Pakistan gas pipeline project, there is a need to reevaluate the gas pricing mechanism for the purpose, according to Dr. Abid Suleri, Executive Director, Sustainable Development Policy Institute (SDPI).Recently, Hamid Raza, Managing Director of National Iranian Gas Company (NIGC), had said that the gas price has not yet been fixed and can be changed.
With regard to the government’s fear of sanctions being imposed on the country if Pakistan is to sign a deal on import of gas from Iran, Dr. Suleri pointed out that Iran is already exporting gas to other countries, including Turkey and Armenia.