The state-owned Industrial and Commercial Bank of China (ICBC) seems to have backed out of its offer to provide financial advisory services to the Iran-Pakistan gas pipeline project that is being stiffly opposed by the U.S. and faces the threat of sanctions owing to the stalemate over Tehran's nuclear programme.
The ICBC had been leading a consortium which was to sign a contract with the Inter-State Gas Systems in January. Though the other members of the consortium — Habib Bank and Ernst&Young Ford Rhodes Sidat Hyder — signed up, ICBC had not signed the contract till date, as a result of which the other two companies had developed cold feet, said Pakistan Petroleum Secretary Ejaz Chaudhury.
According to a summary presented by the Petroleum Ministry to the Economic Coordination Committee of the Cabinet on Tuesday, “it is apprehended that a probable reason for not signing the agreement [to act as financial adviser for the project] till date could be [the] geo-political situation in the region”.
Eager to go ahead with the project despite the hiccups and the threat of sanctions, the Pakistan federal government has begun to explore other options. These include opting for another consortium that would be responsible for arranging the funds required for the project, funding through the Gas Infrastructure Development Cess and government-to-government arrangements with China, Russia or Iran.
Meanwhile, in Beijing, the Chinese Foreign Ministry did not respond to questions from The Hindu about this development. Though unaware of ICBC's decision, senior South Asia scholar at the Shanghai Institute for International Studies Zhao Gangcheng said the Chinese government was “quite cautious about investments where there are a lot of concerns” and it “would not encourage any risky business”. Such concerns, he said, had been heightened after Chinese companies suffered huge losses following the unrest in Libya.
In Pakistan, the development has evoked disappointment as Islamabad regards China to be its “all-weather friend”. The headlines in the media reflected this disappointment with newspapers describing it as China “ditches”, “backs off”, “run away” from a project to which Pakistan recently reiterated its commitment during a visit of the Iranian President.
