The ongoing, rare diplomatic engagement between the United States and Iran—and Pakistan’s central role in this process following weeks of intense fighting between Washington (alongside Israel) and Tehran—has provided Islamabad with a God-sent opportunity to revive the much-delayed Iran-Pakistan (IP) gas pipeline, especially as the country’s severe energy crisis begins to stall the national economy.
The active role Pakistan has been playing to avert further hostilities between the US and Iran, particularly by hosting rare, face-to-face talks between leaders of both sides on its own soil, is highly commendable. Its untiring efforts to defuse ongoing regional tensions and protect the greater Middle Eastern region from the devastating ill-effects of war and instability have significantly enhanced the diplomatic clout and international stature of the country.
Historically, it has mainly been US opposition to the IP gas pipeline, alongside sweeping sanctions on Iran for its alleged efforts to develop nuclear weapons, that prevented Pakistan from taking advantage of this vital energy artery despite enduring serious domestic power deficiencies. Today, however, Pakistan has a unique opportunity to convince the US that allowing the IP gas pipeline to proceed is a small, justifiable favor in return for Islamabad’s immense diplomatic efforts to avert a massive regional war. If Pakistani strategists play their geopolitical cards adroitly, there should be no insurmountable problem in successfully convincing President Trump’s administration in this specific regard.
Recently, the Businessmen Panel of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) urgently called upon the government to act decisively, describing the cross-border IP pipeline as an absolute economic necessity rather than merely an optional infrastructure project. According to the prominent business body, Pakistan’s energy crisis has become entirely unsustainable, with billions of dollars being spent annually on imported liquefied natural gas (LNG) and expensive petroleum products. This trend continues to heavily strain foreign exchange reserves while simultaneously raising business operational costs. In this troubled context, the IP gas pipeline offers a highly reliable, cost-effective alternative through a direct overland route, effectively shielding Pakistan from maritime disruptions and volatile global supply shocks.
It must be highlighted that although Iran successfully completed its portion of the pipeline after signing the bilateral agreement back in 2009, Pakistan has yet to begin actual construction on its side of the border.
This represents a profound failure of successive domestic governments; at the very least, they should have constructed the physical pipeline infrastructure within their own territory without immediately connecting it to the Iranian side. While there is no doubt that financing bottlenecks and complex regulatory challenges have historically hindered Pakistan’s ability to construct the pipeline, these issues could have been systematically sorted out with better governance. Even if Washington agrees today to voice no objections to the IP gas pipeline, given the severe financial and technical issues Pakistan is currently facing, it may still take years to fully construct it. Consequently, China’s strategic support must be actively solicited, and hopefully, Beijing would provide it without any unnecessary delay.
The Iran-Pakistan gas pipeline was originally scheduled to be fully completed by December 2014. While Pakistan has consistently vowed to remain committed to constructing its portion, the looming threat of international sanctions has continuously made the task incredibly difficult. There appears to be a historic confusion in Islamabad’s policy; the threat of international sanctions has always been a known factor, yet despite this, Pakistan formally committed itself to the pipeline framework in 2013 and agreed to complete its respective section by December 2014. In reality, the persistent threat of sanctions has delayed the project by many decades, as the initial target dates should have seen fruition by 2010. The $7.5-billion mega-project has faced repeated delays since it was first conceived in the 1990s to connect Iran’s giant South Pars gas field to consumers in energy-deficient Pakistan and India.
For Pakistan, this specific gas pipeline has always been of critical importance because the country has faced serious energy shortages for recent years, if not decades. These chronic shortages have severely crippled the industrial sector, resulting in widespread, large-scale unemployment across the country. On the other hand, domestic consumers have also been severely affected by these constant supply deficiencies.
However, despite repeatedly committing itself to the project on paper, Pakistan has fundamentally lacked the political will to complete the infrastructure in the minimum possible time. As mentioned previously, the primary issue for Pakistan in this regard has been intense pressure from the US not to go ahead with the project, fearing it could trigger severe retaliatory sanctions. Moreover, as Pakistan had simultaneously been dependent to a certain extent on billions of dollars of US financial aid—in the shape of the Coalition Support Fund and civilian assistance via the Kerry-Lugar Aid Bill—it simply could not defy US pressure over the last decade.
Admittedly, there were strong public statements from former President Asif Ali Zardari and former Prime Minister Yousaf Raza Gillani asserting that Islamabad would complete the project and withstand any external pressure. Even during his ensuing tenure, former Prime Minister Nawaz Sharif made it clear during an official US visit that Pakistan would complete the IP pipeline as scheduled. Ultimately, all of these assertions turned out to be mere shallow statements because these respective governments failed to make any actual budgetary allocations for the project. At the time, Pakistan needed a total of $1.5 billion to build its designated section of the pipeline.
On its part, Iran has already constructed a 900-kilometer section of the 56-inch diameter pipeline running from Assaluyeh to Iran Shehr on the border with Pakistan. Meanwhile, Pakistan has routinely complained about its inability to find an international investor for the project, noting that its adverse domestic economic situation prevents it from financing the infrastructure on its own. While this may explain Pakistan’s slow pace of work, funds could have been arranged somehow if the political will had truly existed. At one point during bilateral negotiations, when Pakistan stated its financial position, Iran offered to provide a loan of $500 million for the project, expecting Pakistan to raise the remaining amount from alternative global sources.
This remaining capital could also be arranged, as an unnamed friendly country—believed by many to be China—had reportedly offered to provide one billion dollars to Pakistan for the project. China must be favorably poised toward the IP gas pipeline and may have wanted to be part of the project esoterically due to international pressure, as it definitely wants to see the project come to stream. Because China is also an energy-deficient nation, it would likely want the pipeline project extended into its own territory in the future by scaling up its overall volume.
This systemic confusion and lack of genuine commitment to the project, despite numerous public statements to the contrary, have proved to be extremely costly to Pakistan. It is now time for Pakistan’s present leadership and strategic planners to learn from past mistakes and the indifference of previous governments. The energy crisis in the country has become deeply critical, and the national economy is on the verge of coming to a complete standstill if it is not rapidly injected with new, reliable sources of energy.