Iran Gas Imports a Disaster for Pakistan

Discussion in 'Pakistan' started by BangersAndMash, Oct 23, 2013.

  1. BangersAndMash

    BangersAndMash Regular Member

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    ISLAMABAD October 23, 2013 (AP)
    By SEBASTIAN ABBOT Associated Press


    Pakistan's plan to import natural gas by pipeline from neighboring Iran would be an economic "death sentence" for the country because the gas price is too high, a Pakistani advocacy group said in a report released Wednesday.

    Despite U.S. pressure, the Pakistani government struck a deal with Iran to import gas in the hope of relieving the country's energy crisis, especially the shortage of electricity. Gas is used to fire many of Pakistan's power plants, but insufficient quantities mean rolling blackouts are common.

    The Islamabad-based Sustainable Development Policy Institute said in its report that the contract with Iran means the gas sold to Pakistan likely will be several times more expensive than the domestic gas currently used.

    "This is a death sentence for Pakistan's economy," the report said. It criticized Pakistani officials who "blatantly ignored the energy dynamics and its pricing while going for this deal."

    An official at the Ministry of Petroleum and Natural Resources rejected the report, saying the pipeline project was good for Pakistan. He spoke on condition of anonymity because he was not authorized to talk to journalists.

    The advocacy group's findings represent the latest challenge to the plan. There are also serious doubts about how Pakistan could finance the at least $1.5 billion needed to construct the pipeline and whether it could go through with the project without facing U.S. sanctions in place over Iran's nuclear program.

    "This gas will be an economic disaster for us," said the lead author of the report, Arshad Abbasi, at its release in Islamabad.

    The chief guest was Shamsul Mulk, an ex-chairman of Pakistan's water and power authority and former head of the advocacy group's board of governors. Many other former senior officials and academics are affiliated with the institute.

    The report called on the Pakistani government to renegotiate its contract with Iran and uncouple the price of gas with the cost of oil. That could produce lower gas prices that are closer to Pakistan's domestic cost of gas.

    The agreement with Iran stipulates that Pakistan must construct its side of the pipeline by December 2014. If the country fails to meet this deadline, it will be liable to pay fines that could run into the millions of dollars per day.

    The Iranian government says it has built 900 kilometers (560 miles) of the pipeline on its side of the border, with about 320 kilometers (200 miles) remaining to be built inside Iran. The Pakistan segment of the pipeline is expected to be about 780 kilometers (500 miles) and has not yet been constructed.

    The U.S. has opposed the project, instead promoting an alternative pipeline that runs from the gas fields of Turkmenistan to Afghanistan, Pakistan and then to India. The U.S. also has championed a number of electricity generation projects within Pakistan, such as helping renovate hydropower dams.

    The advocacy group also championed the use of hydropower, which is much cheaper than gas but can require significant up-front costs.

    Report: Iran Gas Imports a Disaster for Pakistan - ABC News
     
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  3. drkrn

    drkrn Senior Member Senior Member

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    will they pay money at the first place.
    they may use barter system for it
     
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  4. datguy79

    datguy79 Regular Member

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    What are they going to give Iran? Chicken masala?

    On another note, Iranians hate spicy food.
     
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  5. drkrn

    drkrn Senior Member Senior Member

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    basmati rice.it might not cover evry rupee.but yet to some extent

    how are the situations in afghan now?
     
  6. kseeker

    kseeker Retired

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    Business with Shia's i.e. Kafirs ? ! Isn't it against the Sunni Islam ?
     
  7. civfanatic

    civfanatic Retired Moderator

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    Well, they also deal with pork-eating Han Chinese atheists who are unabashed in their suppression of Islam...
     
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  8. sob

    sob Moderator Moderator

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    I know from an Iranian who deals in Basmati imports, Iran has almost stopped imports from Pakistan for Basmati rice due to quality issues and also very erratic deliveries.

    According to this gentleman the Iranian importers get very good treatment from the Indian rice exporters and also with UCO Bank being the designated banker there is no problem with the payment.
     
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  9. sob

    sob Moderator Moderator

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    They are more pragmatic than us Indians in these matters.
     
  10. datguy79

    datguy79 Regular Member

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    That is one loaded question. I will summarize it:

    Karzai is weak and sucks, Abdullah might become new president, surprisingly the war has calmed down somewhat with the exit of foreign troops, border with Pakistan is LOC*10, no big attacks in a few months (knock on wood), agreement close to being signed with US for 10k troops to stay till 2024 plus $25 billion in aid, economy boosted by central asian railway and chahbahar port....

    that covers the important parts at least, don't quote me on it. Just the sense i get from talking to people on ground plus watching afghan tv
     
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  11. Defcon 1

    Defcon 1 Senior Member Senior Member

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    Hi, barter system is useful only in payment crises such as that between India and Iran as it eliminates dollar exchange in trade. However, in cases where one party doesn't has the dollars to pay, this system won't work.

    Eg. Lets say Pakistan imports 300 million worth of goods from Iran and exports 100 million. Now even if barter system were to be introduced, pakistan will still need to pay 200 million to iran to cover up the trade deficit. This will decrease forex reserves of pakistan. This process cannot go on indefinitely if pakistan doesn't has regular supply of dollars. That is the quagmire pakistan is in currently.
     
  12. drkrn

    drkrn Senior Member Senior Member

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    you need a correction pakistan itself is an economic quagmire these days.

    barter system is a simple system of trade.i have x you have y.we exchange a units of x for b units of y.simple

    if other party is not interested in the opposite good,either give discount or add another product to it.more or less like todays malls.


    importers always suffer trade deficit.
     
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  13. drkrn

    drkrn Senior Member Senior Member

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    good to hear.imo afghan needs decent railways to improve their economy.but don't mess it like your neighbour.
    literally afghan is a golden goose sitting on trillion dollar mineral deposits.if used properly it will rejuvenate economy and quality of life
     
  14. drkrn

    drkrn Senior Member Senior Member

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    then how about trade for a terrorist..you can buy a terrorist dead cheap from pak land.rates probably the lowest in the world while quality is assured with international warranty(probably the only pak product).

    they can be used against is**el or any other nation

    just an idea
     
  15. nirranj

    nirranj Regular Member

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    Yeah.. brilliant idea. I hope Pakinitan now can play a double game. It can export terrorists to fight along the Sunni fighters against Bashar and get ptero dollars from Saud. It can export Terrorists to Iran for Gas, Iran will employ these terrorists in Bashar's defense. So the fight drags on and the pakinitani can tan under the warm sun and continue prickling India!!!
     
  16. nomibucha

    nomibucha Regular Member

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    It will be a real test of friendship of Iranian Government, I.e., whether it is willing to help energy-hungry Pakistan or this pipeline is just a show-off just like various other shallow promises of PPP?
    In the later case, the credibility of brotherly Iran will be at stake just like the PPP had lost all credibility during the last few months of its government.
     
  17. Dovah

    Dovah Untermensch Senior Member

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    Brotherly Iran recently executed a dozen Pakistanis. Also, $ > brotherly love.
     
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  18. kseeker

    kseeker Retired

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    Awesome, Bang on target !

    When it comes to Shia - Sunni aspect, IRAN is a threat to whole world, when it comes to economy, IRANIs become long lost brothers for Pakis !!! :noidea:
     
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  19. Ray

    Ray The Chairman Defence Professionals Moderator

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    Religion is thicker than water, money and extinction!



    @kseeker,

    When sanctions pinch the fervent and wild Sunni Shia divide blurs.
     
    Last edited by a moderator: May 10, 2015
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