ISLAMABAD: In a bid to meet its contractual obligations with Iran, Pakistan is in talks with the United States to secure a waiver from sanctions imposed on the Iran-Pakistan (IP) Gas Pipeline Project.
This was confirmed by Pakistan’s Federal Energy Minister, Dr Musadiq Masood Malik, during a press conference on Thursday.
The caretaker government has initiated construction of an 80-kilometer segment of the pipeline within Pakistani territory to avoid potential legal challenges from Iran, which could lead to an $80 billion penalty if the dispute were taken to international courts.
By advancing the pipeline’s construction and seeking a sanctions waiver, Pakistan aims to balance its legal obligations with international economic restrictions.
Dr. Malik also addressed Pakistan’s compliance with the International Monetary Fund’s (IMF) requirements, emphasizing that the recent discussions with the IMF were introductory.
He stated that the energy sector reforms are a priority for the government, aimed at bridging the gap between the cost and sale price of electricity, which currently results in annual losses of Rs1,000 billion.
Efforts to reform the energy sector include the implementation of the Weighted Average Cost of Gas (WACOG) to lower power generation costs.
Despite these measures, the minister noted that the cost of electricity has risen due to the high price of imported RLNG, contrasting with lower costs for locally produced gas.
Further, the minister highlighted the need for operational improvements in Distribution Companies (DISCOs) to reduce electricity theft and line losses.
He announced plans for public sector oil companies to create renewable energy subsidiaries and discussed government initiatives to support rural agriculture and urban IT training, alongside facilitating loans for small and medium enterprises.
