Iran, Pakistan launch final construction phase of gas pipeline project (UPDATE)
By Sara Rajabova
Iranian President Mahmoud Ahmadinejad and his Pakistani counterpart Asif Ali Zardari have officially inaugurated the final construction phase of the multi-billion-dollar Iran-Pakistan gas pipeline project.
Ahmadinejad and Zardari attended the ceremony on the Iran-Pakistan border on Monday.
Iranian Oil Minister Rostam Qasemi and Iran's Minister of Industry, Mine and Trade Mehdi Ghazanfari also attended the ceremony, which marks the start of building the pipeline, intended to transfer natural gas from Iran to energy-hungry Pakistan.
United Arab Emirates Energy Minister Mohammad Bin Dha'en Al Hameli also attended the ceremony.
During a short meeting prior to the inaugural ceremony, Ahmadinejad and Zardari said the project would promote peace, security and progress for the Iranian, Pakistani as well as other regional nations.
The project will help enhance economic, political and security ties between Tehran and Islamabad, the two leaders said.
They also underlined the need for tapping into all of the existing capacities between Iran and Pakistan to promote the progress and welfare of the two countries.
In late February, President Zardari visited Iran and the two countries shared strategic views on bilateral ties.
In a meeting with the Pakistani President, Ahmadinejad said the construction of the Iran-Pakistan (IP) pipeline would benefit both countries as well as other regional states.
The Pakistani president said Islamabad supports all measures taken to complete the pipeline.
Pakistan faces a crushing energy crisis, which has caused difficulties in financing the pipeline, which stretches from the border between the two countries to Nawabshah region in Pakistan.
Iran plans to extend its 7th cross-country pipeline from the southwestern port city of Assaluyeh to the southeastern city of Iranshahr, and from there to the Pakistan border.
By extending the pipeline Iran can also supply gas to its eastern provinces.
An Iranian contractor will lay some 780 kilometers of the pipeline on the Pakistani soil in 22 months, he said.
Iran and Pakistan have devised a plan to finance the gas pipeline on Pakistan's side without the need for Islamabad to transfer funds to Tehran.
Based on the standing agreement, Tehran will grant a $500 million loan to Tehran-based Tadbir Energy Development Group, which is responsible for laying a pipeline in Pakistan under the multi-billion-dollar project.
In the first phase, Iran will lend $250 million and extend the assistance later to $500 million.
The remaining amount is expected to be generated through Pakistan's Gas Infrastructure Development Cess (GIDC).
The pipeline is projected to come on stream in 2014.
The pipeline, projected to cost $1.2-1.5 billion, will enable the export of 21.5 million cubic meters per day of Iranian natural gas to Pakistan.
Iran has already constructed more than 900 kilometers of the pipeline on its soil.
The 2,700-kilometer long pipeline is to supply gas for Pakistan and India, which are suffering from a lack of energy sources, but India is said to have missed talks. In 2011, Iran and Pakistan declared they would finalize the agreement bilaterally if India continued to be absent from the meetings.
According to the project proposal, the pipeline will begin from Iran's Assalouyeh Energy Zone in the south and stretch over 1,100 km through Iran. In Pakistan, it will pass through Baluchistan and Sindh but officials now say the route may be changed if China agrees to the project.