The federal government has decided to obtain a waiver of US sanctions on the Iran-Pakistan (IP) Gas Pipeline Project, aiming to fulfil contractual obligations with Iran.

The caretaker government opted to construct a portion of the 80-kilometre pipeline within its territory to preempt potential legal disputes with Iran in international courts.

Pakistan feared facing an $80 billion penalty if it lost the case in the international court, hence the decision to proceed with its portion of the pipeline while concurrently seeking a US waiver on sanctions related to the IP gas pipeline project.

In an informal conversation with journalists, Petroleum Minister Musadik Malik confirmed that Pakistan would request an exemption from the United States.

Read more: Iran seeks extension in gas pipeline deal

He expressed reservations about the increase in gas prices, stating, “Whether it’s a decrease or increase in dollar prices, requests for increases come from companies.” Malik added, “Only 25 to 27 per cent of citizens have access to gas, while over 70 per cent do not.”

He emphasised that utilising locally-produced gas for power generation would bring the cost of electricity to Rs10 to Rs12 per unit, adding that the government aims to provide cheap electricity to the masses to conserve gas.

Regarding the imposition of sales tax on petroleum products, Malik stated, “I am not aware of the implementation of sales tax.” He reiterated Pakistan’s stance on seeking a waiver from the United States concerning the Pakistan-Iran gas pipeline project.

“We cannot bear American sanctions. We will present our stance to the US,” Malik said. “Iran has been told multiple times that we need their gas. We want to complete this project but without any sanctions.”

Malik highlighted the efficiency of six LNG power plants in Pakistan, stating, “These plants can be run on local gas, enabling cheaper electricity production.” He emphasized the government’s policy of providing a level playing field to all stakeholders in the energy sector.

“We have accumulated a circular debt of Rs5 trillion in the energy sector,” Malik stated, emphasizing the need for reforms to alleviate the debt burden.

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